Dexus shares drop nearly 3% after full-year loss

The news: Property investor Dexus has swung to a full-year loss on the back of a slump in property valuations.

The numbers: The company reported a net loss of $752.7 million for the year to 30 June, compared to a $1.62 billion profit a year earlier. This was mainly due to a $1.18 billion decline in investment property valuation, while funds from operations also declined to $738.5 million. It declared a distribution of 51.6 cents per security for the year but flagged a lower distribution of about 48 cents a security for FY24.

The context: The weaker result comes amid a rapid increase in interest rates that has lifted Dexus’ cost of debt and had a material impact on portfolio valuations, as well as funds from operations. Chief executive Darren Steinberg warned that operating in an uncertain economic environment remained challenging and said the group has continued to diversify its capital sources funds management business.

What they said: “We anticipate that FY24 will remain a challenging period as capital flows and market sentiment continue to be impacted by inflation, higher interest rates and geopolitical risks. This environment is expected to put further pressure on the valuations of real assets," Steinberg said.