Dexus dives on widened FY loss, dividend 'reset'
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More news: Dexus shares plunged on the ASX as the property investor widened its full-year loss amid a slump in property valuations.
Shares were down 7% to $6.98 by 2:45pm AEST.
Jarden analysts said that while the FY24 result was "broadly in line with expectations", Dexus CEO Ross Du Vernet has "reset expectations" by providing FY25 adjusted funds from operations (AFFO) guidance that is 6% below consensus expectations.
Meanwhile, Dexus' FY25 dividend payout has been reset at 80% to 100% of AFFO, around 23% below FY24, they noted.
What they said: "Whilst this is a prudent approach given the ongoing pressure on asset values and the significant development commitments, it highlights the weak cash generation in the current environment," Jarden's analysts said.
"[...] we believe earnings momentum will continue to be challenged and after the recent share price recovery, we believe the ~12.5% discount to [net tangible assets] and 4.9% [distribution per unit] yield looks less attractive than for other stocks in the sector."
Dexus widens full-year loss as property valuations drop
The news: Property investor Dexus has widened its full-year loss on the back of a slump in property valuations.
The numbers: The company reported a net loss of $1.58 billion compared to a 752.7 million loss a year ago, missing market expectations. This was mainly due to a $1.3 billion writedown in investment property valuation. Funds from operations also declined 4.8% to $703.4 million.
It declared a final distribution of 21.3 cents per security, down 10% from a year ago.
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.
The property investor wrote down the valuations of its office assets by 11.3% in June amid a softening market, while its industrial portfolio decreased by 1.2%.
Chief executive Ross Du Vernet said the company had maintained high occupancy across both its office and industrial portfolios, ensuring strong cashflows, but moderated return expectations amid a “challenging environment”.
He has flagged a lower distribution per security of 37 cents for FY25, representing a payout of 80% to 100% of adjusted funds from operations.
What they said: “Markets move in cycles and while conditions are presently challenging, we invest for the long term,” CEO Ross Du Vernet said.
The sources: ASX announcement, Jarden research
