Dexus (DXS) is a current holding within the ASX Blue Chip portfolio, and this morning has announced its earnings report for the first half-year, with markets reacting poorly as shares are down -2.77% compared to a -1.23% fall in the real estate sector.
In its latest earnings report for the first half-year Dexus has reported a net loss of $597.2 million, compared to last year’s result which showed a profit of $23.1 million. This loss was primarily attributed to substantial revaluation declines in its property portfolio’s valuation, which suffered a collective devaluation of $687.3 million, marking a 4.7% decline from prior book values. Dexus saw a 6.2% decrease in its funds from operations to $364.8 million, with the office segment declining 3.7% to $283.9 million, while the property management division rose by 68% year-over-year to $6.2 million. Conversely, the development and trading segment fell by 88% to $6.9 million, below expectations of $74.7 million. The company reaffirmed a forecast for a payout of around $0.48 per security in the 12 months through June, having already declared an interim distribution of $0.267.
The company’s cap rate across the total portfolio expanded by 34 basis points to 5.45% at the end of December, from 5.11% at end-June, with rising cap rates indicative of falling values, and vice versa. Property developers are still experiencing headwinds with high interest rates increasing the cost of borrowing and more people deciding to work from home, weighing on commercial property values.
As a reminder, DXS’s inclusion in the Blue Chip portfolio is based on its dividend yield, which currently sits at 6.71% and its inclusion will depend on how the stock trades between now and the next rebalance date of March1st, 2024.
