Here’s why Dexus (ASX:DXS) should be on investors’ radar

Summary

  • Dexus has reported a total property FFO at $388 million, down by 4.2 per cent, compared to HY20.
  • The office property FFO saw a downtick due to the impact of divestments and rent relief.
  • The company’s Dexus Wholesale Property Fund (DWPF) has seen sustained growth with a conservative gearing of 12.7 per cent.

On 9 February 2021, Dexus Property Group (ASX:DXS) has released its earnings report for the six months ended 31 December 2020. The company had focused on quite a few strategic initiatives to diversify the business as the pandemic has shown the importance of the same. The company will take advantage of the changed market dynamics by seeking to capitalize on counter-cycle opportunities.

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This would enable the company to unlock the relative value of the business and strengthen the platform for the future cycle. Dexus also intends to propose some changes in the corporate structure of the group to simplify the workings.

The company reported total property FFO at $388 million, down by 4.2 per cent compared to $405.2 million reported in HY20. The office property FFO contributed $330.5 million and industrial property FFO contributed the remaining $57.5 million.

The office property FFO saw a downtick due to the impact of divestments and rent relief which was partly offset by fixed income rent increases and income from recently completed developments.

The management operations have also been reduced by 18.3 per cent to $27.3 million due to lower leasing fees and skew of development revenue to the second half of FY21.

Read More: Dexus establishes new JV with GIC to acquire interest in Rialto Towers

Fund Management

The company’s Dexus Wholesale Property Fund (DWPF) has seen sustained growth and a consistent outperformance. The fund has a conservative gearing of 12.7 per cent with access to diversified funding sources.

The total FUM has grown at a pace of 13 per cent per annum since FY05 and currently stands at $10.1 billion.

Stock Performance

Dexus’ share price has closed at A$8.73 on 8 February. The stock has been consistently underperforming the broader markets for the last three months, delivering a negative return of 10.55 per cent. The one-year return stands at a negative 33.8 per cent.

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