Dexus (ASX: DXS) – Dexus 2026 AGM Chair and Group CEO Address

Dexus reported FY26 earnings aligned with expectations, with AFFO of 483.9 million and distributions of 37.0 cents per security, but warned that FY27 results will be materially lower. Management expects FY27 AFFO of 37.5 to 39.5 cents per security with distributions of 37.0 cents, citing minimal performance fees, higher financing costs and the practical completion of the Atlassian Central development as the primary headwinds.

The property manager delivered a mixed operational performance. Office portfolio occupancy declined slightly to 94.2 percent from 95.7 percent but remained well above the ASX-listed sector average of 85.1 percent, while industrial occupancy held steady at 94.0 percent with leasing spreads of around 36 percent. Portfolio valuations increased by 1.0 percent during the year despite the challenging interest rate environment. The company exceeded its divestment target of $2 billion across three years, completing $2.5 billion of asset sales since FY24 and using proceeds to strengthen the balance sheet and fund a securities buyback program.

Dexus navigated two significant operational headwinds in FY26. The NSW Supreme Court judgment against the Dexus Bloc in May 2026 related to an APAC airport sale process created uncertainty, with an appeal hearing scheduled for 30 November. The company also initiated a strategic review of infrastructure funds worth $7.3 billion in third party funds under management that transitioned from AMP Capital. Management indicated that asset sales will be the focus for two specific funds in FY27 to provide liquidity to investors, while other funds remain under consultation regarding pathways forward.

The disconnect between the security price and underlying value remains a key frustration for the board. Dexus securities traded at a 35 percent discount to net tangible asset backing before accounting for value attributed to the funds management business. Chair Warwick Negus acknowledged this gap and indicated management is working on narrowing it through a combination of balance sheet transitioning and strategic capital partnerships. The company expects to release more than $2 billion of capital over FY27 and FY28 by introducing third party capital into core holdings and continuing active capital recycling.

Long-term growth initiatives also progressed during the year. The Boral joint venture is advancing plans for a logistics precinct with potential lettable area of 2.5 million square metres, while Australian Data Centres, in which Dexus holds an 85 percent stake, entered into lease documentation with an Anthropic subsidiary for a hyperscale data centre campus in Queensland, subject to approvals. Atlassian Central is on track for practical completion in late 2026, though Waterfront Brisbane’s completion has been pushed back to late 2029, with Dexus’s cost share expected to increase due to interest costs and leasing incentives.

Investors should monitor the 30 November APAC appeal hearing outcome, progress on the infrastructure fund review, and capital release execution against the $2 billion FY27-28 target. The departure of Chief Financial Officer Keir Barnes at year-end also marks a transition point for the company. This announcement has been classified as price sensitive material by the ASX.

View the full ASX announcement (PDF)

About Dexus Limited (ASX: DXS)

Dexus is a leading Australasian property investor, developer and manager operating a diversified real estate and infrastructure portfolio. The company manages a high-quality portfolio of office and industrial properties across Australia and New Zealand, alongside a substantial funds management business overseeing third-party capital. It is a major listed property trust (REIT) on the Australian Securities Exchange.

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