By Shivangi Lahiri and Lewis Jackson
SYDNEY (Reuters) – Australia property giant Dexus said its annual net loss more than doubled and flagged lower-than expected figures for a key earnings metric next year, sending its shares tumbling.
The results underline how Australia’s commercial property market has struggled to regain momentum after the pandemic emptied offices across major cities.
Current high interest rates have exacerbated the situation, hitting so-called cap rates which indicate the expected annual return on an investment in real estate as well as increasing debt-servicing costs for companies.
Dexus’ A$14.8 billion ($9.9 billion) portfolio of offices and warehouses shrank 12.9% or A$1.9 billion in value over the year ended in June.
That helped widen its statutory after tax net loss to A$1.5 billion from A$752.7 million a year earlier.
A key metric – adjusted funds from operations (AFFO) which excludes valuation changes and one-off charges – fell 7% to A$516.3 million or 48 cents per security.
Dexus said AFFO next year would be between 44.5 to 45.5 cents per security, 7% lower than a consensus estimate, according to analysts at Macquarie.
Shares in Dexus fell 9% by the end of trade, their worst slide since March 2020 and valuing the company at A$8 billion.
On a brighter note, however, Chief Executive Ross Du Vernet said Australian and foreign institutional investors were looking at offices, including deals with Dexus, for the first time in years although he added it was too soon to call a bottom in the market.
“Investors are still selective and the buyer pool is still thin but it’s a very different complexion to 12 months ago,” he said.
Dexus also said it had earmarked assets worth A$2 billion for sale over the next three years.
($1 = 1.48 Australian dollars)
(Reporting by Shivangi Lahiri in Bengaluru and Lewis Jackson in Sydney; Editing by Mohammed Safi Shamsi and Rashmi Aich)
