Dexus aims to fund growth and busy offices

Diversified real estate group Dexus has forecast growth in fund management, rising demand for its alternative investment funds and a return to capital city offices to boost rents as the primary drivers of growth amid ongoing economic volatility.

In the last six months, the country’s largest office leasing company began work on Sydney’s “city-shaping” Atlassian Central and Central Place, which will be the centerpiece of the city’s new $3 billion tech hub.

Despite the global downsizing in the technology industry, the center will also house other Atlassian businesses as well as emerging technology-related sectors.

The ASX-listed trust has a market value of $8.92 billion with $26.3 billion under management across 19 funds within its diversified fund management business. The revenue basis is around 60 percent in the office portfolio and 40 percent in the fund area.

The fund management arm was also strengthened with the integration of the former AMP Capital business, which added $18 billion to the business. Dexus takes on about 450 new employees.

The group increased their distribution forecast to 51¢ to 51.5¢ ahead of safety. It reported an interim payout of 28 cents, payable February 28.

Darren Steinberg, CEO of Dexus, said it’s been an active half year despite subdued market conditions. “We have announced balance sheet disposals of $773 million since 2022 total earnings to recycle capital into higher return opportunities and to maintain a strong balance sheet,” Steinberg said.

“Within the office portfolio, I’ve definitely seen the post-Christmas resurgence of CBD, especially in the last few weeks. It’s been strong, but it’s mostly in the core of the CBD, reflecting a mixed group of tenants fleeing to quality buildings,” Steinberg said after the results briefing.

Dexus manages a $23.5 billion office portfolio, of which $12.9 billion is in the Dexus portfolio and is 95.6 percent occupied. Overall, like-for-like effective income growth for the office portfolio has remained positive in each fiscal year over the past 10 years, averaging 2.7 percent.