Dexus (ASX: DXS) swings back to profit - is commercial property finally turning the corner? 31 August 2026 11:52 PM AEST Summarize with AI You are reading a free article with opinions that may differ from the recommendation given by Kalkine in its paid research reports. Become a Kalkine member today to get access to its research reports, in-depth technical and fundamental research. Learn more Highlights. - Dexus swung to a FY26 statutory net profit of $482.2 million, from a loss of more than $1.5 billion a year earlier. - Adjusted funds from operations (AFFO) were $483.9 million, or 45.0 cents per security. - Property valuations across the portfolio rose about 1% over the year, the first sign of stabilisation after prior writedowns. - The distribution was held at 37.0 cents per security, a Payout Ratio of about 82%. - Look-through gearing was 33.4%; office occupancy by income was 95.7%. - The industrial portfolio delivered like-for-like income growth of 8.3%; funds under management stood at $51.4 billion. - Dexus raised $2.0 billion in third-party Equity commitments for its funds business, up from $1.1 billion. - FY27 AFFO guidance of 37.5-39.5 cents per security is below the FY26 figure, reflecting lower performance fees and higher financing costs. For three brutal years, Dexus has been the ASX's most visible casualty of the office-property downturn, absorbing billions of dollars in devaluations as higher interest rates repriced commercial real estate. Its FY26 result, handed down on 20 August, marked a striking Reversal at the bottom line: the diversified property group swung from a statutory loss of more than $1.5 billion a year earlier to a net profit, as valuations stabilised. Whether that inflection signals a durable recovery, or merely a pause, is now the defining debate for the sector. Latest developments. Dexus said it delivered its FY26 result in line with guidance while progressing a strategy centred on recycling capital, growing its funds management platform and reshaping its portfolio toward better-quality assets. Property valuations across the portfolio rose about 1% over the year, the first meaningful sign of stabilisation after the sharp writedowns of prior periods. The group raised $2.0 billion in third-party equity commitments for its funds business, up from $1.1 billion the previous year, a signal that institutional Capital is cautiously returning to Australian real estate. Rent collection held at 99.7%. Dexus has been repositioning itself from a balance-sheet-heavy landlord toward a more capital-light funds manager, using asset sales to recycle capital into its managed platform and reduce direct property exposure. The strategy is designed to smooth Earnings and lift returns on equity over time, but it also means the reported result now reflects a mix of rental income, development activity and fee earnings. What the numbers show. Adjusted funds from operations (AFFO), the industry's preferred cash-earnings measure, came in at $483.9 million, or 45.0 cents per security. Statutory net profit was $482.2 million, a dramatic turnaround from the prior-year loss driven by office devaluations. The distribution was held at 37.0 cents per security, a payout ratio of about 82%. Balance-sheet metrics were solid, with look-through gearing of 33.4%. Office occupancy by income was 95.7%, comfortably above the national CBD average, and the industrial portfolio delivered like-for-like income growth of 8.3%. Funds under management stood at $51.4 billion at 30 June. What could drive the stock next. The clearest swing Factor is the direction of interest rates and bond yields, which drive Capitalisation rates and therefore property values. Any move by the Reserve Bank toward easing would support valuations, though recent commentary has kept the prospect of further hikes on the table. Company-specific catalysts include the pace of asset sales at or above book value, growth in higher-margin funds management fees, and leasing outcomes on prime office towers. Success on those fronts would help offset the earnings drag from completed developments and asset divestments. Key risks to watch. Guidance was the sting in the result. Dexus flagged FY27 AFFO of 37.5 to 39.5 cents per security, below the FY26 figure, citing lower performance fees and trading profits, higher financing costs, the full-year impact of a completed development and reduced earnings from Assets under review. That points to softer near-term cash earnings even as the statutory picture improves. Broader risks include still-elevated office vacancy in parts of the market, the possibility that valuation stabilisation stalls if rates stay higher for longer, and execution risk on the capital-recycling program. Investor takeaway. Dexus has moved from crisis management to tentative recovery, with valuations stabilising and its statutory result back in the black. But the lower FY27 earnings guidance is a reminder that the road back is uneven, and that a genuine turn in commercial property will depend as much on the rate cycle as on Dexus's own execution. FAQs. Q: what does Dexus do? A:Dexus is a diversified Australian property group and funds manager, owning and managing office, industrial and other commercial real estate. Q: How did Dexus perform in FY26? A:Dexus swung to a statutory net profit of $482.2 million, from a loss of more than $1.5 billion a year earlier, as property valuations stabilised and rose about 1% over the year. Q: Why is FY27 guidance lower despite the profit recovery? A:Dexus flagged FY27 AFFO of 37.5 to 39.5 cents per security, below FY26, citing lower performance fees and trading profits, higher financing costs and reduced earnings from assets under review. Q: what distribution does Dexus pay? A:The distribution was held at 37.0 cents per security, a payout ratio of about 82% of adjusted funds from operations. Q: What are the main risks for Dexus securityholders? A:Still-elevated office vacancy in parts of the market, the possibility that valuation stabilisation stalls if interest rates stay higher for longer, and execution risk on the capital-recycling and funds-management strategy. Download Free Report - Explore 3 Stock Ideas & Industry Insights Unlock 3 stock ideas and key industry insights in its free report. This information is general in nature and does not consider your personal objectives, financial situation, or needs. It is not financial advice. All investments involve risk - consider independent advice before making any investment decisions. Disclaimer:

Dexus reported total adjusted funds from operations of $484 million for FY 2026, with distributions of $0.37 per security at an 82% payout ratio. The company's portfolio valuation increased 1% over 12 months, with industrial assets up 2.3% and office properties rising 0.6%. Office occupancy improved to 95.7% from 92.3% a year earlier, whilst leasing volumes reached 172,000 square metres, up 60% year-on-year. Industrial occupancy by income fell slightly to 94.6%, though the portfolio remains 8.1% under-rented with strong releasing spreads of 24%. The firm reduced group corporate costs by 6% and cut overall corporate and management operation costs by over $30 million since FY24. Look-through gearing stood at 33.4%, expected to decline approximately 1.5 percentage points following announced divestments. For FY27, Dexus forecast AFFO between $0.375 and $0.395 per security, with distributions maintained at $0.37.

Former AMP Capital head of leasing joins Knight Frank. The latest issue of Financial Standard now available as an e-newspaper Executive Appointments | / | / | / | / | Former AMP Capital head of leasing joins Knight Frank BY STAFF WRITER | THURSDAY, 6 AUG 2026 2:10PM Knight Frank has recruited Hamish Stuart in the dual role of partner, managing director, NSW and national head of office leasing. Hamish, who will officially start at Knight Frank on September 1, has almost 25 years of experience in commercial real estate across Australia and the United Arab Emirates, including in office leasing and asset management. He joins to the group from Dexus, where he was most recently Head of Office Leasing, and prior to that he was Head of Leasing for Office and Industrial at AMP Capital. In joint news, Knight Frank has appointed John Brasier as Partner, Head of Office Leasing NSW. John, who has more than 13 years of experience in commercial property, and specifically office leasing, also joins Knight Frank from Dexus, where he has been General Manager, NSW Leasing - Office for nearly five years. He started his role this week. Rounding up their latest appointments, Jenine Cranston, who has been with Knight Frank for more than four years, will move into a partner role within the NSW Office Leasing team. Read more: Knight Frank, Hamish Stuart, Jenine Cranston, John Brasier Related News | | | Knight Frank names new South Australia managing director | | | | Knight Frank names QLD head of asset management services | | | | Australia's economic growth lays far beyond capitals | | | | Australia attracts $18bn for CRE investments in 2025: Knight Frank | | | | Rapid growth of UHNW population prompts management shift: Knight Frank | | | | Knight Frank launches private office in Australia | | | | Australia dominates APAC real estate private credit raisings | | | | Data centres 'major growth sector' for Australia: Report | | | | Property 'well-placed' for growth: Knight Frank | | | | Commercial real estate optimism ticks up Editor's choice. The $38 billion super fund has teamed up with TAL to offer members a lifetime income product while still in the accumulation phase. FinCap has welcomed a new member to help scale the firm's private markets managed accounts offering. The super fund is transforming its MySuper LifeCycle structure by shrinking nine options into four distinct categories, while making changes to its investment and administration fees Former Berndale Capital Securities director Stavro D'Amore has been sentenced to almost four years' imprisonment after admitting to dishonestly misusing nearly $700,000 of company funds and authorising false statements to ASIC. Videos. Further Reading