Dexus (DEXSF) (Q1 2026) Earnings Call Highlights: Strong Leasing Activity and Strategic Capital …

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Wed, February 18, 2026 at 2:02 PM GMT+9 7 min read

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DEXSF

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**AFFO:** $253 million.

**Distributions per Security:** $0.193, reflecting a payout ratio of 82%.

**Net Tangible Assets (NTA):** Increased to $8.95 per security.

**Office Leasing Volumes:** Almost double the prior corresponding half, with 95,000 square meters leased.

**Industrial Portfolio Total Return:** 8.8% over one year.

**Office Portfolio Occupancy:** 92.2%.

**Industrial Portfolio Occupancy by Income:** 97%.

**Re-leasing Spreads:** 33% across the stabilized industrial portfolio.

**Equity Raised:** Over $950 million, including $640 million of new equity commitments.

**Debt Hedging:** 95% of debt hedged at an average rate of 2.9%.

**Development Pipeline Spend:** $1.2 billion remaining, with $360 million expected in the second half of FY26.

**Funds Under Management:** $51 billion, with third-party funds at 2.4 times the investment portfolio.

**Divestments:** $1.4 billion secured since June 30, 2024, towards a $2 billion target.

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Release Date: February 17, 2026

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

Dexus (DEXSF) reported AFFO of $253 million and distributions per security of $0.193, reflecting a payout ratio of 82%.

The company achieved a second consecutive six-month period of positive property portfolio valuations, leading to an increase in NTA to $8.95 per security.

Office leasing volumes nearly doubled compared to the previous half, with significant progress at Waterfront Brisbane, now 71% pre-leased.

The Industrial portfolio delivered strong like-for-like growth and re-leasing spreads, with occupancy by income increasing to 97%.

Dexus raised over $950 million in equity, including $640 million in new equity commitments, and established a new fund series, demonstrating strong capital management.

Negative Points

Office FFO decreased due to divestments and lower average occupancy, despite contracted rent increases.

FFO from management operations declined due to lower performance fees and divestments.

Performance fees and trading profits are expected to be materially lower in FY27 compared to FY26.

The company faces challenges with vacancies at key locations such as 80 Collins Street in Melbourne and 30 Hickson Road in Sydney.

Dexus has a high threshold for commencing new development projects, indicating potential delays in capital deployment.

Q & A Highlights

Q: Hi there. My first question today is just on the Atlassian development. I’m just wondering if you’ve progressed any plans for a partial sell-down, full sell-down of that asset? A: Morning, Adam. Thanks for your question. This is certainly an asset that we have flagged that we’ll be looking to introduce third-party capital into. I think we’ve been pretty consistent with the market that we think the best time for that is closer to practical completion. That is slated for the end of the year. We think it’s a great investment product, 15-year lease, fixed 4% increases. And so, yeah, that’s one of the assets that we will be bringing third-party capital in over the course of the year. It might not happen before practical completion but it will be towards the end of the year.

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Q: Just, my second question, on the Office portfolio. But, in terms of the core Sydney CBD portfolio, in particular, I’m just wondering if you could talk to how much under-renting would potentially be in that segment? A: Andy, that’s probably one for you. Andy Collins: Yeah. No problem. Hi, Adam. Look, re-leasing spreads were positive in all of the CBDs, including in Sydney CBD. And so re-leasing spreads obviously impact the extent to which the portfolio is over- and under-rented. We’re seeing a pattern of better effective re-leasing spreads driving – or reducing the extent to which the portfolio is over-rented on an effective basis. And so the portfolio generally is around 7.5% over-rented on an effective basis. That’s come in from 12.5%, 12 months ago. It’s about 4.5% under-rented on a (inaudible) basis, which is pretty stable (inaudible) with 12 months ago.

Q: Just, firstly, on the buyback, my understanding was that you’d need to do more than $2 billion of divestments to get the buyback away. Is that still the case? Or are you sticking with that $2 billion target? A: Well, I think we’re very resolved around the $2 billion target. I think what we’re flagging is we see real value in the security price where it’s trading. We instituted a pretty disciplined capital allocation framework, when I stepped into the chair. Dare I say it, that has regard to the return on the investments we already have and, also, marginal uses of capital. We are definitely resolved we’re going get through that $2 billion target. As I have a look – shared in my concluding remarks, we are actively looking at bringing third-party capital into the $13 billion investment portfolio. That has the potential to release a significant amount of capital. Certainly, given where we’re trading today, the buyback would be a really good use of that.

Q: My first question relates to the buyback. Guys, how much of the buyback do you think you’ll actually do in the second half of fiscal year 2026? If you are genuine about kicking off the buyback in the second half of fiscal year 2026, I would have thought there’s scope for you to change your earnings guidance for the year ‘cause you’re buying back stock at, essentially, 10% earnings yield and your cost of debt’s 5%. A: Maybe I’ll take the question in two parts. Are we serious about the buyback? The short answer is yes. I think it’s not just a statement of intent but we see real value in the company where it’s trading. We see a disconnect. We have a very high-quality portfolio. Valuations have troughed. We see valuations moving north from here. I think the market is fixated on maybe EPS growth and some noise in the business, be that developments or litigation, those sorts of things. We see good value in the current level. We need to make sure that as we’re executing that buyback, we’re doing it in a disciplined way; that we have regard to the balance sheet strength, which is really important to us. But I think I am getting more confident around the transaction market. It is improving. Certainly, I think bringing third-party capital into the platform and the confidence we have in doing that, there is scope for us to release a lot of capital. As I said in previous responses, I think the buyback is a really good use of capital at current levels. I can’t predict where the stock price is going be in three months’ time. We’re not going to cook that into guidance. But, certainly, at current – trading at current levels, if we can be more active on capital recycling, I think you’re going to see us being very active.

Q: In the remarks, you noted that $1 billion of real estate redemptions were satisfied in the period. I’d just be interested to hear where that redemption backlog is sitting today. I think it was around $3 billion back in the August results. Thank you. A: Thanks, Andrew. Yeah. redemptions are around about $2 billion. We satisfied about $1.5 billion during the half-year period. They’re now around evenly spread between real estate and the Infrastructure exposures. Infrastructure will obviously be dealt with, in line with the APAC court case resolution, which isn’t too far away. Our expectation is that the current redemptions will likely be dealt with within 12 months.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

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