Dexus reports 67% slump in profits, with mixed outlook for offices and warehouses

Listed office and industrial property developer Dexus has recorded a sharp slump in full-year profits with a mixed outlook for both commercial sectors over the next two years.

Dexus reported annual statutory profits of $181.1 million for the 12 months to June 30, compared with profits for the previous period of $553 million – a fall of 67%.

Much of this was the result of Dexus recording a $117 million loss from the $770 million sale of its US property portfolio.

Delivering his first set of full-year results since replacing Victor Hoog Antink as chief executive at the end of March 2012, Darren Steinberg said the company expected to lift earnings per security by 1.3% to 7.75¢ in 2012-13.

He said Dexus was operating in a challenging and volatile environment with the focus on “actively managing the portfolio”.

Dexus increased the value of its office portfolio from $4.5 billion to $4.7 billion with an occupancy rate of 97% and completed 75,600 square metres of leasing deals.

New office leased completed during the year yielded average rental increases of 4.6%

The flagship One Bligh Street office tower is now 90% leased, while another major project, 123 Albert Street in Brisbane, is 99% leased.

The value of the Dexus industrial portfolio increased from $1.6 billion to $1.7 billion with 300,000 square metres leased over the year.

Major Australian acquisitions over the course of the financial year included the $201.5 million acquisition of the 452 Flinders Street office tower in Melbourne via its third party funds management business.

It also sold QV1, the third tallest building Perth at 40 stories, for $310 million.

In total Dexus undertook $1.6 billion worth of property transactions involving 95 properties.

From the 2014 financial year, Dexus expects an improvement in tenant demand for office space in line with improved employment forecasts with the national vacancy rate to fall further in 2013.

It also expects an increase in demand for warehouse space in line with projected growth in imports.

Dexus expects the value of prime grade office and industrial properties to increase in value as yields tighten.