This post is based on the presentation of the annual results of DEXUS on 17th August 2021. The DEXUS has three earning drivers, property portfolio, funds management, and trading. The total fund under management of Dexus is A$42.5b (Dexus portfolio A$17.5b and Funds management portfolio A$25.0b). The total property funds from operation (FFO) is A$780.5m. On the other hand, the company has total debt of A$4.8b (the debt maturity largely distributed in 4 years of FY24-27) The business looks stable even under COVID-19 impacts, the FY21 rent collection reached 98.1%
| FY20 | FY21 | change | |
| Office property FFO | 671.4 | 658.3 | -2.0% |
| Industrial property FFO | 124.2 | 122.2 | -1.6% |
| Total property FFO | 795.6 | 780.5 | -1.9% |
| Underlying FFO | 694.9 | 666.6 | -4.1% |
| Trading Profits | 35.3 | 50.4 | 42.8% |
| Distribution | 550.3 | 561.0 | 1.9% |
FFO means Funds from operations. The compositions of FFO = Office (74%) + Industrial (14%) + Funds/Trading (12%). Trading profits last 7 FY are between $34.7m to $63.3m (that will be shown later in table). They distribute almost 100% of Adjusted Funds from operations, the share of outstanding is about 1.075b, so they distribute about 50 cents or so a year. The graph is shown in the last.
| FY20 | FY21 | change | |
| Underlying FFO/share?? (cent) | 63.5 | 61.5 | -3.1% |
| Distribution/share (cent) | 50.3 | 51.8 | 3.0% |
| Net Tangible Assets/share (A$) | 10.86 | 11.41 | 5.1% |
Underlying FFO, Distribution, and NTA per share are above. Even during COVID-19 and the business has been stable. However, FY22 could be affected because of 4 months of lockdown. Net Tangible Assets is increasing so it looks, for now, NTA/share = share price and they are creating like 4.5% of return from it.
They have a A$17.5b worth portfolio,
| Dexus portfolio (A$b) | 17.5 | 100% |
| Office | 14.0 | 80% |
| Industrial | 3.0 | 17.1% |
| Retail | <0.1 | <1% |
| Healthcare | 0.5 | 2.9% |
This is a breakdown of the DEXUS portfolio. The Office portfolio is A$14.0b with 95.2% occupancies and 4.6 years WALE. The industry portfolio is A$3.0b with 97.7% occupancy and 4.4 years WALE. The rest are shown but they are still small.
Also, they have a A$25.0 fund under management,
| Fund management in total (A$b) | 25.0 | 100% |
| Office | 12.0 | 48.0% |
| Industrial | 4.8 | 19.2% |
| Retail | 6.2 | 24.8% |
| Healthcare | 0.7 | 2.8% |
| Real Estate securities | 1.3 | 5.2% |
The Fund management in total increased 61% from FY20 (From A$15.5b to A$25.0b), which is impressive however I don’t understand how it happens. Maybe I will look into it here more. Like the portfolio, they are mostly from managing the office, industrial, healthcare. This part only contributes 12% (about $79m) including trading.
| track record | FY15 | FY16 | FY17 | FY18 | FY19 | FY20 | FY21 |
| Post-tax profitA$m | 42.6 | 63.3 | 47.2 | 36.6 | 34.7 | 35.3 | 50.4 |
Finally trading, DEXUS deliveries trading profits over time. It is good but trading is not contributing much considering the share of outstanding is about 1b or so. Maybe $0.05 per share.
The distribution has continuously increased last 10 years and also the share price has not come back since the COVID outbreak in March 2020. It dropped $13.2 per share to $8.2 per share. Currently, it is about $11 per share. The DEXUS seems to be running consistent so if it can come back to before COVID-19 level, the share price can be up 20%. With the current share price annual return is about 4.7%. I believe it is not so bad. You might want to put it as a part of your portfolio in the A-RIET section. The office demands will come back after the COVID-19? I am not sure but these high-class offices in the cities they have, I think they still have the demand. Also, their customers look very good and stable (like Victoria state government, Wilson parking, Commonwealth Australia(office), IBM Australia, Coles(industrial)).