Australia's Dexus posted a bigger-than-expected annual loss on Tuesday, as high interest rates wiped off around A$1.9 billion (US$1.28 billion) in value of its property portfolio.
Dexus, one of Australia's largest office landlords, posted statutory net loss attributable of A$1.58 billion for the year ended June 30, much wider than a Visible Alpha consensus of A$488.5 million loss and prior year's A$752.7 million loss.
Decade-high interest rates have pressured property valuations as growing demand for home working and e-commerce lead tenants to reconsider floor space, with high borrowing costs reducing building values and making it costlier to service debt costs.
Dexus' portfolio valuation declined around 13 per cent on prior book values over fiscal 2024. Valuation of its office portfolio - more than two-thirds of the total portfolio - declined more than 15 per cent during the year.
Its adjusted funds from operations, which excludes valuation changes and one-off charges, also slipped 7.0 per cent to A$516.3 million, falling slightly short of consensus of A$532.2 million.
Dexus has also earmarked assets worth A$2 billion for sale over the next three years to "further enhance the quality of our portfolio", it said.Shares in Australia's Dexus dropped most in more than three years on Tuesday, after the real estate firm reported a wider-than-expected loss for fiscal 2024, owing to a steep decline in its property valuations.
Dexus shares fell as much as 8.5 per cent to A$6.860, marking their worst intraday drop since July 2021, and were among the biggest losers in the ASX 200 benchmark, which was trading slightly higher as of 0040 GMT.
The real estate manager's statutory net loss attributable widened to A$1.58 billion for the year ended June 30, missing Visible Alpha consensus of A$488.5 million loss by a large margin. In fiscal 2023 it had logged a loss of A$752.7 million.
Decade-high interest rates have pressured property valuations as growing demand for home working and e-commerce lead tenants to reconsider floor space, with high borrowing costs reducing building values and making it costlier to service debt costs.
Valuation of Dexus's portfolio fell 13.9 per cent, or A$1.9 billion (US$1.28 billion), in 2024, a steeper devaluation than roughly 7.0 per cent in the previous fiscal.
Dexus' office assets, which make up more than two-thirds of the total portfolio, lost more than 15 per cent of their value in 2024.
Its adjusted funds from operations (AFFO), which excludes valuation changes and one-off charges, also slipped 7.0 per cent to A$516.3 million, falling slightly short of consensus of A$532.2 million.
The company provided AFFO guidance of 44.5 to 45.5 Australian cents per security, which missed consensus expectations by 7.0 per cent, according to analysts from UBS and Macquarie.
Citi analysts forecast Dexus' stock to "potentially drift lower in the short term" on missing guidance expectations.
Dexus added that it had earmarked assets worth A$2 billion for sale over the next three years to "further enhance the quality of our portfolio" without disclosing any additional details.