Dexus sees $1.3bn wiped from portfolio value

An external revaluation of the bulk of its assets estimates Dexus' book value has dropped some 9% in the last six months.

In an update to investors, Dexus said recent draft external independent valuations have resulted in a total estimated drop of about $1.3 billion or 9% on book values.

This was primarily driven by the office portfolio, which decreased 11.3% on the back of higher capitalisation rates and discount rates. The industrial portfolio fell by about 1.2%, with Dexus saying strong rental growth largely offset the impact of higher capitalization and discount rates.

The weighted average capitalisation rate across the total stabilised portfolio sits at 5.87%. The weighted average capitalisation rate of the office portfolio is 6.01% while the industrial portfolio's is 5.45%.

"The investment metrics displayed by recent sale activity support a softening in office market valuations," Dexus chief executive and managing director Ross Du Vernet said.

"However, as a long-term investor, we have confidence in the value of our high-quality portfolio through the cycle.

"There is continued occupier demand for well-located, high-quality buildings as seen in our portfolio occupancy."

Dexus said the valuations will be finalised in time for the group's FY24 results, to be handed down on August 20.