Dexus

DXS: XASX (AUS)

Morningstar Rating for Stocks	Fair Value	Economic Moat	Capital Allocation
	A$73.10	Vpwtxd	Xxvgpbng

Dexus: Office Market Downturn Drags on, but More Than Factored Into Current Price

Jon Mills

Aug 5, 2024

We transition to a new analyst and maintain our AUD 10.80 fair value estimate for narrow-moat Dexus. Dexus’ securities trade at around a 35% discount to fair value, likely due to concerns over office market headwinds. Office accounted for around 60% of the group’s fiscal 2024 first half funds from operations, or FFO, and Dexus is experiencing a cyclical downturn, with tenant incentives weighing on office rental income. With its office portfolio over-rented – for example, its Sydney office tenants pay about 10% above current effective market rents – it faces a decline in rents as leases expire.

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