Dexus (ASX:DXS) share price dips despite positive update

The real estate group’s shares are coming under pressure today…

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Shares in the DEXUS Property Group (ASX: DXS) are edging lower during early afternoon trade. This comes after the real estate group announced it has externally valued its property portfolio.

At the time of writing, the Dexus share price is down 1.19% to $10.84.

Dexus’ property value increases

Investors are selling off their positions in Dexus shares regardless of the company providing a positive update.

According to its release, Dexus advised that 117 of its 128 property assets has been externally valued.

For the 6 months to 30 June 2021, the report indicated that Dexus’ book value increase by around $362 million. This represents a 2.3% lift on the prior corresponding period.

The assets valued consisted of 41 office properties, 75 industrial properties and one healthcare property.

Dexus noted that its office portfolio grew slightly from recent leasing deals, improved market conditions, and cap rate compression on various longer WALE assets. WALE refers to a common commercial property term as ‘weighted average lease expiry’.

Moving across to the industrial portfolio, Dexus’ assets jumped roughly 9.8% in value over the previous period. The company stated cap rates and discount rates remained stable, with high occupancy rates, and the completion of development projects.

The weighted average capitalisation rate across the total portfolio tightened roughly 10 basis points over the past 6 months. Dexus is recording a shift from 5.01% at 31 December 2020 to 4.91% at 30 June 2021.

Dexus CEO, Darren Steinberg commented:

The latest independent valuations reinforce the quality of our property portfolio. We have had a consistent focus on improving the portfolio quality via leasing, acquisitions, divestments and developments and that, combined with continued investment demand, contributed to the consistent growth in underlying asset values. Amongst global investors Australia continues to be a highly attractive investment destination and we expect continued strength in investment demand for quality assets in the year ahead.

About the Dexus share price

The Dexus share price has gained around 8% over the past year, and 15% since the beginning of 2021. The company’s shares reached a 52-week high of $11.04 yesterday and could break that feat again.

Dexus presides a market capitalisation of roughly $11.6 billion, with 1.07 billion shares outstanding.

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Motley Fool contributor Aaron Teboneras has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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