Dexus share price wobbles amid strong FY22 results and reduced FY23 dividend guidance

Dexus recently agreed to acquire AMP Capital's real estate and domestic infrastructure equity business.

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Key points

  • Dexus share price dips in morning trade 
  • Distributions increased 2.7% year on year, beating guidance 
  • The company secured $1.6 billion of investment onto its funds management platform 

The Dexus Property Group (ASX: DXS) share price has given back some small early gains and is currently down 0.7%.

Dexus shares closed yesterday trading for $9.16 and are now at $9.10.

This comes following the release of the commercial real estate group's full-year results for the 12 months ending 30 June (FY22).

Dexus share price wobbles despite strong FY22 results

  • Net profit after tax (NPAT) increased 41.9% year on year to $1.62 billion
  • Distributions of 53.2 cents per security, up 2.7% from FY21 and beating guidance
  • Occupancy of 95.6% for the Dexus office portfolio and 98.1% for the Dexus industrial portfolio
  • $1.9 billion of cash and undrawn debt facilities as at 30 June

What else happened during the year?

Dexus attributed much of its NPAT boost to fair value gains on investment properties, share of net profit of equity-accounted investments, and a favourable net fair value movement of interest rate derivatives.

Milestones during the year included securing $1.6 billion of investment onto its funds management platform with "a number" of new investors coming aboard.

Also topping the list in FY22 was Dexus' agreement to acquire AMP Capital's real estate and domestic infrastructure equity business. The company said it remains focused on completing the transaction, which will provide it with up to $21.1 billion of funds under management.

On the environmental, social and governance (ESG) front, Dexus highlighted that it was the only real estate company to achieve a Gold Class distinction in the S&P Global Sustainability Yearbook 2022.

What did management say?

Commenting on the results, Dexus CEO Darren Steinberg said:

We've achieved a lot this year in what has been a complex environment. We have selectively recycled assets and made investments to support long term growth which involved over $10 billion of industrial, office, retail and healthcare transactions across the group.

Sustainability is integrated across our entire business. For more than a decade, we have been focused on energy efficiency as well as reducing the group's emissions and environmental footprint.

Dexus' CFO Keir Barnes added:

Dexus achieved 2.7% growth in distributions per security for the 12 months ended 30 June 2022. This result is particularly pleasing given our initial market guidance for distribution growth of not less than 2% which was upgraded in the second half to growth of not less than 2.5%.

What's next?

The Dexus share price is likely facing some headwinds today after the company forecast a challenging period over the next two years. Dexus cited increasing interest rates, continuing supply chain disruptions, the global energy crisis and geopolitical risks as creating ongoing uncertainties.

Looking ahead, Steinberg said:

Based on current expectations regarding interest rates, continued asset sales and barring unforeseen circumstances, Dexus expects distributions of 50.0 – 51.5 cents per security for the 12 months ended 30 June 202313, below the 53.2 cents per security distribution delivered in FY22.

In 2024 and beyond, he added, "We are set to emerge as one of the leading real asset managers in the Asia-Pacific region positioned to capitalise on underlying structural trends, and we are confident of continuing deliver long-term value."

Dexus share price snapshot

The Dexus share price is down 19% in 2022. That compares to a year-to-date loss of 7% posted by the S&P/ASX 200 Index (ASX: XJO).

Motley Fool contributor Bernd Struben 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 Scott Phillips.

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