Dexus: AFFO re-base as no one-offs in FY27; buyback to recommence

Research evidence excerpt

J P M O R G A N

Asia Pacific Equity Research

20 August 2026

Dexus

AFFO re-base as no one-offs in FY27; buyback to

recommence

Overweight

DXS.AX, DXS AU

Price (20 Aug 26):A$5.89

▼Price Target (Jun-27):A$7.50

Prior (Jun-27):A$8.25

DXS delivered FY26 FFO of $669.3m (62.2¢ps), down 1.2% on pcp and in line

with our forecast. AFFO was $483.9m (45.0¢ps) flat on pcp and DPS was 37.0¢ps,

both in line with guidance and pcp. FY27 is a reset year for the funds management

platform as Dexus works through the APAC appeal and the strategic review of

infrastructure products. Management guided FY27 AFFO of 37.5-39.5¢ps (a

~14% headline decline), driven by 1) immaterial trading profits and performance

fees, 2) higher finance costs, 3) a drag from completion of Atlassian Central (lower

YOC than development coupon) and 4) a likely materially lower FM contribution.

Having said that, the underlying core earnings are "pretty much flat" y/y ex the

higher WACD. The core portfolio performed strongly, with office occupancy of

95.7% and industrial LFL income of +8.3%, while flagship funds DWPF and

DWSF continued to outperform benchmarks. Having exceeded its divestment

target (~$2.5bn since FY24), DXS confirmed it intends to recommence its

buyback, taking advantage of its ~35% discount to NTA ($8.92). Retain

Overweight, $7.50 (-75¢ps) Price Target.

FY27 funds management reset: Following the APAC judgment and appeal,

DXS is undertaking a strategic review of $7.3bn of infrastructure FUM (~$35m

of fees ex-performance) acquired as part of the 2023 AMP transaction. The

potential outcomes include continuing, restructuring, consolidating or

liquidating each portfolio. DXS has provisioned ~$60m of legal costs against

the APAC case and appeal. The on-going risk being a potential shareholder

class action if the appeal is unsuccessful.

Asset sales de-gear and fund the buyback: Look-through gearing of 33.4%

falls to ~30% on a pro forma basis for the post-balance-date asset sales, but will

lift to ~32% allowing for ~$490m of committed FY27 devex. Further ongoing

asset recycling is expected, including a potential sell-down of Atlassian

Central at completion.

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