Dexus
Morningstar Rating for Stocks | Fair Value | Economic Moat | Capital Allocation |
---|---|---|---|
A$84.90 | Yrwtx | Dkjcsfkqn |
Dexus: Office Market Downturn Drags on, but More Than Factored Into Current Price
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.