Dexus shares jump after landlord reveals bullish outlook and huge stock buyback

Dexus and its main wholesale fund have just sold the NBN headquarters at 100 Mount Street in North Sydney.

Under-pressure office landlord and funds manager Dexus unveiled stronger-than-expected results as it had sold off buildings close to their valuations and unveiled a major stock buyback.

The company will buy back up to $750m of stock as momentum on the sales of large office buildings picks up and more space is taken up in premium towers, despite high headline vacancy rates.

Chief executive Ross Du Vernet said Dexus’s city towers would not be deeply hit by the switch to AI, with back-to-office work in suburban complexes to bear the brunt of the switch.

Dexus expects professional workers in its towers to be the most resilient to replacement by AI, and expects some businesses may even grow. The property group’s shares jumped by 7.8 per cent to $6.80 as investors digested the bullish take on the market.

Dexus is also leasing up space in its huge development at Waterfront Brisbane, where rents are now rising as the space in the city tightens. Big-four bank ANZ is the latest group slated to move in, and rents are running about 40 per cent ahead of last year.

Mr Du Vernet said underlying asset markets were past the point of inflection and improving, backed by positive business confidence, constrained supply pipelines, and rising transaction volumes, notwithstanding the interest rate environment.

The stock has been overshadowed by a scrap between the company and major super funds over the ownership of Melbourne airport. Dexus said it remained focused on resolving fund- specific issues and it expected to go to court in April.

Dexus chief executive Ross Du Vernet.

The company reported adjusted funds from operations, a measure of property earnings, of $253.3m, or 23.6c per security, for the half. Distributions were $207.6m, or 19.3c per security, a payout ratio of 82 per cent. Net profit lifted to $348.5m, jumping from $10.3m in the first half of 2025, driven by property valuation gains.

In another shift, Dexus flagged it would look to bring more super and pension fund capital into assets, potentially allowing it to reinvest in higher-returning areas.

The buyback is partly to capitalise on the selldown of the shares and the value emerging in office markets.

“There is a sustained disconnect between our equity market valuation and that of our underlying assets and businesses,” Mr Du Vernet said.

Dexus and its main wholesale fund have just sold the NBN headquarters at 100 Mount Street in North Sydney for $600m to property group Investa, backed by US giant BGO.

The deal was brokered by CBRE’s James Parry and Flint Davidson and Cushman & Wakefield’s Josh Cullen.

Dexus said it sold partly as the building required further spending as the NBN was moving out. Investa is understood to be bullish about the opportunity in the North Sydney market as few new towers are being built.

“We see valuations moving north from here,” Mr Du Vernet said in an upbeat take on the office market.

Office leasing volumes of 95,300sq m almost doubled the first half a year ago, including deals at Waterfront Brisbane which is now 71 per cent pre-leased.

Dexus said it had now sold $1.4bn of assets against about $2bn of divestments earmarked for fiscal 2025-2027, had repaid investors in its funds about $1bn, and bringing in more capital was a focus.

“We are actively exploring opportunities to enhance returns and capital efficiency by increasing third party capital participation in the investment portfolio. This may release capital in addition to the stated divestment target,” he said.

The CEO said the scope of sales would depend on demand from clients and its own requirements.

“We want to have meaningful aligned interests with our clients,” he said.

“We are open to looking at every asset in the platform.”

Dexus reaffirmed its expectation for adjusted funds from operations of 44.5c to 45.5c per security and distributions of 37c cents per security.