DXS +1.86%: Always good to hear from Australia’s biggest Office landlord at a time when there is simply so much uncertainty / competing views around the future of office in a post-pandemic world. For FY22 they achieved Adjusted Funds From Operations (AFFO) and distributions of 53.2 cents per security, up 2.7% on the prior year, while there was a 41% increase in Net Profit After Tax (NPAT), largely a result of property revaluations. Gearing is key when thinking about risk and it remains low for DXS at 26.9% on a look-through basis with 65% of debt hedged across FY22 + an average hedge maturity of 5.9 years – i.e. low debt levels and a decent amount hedged against future interest rate risks. For FY23, their guidance implies a decline of 5% on FY22 due to the impact of higher interest rates and asset sales, but clearly not too bad. They say incentives have stabilised from 1H22 at ~30% and occupancy has ticked up to 95.6% but leasing done in 4Q was very soft. Certainly still challenging but they are managing it well.
MM is generally bullish property into current weakness and likes DXS ~$9
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