Australian property firm Dexus reported its second-steepest half-year loss since 2008 as higher rates slashed roughly A$600 million (US$387.24 million) off its large portfolio of office towers, although its chief executive officer (CEO) said the worst could soon be over.
The result on Wednesday from one of the country's largest landlords with an A$11 billion office portfolio comes six months after its first annual loss since 2009 and highlights how higher interest rates and the shift to home working continue to weigh on office tower owners around the world.
CEO Darren Steinberg said he believed the office sector was nearing the bottom, which should in turn help unfreeze a market that has seen very few sales as buyers wait to see how far prices will fall.
"What we'll see is a small amount of further devaluation in the coming period as we get through to June and then you'll see transaction activity pick up as we get into Q3 of this calendar year and that should then enable a stabilisation of valuations," he said in an interview.
Dexus recorded a statutory net loss after tax of A$597.2 million (US$385.31 million) for the six months ended Dec. 31 versus a A$23.1 million profit a year earlier,
However, an adjusted metric which excludes valuation changes beat expectations. Adjusted funds from operations (AFFO) fell 5.9 per cent to A$292.4 million and beat the Visible Alpha consensus by 11 per cent on a per-security basis, according to Citi analysts.
Dexus expects AFFO excluding trading profits to be broadly in line with last financial year.
The half-year loss was driven by a 4.7 per cent, A$687.3 million writedown across Dexus' A$15.5 billion property portfolio, the bulk in office.
Dexus, which manages A$41.3 billion on behalf of others, paid out some A$720 million in redemptions during the half, although Steinberg said they were not concentrated in any one fund.
To pay out investors and fund new projects, Dexus divested A$1.3 billion worth of assets over the six-month period. (US$1 = 1.5499 Australian dollars)