The DEXUS Property Group (ASX: DXS) share price is down 0.8% after it announced its portfolio valuation for 30 June 2019.
DEXUS Property Group is one of Australia’s largest property groups, with a focus on commercial properties such as offices. Its office and industrial properties that it directly owns are worth $13.9 billion.
Dexus Property Portfolio Update
The property business announced that 109 of its 114 assets, being 45 office properties and 64 industrial properties have been externally valued at 30 June 2019.
Dexus said that the external independent valuations have led to a total estimated valuation increase of $250 million, or approximately a 1.6% increase on prior balance sheet valuations.
Due to the valuations Dexus’ net tangible asset (NTA) backing, the underlying value, per share is expected to increase by 23 cents.
The key contributors for the valuation increases were the Sydney and Melbourne office portfolios where rents continue to grow and capitalisation rates have compressed further. The weighted average capitalisation rate across the total portfolio tightened by 0.10% over the past six months to 5.26%.
Dexus’ 100 Mount Street in North Sydney increased in value by $37.8 million following the practical completion of the development.
1 Ferrer Place in Sydney increased in valuation by $37.7 million driven by increased market rents.
385 Bourke Street in Melbourne grew in valuation by $24.5 million thanks to market rents increasing.
123 Albert Street in Brisbane has reduced in value by $48 million due to re-leasing and downtime allowances.
240 St Georges Terrace saw a $18.1 million valuation increase and is now 92% leased.
DEXUS CEO Darren Steinberg said: “Investment demand for quality office and industrial properties combined with a lower for longer interest rate environment continues to flow through to the capital values of our properties. Pleasingly, we have seen two-thirds of the office portfolio uplift driven by rental growth, with strong market fundamentals in Sydney and Melbourne being reflected in our valuations.”
Although Dexus offers a decent trailing yield of 3.77%, I don’t think it represents good value today, there could be capital risk by buying at such a high valuation. I’d rather invest in the reliable ASX shares in the free report below instead.
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Disclaimer: Any information contained in this article is limited to general financial/investment advice only. The information has not taken into account your specific needs, goals or objectives, so please consider consulting a licenced and trusted adviser before acting on the information. Please read The Rask Group’s Financial Services Guide (FSG) for more information. This article is authorised by Owen Raszkiewicz of The Rask Group, which is a corporate authorised representative No. 1264179 of Strawman Pty Ltd (ACN: 610 908 211) (AFSL: 501 223).
At the time of publishing, Jaz does not have a financial interest in any of the companies mentioned.