Fund Manager Summary
The fund managers believe that the outlook for Dexus presents a significant opportunity for investors. They note that the incessant rise in capitalisation rates has peaked, leading to a potential recovery in the sector. In their opinion, the cap rates have shown only marginal increases in 1H FY25, suggesting a stabilization trend. Furthermore, the Net Tangible Assets (NTA) appear to have bottomed out at $8.81, providing a favorable entry point. With an impressive occupancy rate of 93.5% in Office and 95.7% in Industrial segments, along with properties in prime CBD locations, rents are expected to stabilize. Additionally, Dexus's $38.9bn Funds Management platform is diversified and exhibits higher growth rates, enhancing investor appeal. The stock's 5% dividend yield further solidifies its attractiveness, prompting the fund managers to take a position.
Source: Trading View
Commentary From The Managers
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Pendal Group
3 Nov 2025
$7.21
Summary
- Pendal Group continues to hold its position in Dexus (DXS) following the 1Q26 update at the AGM.
- Office metrics are showing signs of deterioration, with occupancy decreasing by 110 basis points to 91.2%.
- Incentives in the office sector have increased by 190 basis points to 28.7%.
- Industrial metrics present a mixed picture, with occupancy down by 30 basis points to 95.9%.
- Incentives in the industrial sector rose significantly by 320 basis points to 19.5%.
- Leasing spreads in the industrial sector are strong, showing an increase of 36%.
- The portfolio remains 9.5% under rented, indicating potential for future growth.
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Please note: The completeness, accuracy or current status of the investments referenced are not guaranteed.
Commentary From The Managers
Pendal Group
3 Nov 2025
$7.21
- Pendal Group continues to hold its position in Dexus (DXS) following the 1Q26 update at the AGM.
- Office metrics are showing signs of deterioration, with occupancy decreasing by 110 basis points to 91.2%.
- Incentives in the office sector have increased by 190 basis points to 28.7%.
- Industrial metrics present a mixed picture, with occupancy down by 30 basis points to 95.9%.
- Incentives in the industrial sector rose significantly by 320 basis points to 19.5%.
- Leasing spreads in the industrial sector are strong, showing an increase of 36%.
- The portfolio remains 9.5% under rented, indicating potential for future growth.
Summary
Clime Investment Management
30 June 2025
$6.65
- Dexus (DXS.ASX) is a new holding in Clime Investment Management's portfolio.
- Dexus is an Australian real estate owner and fund manager.
- Owned assets are valued at approximately $15 billion, with $10 billion in office, $3 billion in industrial, and $2 billion in co-investments.
- About 80% of group earnings come from owned assets, while the remaining earnings are from the funds management business.
- Clime Investment Management believes DXS represents deep value for patient investors.
- Prior downward pressure on earnings from COVID-induced office market weakness and higher policy rates is abating.
- Dexus's office portfolio is premium rated and primarily located in the Sydney CBD.
- DXS continues to trade at a material discount to NTA, which Clime Investment Management considers excessive.
- There is evidence of stabilising office property values and a backdrop of declining policy rates.
Summary
Antares Capital
30 June 2025
$6.65
- Antares Capital sold their investment in Dexus (DXS) due to a slower-than-expected turnaround in the office market.
- Despite signs of stabilising occupancy, property values are still approximately 25–30% below pre-COVID levels.
- There is ongoing uncertainty and repricing in the sector.
- High tenant incentives, often 30-40% or more, indicate challenges in attracting and retaining tenants.
- New supply from pre-COVID projects is intensifying competition, particularly for older or less premium assets.
- Effective rents are either flat or declining, despite stability in nominal face value rents.
- This situation is delaying meaningful income recovery for landlords.
- The office sector is expected to face a protracted recovery horizon with structural shifts in workplace usage.
- These factors are likely to temper near-term earnings and valuations for large office landlords.
- Consequently, Antares Capital has exited their position in DXS.
Summary
Ten Cap
31 May 2025
$7.00
- Ten Cap has taken profits from Dexus (DXS) as valuation has recovered.
- Earnings growth for Dexus remains constrained.
- Ten Cap continues to monitor the situation closely.
- The investment thesis reflects a cautious approach in light of current market conditions.
Summary
Clime Investment Management
31 Mar 2025
$7.08
- Clime Investment Management has initiated a position in DXS, an office real estate owner and fund manager.
- The fund manager's investment thesis is based on signs that the downward pressure on DXS’s distributions is easing.
- Improving office market fundamentals are contributing to this stabilization.
- The impact of rising interest costs is beginning to diminish.
- Despite these improving fundamentals, DXS continues to trade at a significant discount to its net tangible assets (NTA).
- As earnings stabilize and interest rates ease, Clime Investment Management expects the valuation gap to narrow.
- The current valuation gap is around 20%.
Summary
Oracle Advisory Group
31 Mar 2025
$7.08
- Oracle Advisory Group notes the ongoing challenges in Dexus and the real estate sector, primarily due to rising capitalisation rates.
- Evidence suggests that cap rates have peaked and are anticipated to decline moving forward.
- In FY24, cap rates for Property, Office, and Industrial valuations rose but showed a significant slowdown in 1H FY25.
- The Net Tangible Asset (NTA) has likely bottomed out at $8.81, down from $12.28 three years ago.
- Dexus maintains a strong occupancy rate of 93.5% in Office and 95.7% in Industrial segments.
- Properties are predominantly located in prime CBD areas (95% prime grade), which supports rent stability.
- Lower interest rates over the next few years are expected to compress cap rates.
- Dexus holds $38.9bn in Funds Management, diversified across sectors and investor types.
- This division features nearly double the margins of the Property division along with higher growth rates.
- The stock offers a 5% dividend yield, prompting Oracle Advisory Group to take a position.
Summary
Wilson Asset Management
31 Jan 2025
$7.26
- Dexus is recognized as one of Australia's leading office and industrial property owners.
- The portfolio of Dexus is valued at $15 billion.
- It manages a further $40 billion in assets across various sectors including office, industrial, retail, and healthcare.
- In January, the REIT sector saw strong performance with prime office valuations stabilizing.
- Markets are anticipating interest rate cuts, contributing to the recovery of occupancy in key office markets.
- Despite a 25% reduction in office asset valuations over the past three years, Dexus trades at a significant discount to its asset value.
- Wilson Asset Management believes that Dexus's profitable funds management business remains materially undervalued.
- The outlook on the REIT sector is positive, with Wilson Asset Management maintaining significant holdings in Dexus, Scentre Group (ASX: SCG), and GPT Group (ASX: GPT).
Summary
Oracle Advisory Group
31 Mar 2024
$7.85
- Investment is an inductive game, requiring periodic weeding out of the portfolio.
- Oracle Advisory Group sold their investment in Dexus due to new information regarding overearning on prime property rents.
- Office rents are expected to decline as leases expire, despite seemingly low vacancy rates.
- Low vacancy rates are attributed to high leasing discounts.
- Industrial segment growth is limited, constituting only 16% of the funds from operations (FFO).
- Dexus has low exposure to fast-growing data centres, dampening potential for industrial growth.
- Funds management is performing well but represents only about 20% of the FFO.
- The company's large exposure to office properties (77.8% of FFO) raises concerns given the interest rate outlook in Australia.
- Dexus is perceived as a value trap, especially with the recent management changes.
- The new CEO announced there will be no major strategy changes, continuing with business as usual.
- Oracle Advisory Group opted to exit the position at a small profit, largely thanks to the high dividend.
Summary
Please note: The completeness, accuracy or current status of the investments referenced are not guaranteed.
ANALYST INSIGHT
Equity Research Analyst
"It seems we may be witnessing a turning point; as cap rates appear to have peaked, Dexus could be poised for a rebound. With a solid occupancy rate and a diverse funds management platform, the potential for growth is intriguing amid a stabilizing rental market."
Last Updated: 03 Nov 2025
Query The Data
Frequently Asked Questions
Who is investing in Dexus (ASX:DXS)?
Fund managers including Oracle Advisory Group, Ten Cap, Antares Capital, Wilson Asset Management, Clime Investment Management and Pendal Group have invested in Dexus (ASX:DXS).
Why do fund managers invest in Dexus?
Fund managers invest in Dexus due to signs of stabilization in capitalisation rates, which have peaked and are expected to decline, improving the valuation of the company. With a Net Tangible Asset (NTA) that has likely bottomed out and a strong occupancy rate of 93.5% in Office and 95.7% in Industrial segments, Dexus is positioned well in prime CBD locations. The diversified $38.9 billion Funds Management platform, which offers higher margins and growth rates, further enhances its attractiveness. Additionally, a 5% dividend yield provides a compelling incentive for investment.
What happened to Dexus (ASX:DXS)?
Fund managers, including Pendal Group, have invested in Dexus due to its substantial leasing spreads and under-rented portfolio, despite recent declines in occupancy rates and increased incentives. The industrial sector shows resilience with solid leasing performance, indicating potential for future growth.