Dexus Cites Infrastructure Headwinds, Lowers FY27 Outlook

Dexus has started a strategic review of its infrastructure funds after announcing a significant increase in annual profit but warning of weaker results ahead.

The Sydney-based property and funds manager reported a statutory net profit after tax of $482.2 million for the 12 months ending June 30, compared with $136.1 million the previous year. Stabilising capitalisation rates and asset revaluations drove the rise, according to the company.

Redemptions and liquidity pressures

Clients in Dexus’s fund management division have been adjusting strategies, increasing redemption requests. The $1.1 billion Dexus Healthcare Property Fund has faced the most pressure, prompting consultations with investors.

“Excluding this fund, the real estate redemption queue has returned to normal levels, showing improved investor confidence in core real estate and better liquidity management,” the company stated. It will streamline smaller funds as part of an update to its offerings.

For the financial year ending June 2027, Dexus anticipates lower contributions from performance fees and trading profits, which reached unusually high levels in the current period. Higher finance costs, the completion of Atlassian Central, and reduced contributions from funds under review will also impact results.

Infrastructure funds under review

Dexus has initiated a strategic review of infrastructure funds and mandates obtained from AMP Capital in 2023. The process covers $7.3 billion in third-party funds under management, including:

Dexus Diversified Infrastructure Trust (DDIT)

Dexus Community Infrastructure Fund (CommIF)

Dexus Core Infrastructure Fund (DCIF)

Australia Pacific Airports Fund vehicles (APAFs)

Infrastructure mandates and separately managed accounts

The review seeks to resolve issues that have arisen since the acquisition and decide the best approach for investors. Possible outcomes include restructuring, consolidation, refining investment strategies, or partial or full liquidation.

Many of the funds under review hold stakes in Australian Pacific Airports Corporation (APAC), which operates Melbourne and Launceston airports. Progress on the review may hinge on the resolution of an ongoing legal dispute. In May, the Supreme Court rejected Dexus’s attempt to block a default notice from fellow APAC shareholders led by IFM Investors. Dexus has since appealed, with a hearing set for October 2026.

The APAC stake was part of the 2023 deal that brought the infrastructure funds under Dexus’s control. Legal uncertainty has slowed the review, leaving some investors waiting while the company evaluates its options.

Dexus describes the review as a necessary move to align its fund offerings with investor expectations. The process will focus on transparency and long-term value, even if short-term financial effects are negative.

The timing presents challenges. The company expects a decline in trading profits and performance fees after a strong FY26. Higher borrowing costs and the completion of major projects like Atlassian Central add pressure for the next 12 months.

The review’s outcome may depend on resolving the APAC dispute. Until then, Dexus and its investors remain in a holding pattern.

Dexus reiterated its commitment to acting in investors’ best interests but acknowledged the path forward is uncertain. Over 70 parties are involved in consultations, and each fund’s viability will be assessed individually.

The company did not provide a timeline for completing the review but noted some decisions may not be possible until the APAC appeal concludes next year.

Before the Bain transaction, Perpetual expects adviser growth to support its position in the market.