DXS
The DXS result was a good one.
Segment revenues continue to grow, particularly the enlarged funds management arm, which has benefited from M&A (e.g. taking over the AMP property funds).
As such funds from operations continues to grow…
Occupancy continues to trade well, as higher incentives ensure spaces are kept filled. We regard that as the critical bit – taking a hit on rent renewals is a vastly better outcome than unoccupied floors.
In the above graph, we looked at individual stocks segment occupancy, below, we look at company aggregates when bundled into sectors. The two graphs together help get a sense of what’s happening industry wide. COF, DXS, and the office segments of GPT, MGR suggest that office occupancy rates remain reasonable, and that the “death of the office” has been exaggerated.
And cap rates have either tightened, or remained roughly the same.
Look through gearing has risen, through acquisitions, but remains at the bottom end of the target range (30-40%).
Guidance is for distribution growth of not less than 2%, and we continue to view the stock as reasonably priced.
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