UPDATE 2.50pm Dexus Property Group is selling off billions of dollars worth of overseas office blocks and industrial sites as it switches focus to Australia to drive its earnings higher.
Unveiling a steep 67 per cent drop in full year profit on Thursday, Dexus said it was pulling out of Europe, the United States and New Zealand following a strategic review.
It has already sold 65 industrial properties in the US and now has the ‘for sale’ signs up at the remaining 24 sites there plus one in Germany, five in France and one in New Zealand.
The company plans to have completed its withdrawal from overseas markets within the next 12 to 18 months so it can focus on Sydney, Melbourne, Brisbane and Perth instead.
Dexus believes that while activity in the Australian office and industrial property markets will remain subdued in fiscal 2013, there will be improvements the following year once the benefits of lower interest rates flow through.
Despite Dexus’ net profit falling to $181.1 million in the year to June 30, from $553 million in 2011/12, chief executive Darren Steinberg is upbeat about an improved performance in this year.
He flagged a lift in earnings per security of 1.3 per cent to 7.75 cents.
On a like-for-like basis, excluding Dexus’ US central portfolio which was sold for $771.1 million in June, earnings are expected to rise by 5.2 per cent.
“We are starting to see an improvement in business confidence but obviously consumers aren’t there yet,” Mr Steinberg told AAP.
“As a result of the work we have done this year we are in a very good position to continue to grow our earnings.”
Mr Steinberg, who took on the top job at Dexus in March, said the group had a long list of potential office acquisitions in Australia.
As part of its renewed focus on Australia, Dexus has bought two more office properties - one in Sydney for $58.5 million and another in Brisbane for $241.6 million.
Dexus blamed its profit fall in 2011/12 on unrealised market-to-market movements in hedging contracts as a result of lower market interest rates.
Lower revaluation gains during the year and costs associated with the sale of its 65 US industrial properties also hit the bottom line result.
Dexus expects Australian office markets to experience cyclical slow tenant demand in fiscal 2013 before improving in 2014 as business confidence improves and lower interest rates take effect.
In the Australian industrial properties market, the weakness in demand for space is also expected not to pick up until 2014.
Dexus declared a final distribution of 5.35 cents, up 3.3 per cent on the previous year.
Its securities closed 2.5 cents lower to 97 cents