News: DXS UPDATE 1-Australia's Dexus flags $867 mln decline in portfolio valuation

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June 20 (Reuters) - Australian real estate firm Dexus (DXS) said on Thursday the book value of its portfolio declined by 9%, or A$1.3 billion ($867.36 million), for the six months to June according to a draft external independent valuation.

The domestic real estate market, particularly office and retail, has been battling a downturn as the work-from-home trend and e-commerce constraints pressure valuations, with higher interest rates also lowering building values and raising debt costs.

Shares of Dexus fell as much as 1.8% as of 0007 GMT to hit their lowest in more than seven months, while the benchmark index (xjo) was largely unchanged.

The stock had declined nearly 15% this year by Wednesday's close as the company posted its second-biggest half-yearly loss since 2008 in February and valuations of its properties slide further.

"The investment metrics displayed by recent sale activity support a softening in office market valuations," said Ross Du Vernet, Dexus Group CEO and Managing Director.

"However, as a long-term investor, we have confidence in the value of our high-quality portfolio through the cycle."

The draft external independent valuation covered 170 of the company's 176 assets, Dexus said.

The valuations of its office portfolio decreased by 11.3%, while those of the industrial portfolio declined by 1.2%.

The weighted average capitalisation rate - a metric to measure return on investment of real estate assets - across the company's portfolio increased to 5.87% from 5.45% at December-end. ($1 = 1.4988 Australian dollars)