Dexus · ASX:DXS
Dexus — DEXUS Property Group — Investor Day (October 2016)
56 slides from Dexus's investor day presentation, Oct 25, 2016
Slide 1: 2016 Investor Day ASX release
DEXUS Property Group (ASX: DXS) ASX release 25 October 2016 2016 Investor Day For personal use only DEXUS Property Group (DEXUS) provides the presentation that will be presented today at its 2016 Investor Day event. A webcast of the presentation will commence at 11.00am and will be available at www.
Slide 2: DEXUS Property Group Investor Day
DEXUS PROPERTY GROUP INVESTOR DAY - 25 OCTOBER 2016 For personal use only
Slide 3: 2016 Investor Day Presentation
DEXUS PROPERTY GROUP 2016 INVESTOR DAY PRESENTATION – 25 OCTOBER 2016 For personal use only DEXUS Funds Management Limited ABN 24 060 920 783 AFSL DEXUS238163 as responsible Property entity for DEXUS Group – [presentation title]Property Group Slide 1 DARREN STEINBERG DEXUS Property Group – 2016 [pre
Slide 4: Agenda
AGENDA SESSION 1 SPEAKERS 11.00am WELCOME Darren Steinberg STRATEGY – Leadership in office Ross Du Vernet - Funds management partner of choice CREATING VALUE THROUGH: For personal use only - Technology & Innovation Mark Hansen – Customer focus Deborah Coakley – Leasing Kevin George, Chris Hynes, And
Slide 5: Commitment to strategy
COMMITMENT TO STRATEGY DEXUS’S ASPIRATION - EXTRACT FROM 2012 ANNUAL PROGRESS TO DATE RESULTS & STRATEGIC REVIEW PRESENTATION Proxy for high quality Australian CBD office Leveraged multi-sector capabilities and scale to access diverse pools of capital For personal use only Actively acquired, d
Slide 6: Leadership in office
LEADERSHIP IN OFFICE Leadership in office = superior investment performance AND the best customer experiences Core capabilities Customer orientation For personal use only Asset management Property Identification of management customer needs Leasing and the capability Development Superior to
Slide 7: Performance underpinned by customer focus
LEADERSHIP IN OFFICE – Performance underpinned by customer focus Real estate performance Customer orientation DEXUS balance sheet – office portfolio returns Customer focus driving improved NPS 20% 40 16.0% 33 16% 14.6% 28 11.7% 11.0% 11.7% 10.9% 30 For personal use only 12% 18 20 8% 4% 10 0% – DEXUS
Slide 8: Relevance of scale to investment performance
LEADERSHIP IN OFFICE – Relevance of scale to investment performance Increased diversity Increased portfolio scale Reduced operating costs of income $9.2bn 39% Top 10 customers (% of income) +$4.5bn +24 67 bps 32bps 50 16ppt increase properties reduction reduction No. of office properties For persona
Slide 9: Funds management partner of choice
LEADERSHIP IN OFFICE – Capabilities and product development For personal use only DEXUS Property Group – 2016 Investor Day Slide 13 FUNDS MANAGEMENT PARTNER OF CHOICE – Aligned to leadership in office SCALE CAPABILITY CULTURE Doubles CBD office footprint Development and Stable scalable team aligned
Slide 10: Funds management partner of choice - assets under management
FUNDS MANAGEMENT PARTNER OF CHOICE – Aligned to leadership in office ASSETS UNDER MANAGEMENT OFFICE INVESTMENT ACTIVITY1 DEXUS Portfolio (Balance Sheet) Total value Total value $6.9bn $1.7bn 16% 100% $11.0bn DEXUS Group For personal use only 80% 45.1% 50.0% 19% 84% 60% Office Industrial $22.2bn 40%
Slide 11: Strategy summary
STRATEGY – Summary Two key strategic objectives - Leadership in office and partner of choice in funds Leadership in office – Must ultimately translate to investment outperformance – Customer orientation key For personal use only Scale critical to improving the customer experience – people & pr
Slide 12: Technology approach and initiatives
TECHNOLOGY – DEXUS’s approach Customer Delivering superior customer experience through technology and Solutions innovation For personal use only Operating Improving operational agility and reducing costs to serve by delivering Platforms integrated and scalable technologies Business Empowering our pe
Slide 13: Blueprint for smart buildings
TECHNOLOGY – Blueprint for smart buildings Customer Solutions …superior customer experience Building Management Systems Digital Systems Management Lift controls Cyber security For personal use only Environmental controls Security centralised operations Enterprise Applications CCTV and access control
Slide 14: Data management and reporting
TECHNOLOGY – Data management and reporting Business Intelligence …accelerating business performance Where we started What it looks like today For personal use only Standardised Reporting TM1 Data Consolidation Data Warehouse Structured Source DEXUS Property Group – 2016 Investor Day Slide 23 INNOVAT
Slide 15: Customer focus
CUSTOMER FOCUS – Deborah Coakley For personal use only DEXUS DEXUS Property Property Group Group –– 2016 [presentation 2016 Investor Investor title] Day Day Slide Slide 25 CUSTOMER FOCUS – Why has DEXUS adopted a customer-centric approach? VALUE ADD ALIGNING DELIVERY DIFFERENTIATION TOUCH POINTS A
Slide 16: Customer initiatives
CUSTOMER FOCUS – Customer initiatives CREATING INTEGRATED COMMUNITIES On-line portal DEXUS building DEXUS Place Products & Five Star Service DEXUS Place Technology For personal use only services DEXUS Suites <500 sqm 3-5 year leases Expansion of DEXUS network & brand Traditional leases Third party C
Slide 17: Launch of Childspace and satisfaction measures
CUSTOMER FOCUS – Launch of Childspace For personal use only DEXUS Property Group – 2016 Investor Day Slide 29 CUSTOMER FOCUS – Measuring satisfaction and probability of recommendation Recommendation / Overall Satisfaction with Net Promoter Score property manager Total Portfolio 2016 2015 2013 4 2014
Slide 18: DEXUS ranks highly in NPS
CUSTOMER FOCUS – DEXUS ranks highly in NPS versus B2C groups NPS LEADERS BY INDUSTRY IN AUSTRALIA -60 -50 -40 -30 -20 -10 0 +10 +20 +30 +40 +50 +60 +70 Aldi Retail EBay Optus Telecom B2B For personal use only Utilities NPS scores AGL are typically Property +28 lower than B2C Airlines Virgin Financia
Slide 19: Overview of office customer base
CUSTOMER – Overview of office customer base Majority of DEXUS’s office portfolio is occupied by a relatively small number of large space occupiers Most customers are SMEs without specialist in-house real estate resources OFFICE CUSTOMERS BY NLA DIVERSITY OF OFFICE CUSTOMERS BY INCOME less than 500sq
Slide 20: Group asset management and leasing structure
LEASING – Group asset management and leasing structure Office & Industrial Kevin George Office & Industrial asset management For personal use only Head of Head of Head of Office Head of Office Head of Office Head of Industrial Property Portfolio - 1 Portfolio - 2 Portfolio - 3 Leasing Portfolio Mana
Slide 21: Leasing approach
LEASING APPROACH Forward leasing - solving for future leasing risks Live data Meeting review Strategy Property portfolio Review and execution For personal use only Vacancies - Solving for available space Strategy Agency selection Marketing strategy Review and execution Leasing campaign DEXUS Propert
Slide 22: Leasing - Office: lease structures and expiry profile
LEASING – OFFICE For personal use only DEXUS Property Group – 2016 [presentation Investor title] Day Slide 39 LEASING – OFFICE: Lease structures and lease expiry profile Standard annual fixed increases of 3.5-4% (Sydney pushing to 4%+) 8-15% of leases (by income) expire each year Average lease
Slide 23: Office portfolio opportunities and challenges
LEASING – OFFICE: Portfolio opportunities and challenges SYDNEY (60% of DEXUS’s office portfolio1) MELBOURNE (13% of DEXUS’s office portfolio1) OPPORTUNITY: 66% of FY17, 52% of FY18 and 72% of OPPORTUNITY: Pre-leasing 180 Flinders Street, FY19 office expiries located in Sydney - where demand Mel
Slide 24: Pitt Street, Sydney - capitalising on demand
LEASING – OFFICE: 56 Pitt Street, Sydney - capitalising on demand DEXUS APPROACH Sydney A & B grade office demand has increased substantially over the past 12 months as a result of building withdrawal in the CBD, mainly being driven by the Sydney Metro as well as residential conversion opportuniti
Slide 25: The Bond leasing success
LEASING – OFFICE: 30 The Bond leasing success DEXUS APPROACH Expression of Interest Campaign to the market during lease surrender negotiations with Lend Lease ensured we had a list of tenants to attract to the asset, minimising downtime Transform into multi-tenanted asset rather than single For
Slide 26: Leasing - Industrial: lease structures and expiry profile
LEASING – INDUSTRIAL – Mark Cuddy For personal use only DEXUS Property Group – 2016 Investor Day Slide 47 LEASING – INDUSTRIAL: Lease structures and lease expiry profile Standard annual fixed increases of 3-3.5% 10-20% of leases (by income) expire each year Negative rent reversion common in In
Slide 27: Industrial driving performance and value-add
LEASING – INDUSTRIAL: Driving performance and value-add opportunities STRONG PERFORMANCE IN SEPTEMBER 2016 QUARTER DEXUS INDUSTRIAL BY LOCATION SA 3% 158,811 square metres leased across 47 deals QLD 5% during the quarter Occupancy from 90.4% at 30 June 2016 to 92.3% VIC 40% NSW 52% For personal us
Slide 28: Securing FedEx at Military Road, Matraville
LEASING – INDUSTRIAL: Securing FedEx at 2-4 Military Road, Matraville DEXUS APPROACH Acquired in December 2009 in line with DEXUS’s strategy Salmat vacated in March 2015, leaving 18,000sqm to lease Tailored leasing strategy to high volume/just in time express couriers that were highly dependan
Slide 29: Development team
DEVELOPMENT – Paul Oates, Chris MacKenzie For personal use only DEXUS Property Group – 2016 [presentation Investor title] Day Slide 53 DEVELOPMENT – O&I development team Development Office Industrial City Retail Finance & Analytics 15+ Development Professionals Planning & Authority Approvals DEXUS P
Slide 30: Development rationale, parameters and capabilities
DEVELOPMENT – Rationale & Parameters RATIONALE Customers Quality Portfolio For personal use only Highest and Best Use Enhanced Returns PARAMETERS <15% of FUM allocated to development and trading activities HURDLES Yield on Cost >7% Development Margin >10% IRR target>10% DEXUS Property Group – 2016 I
Slide 31: Development pipeline in detail
DEVELOPMENT – Development excellence method Live demonstration of internal system used for Development (system contains DEXUS proprietary information and no visual slides have been provided for this section) For personal use only Development Introduction Excellence Method Change Request (DEM) Docume
Slide 32: 100 Mount Street, North Sydney
DEVELOPMENT – 100 Mount Street North Sydney - Perspective 41,419sqm premium tower 15-year low market vacancy expected at completion For personal use only DEXUS Property Group – 2016 Investor Day Slide 59 DEVELOPMENT – 100 Mount Street, North Sydney - Ground floor plane Located next to North Sydney m
Slide 33: Mount Street North Sydney elevation
DEVELOPMENT – 100 Mount Street, North Sydney - Elevation For personal use only DEXUS Property Group – 2016 Investor Day Slide 61 DEVELOPMENT – 180 Flinders Street, Melbourne – Site location DEXUS Property Group – 2016 Investor Day Slide 62 32 DEXUS PROPERTY GROUP - 2016 INVESTOR DAY
Slide 34: 180 Flinders Street, Melbourne proposed building
DEVELOPMENT – 180 Flinders Street, Melbourne – Proposed building 22,765sqm of office space Currently seeking pre-commitment For personal use only DEXUS Property Group – 2016 Investor Day Slide 63 DEVELOPMENT – 180 Flinders Street, Melbourne – Building components DEXUS Property Group – 2016 Investor
Slide 35: Flinders Street proposed atrium
DEVELOPMENT – 180 Flinders Street, Melbourne – Proposed atrium For personal use only DEXUS Property Group – 2016 Investor Day Slide 65 DEVELOPMENT – Waterfront Precinct concept – Brisbane River Masterplanning phase Mixed use – office, retail, residential DEXUS Property Group – 2016 Investor Day Slid
Slide 36: Waterfront Precinct concept, Brisbane
DEVELOPMENT – Waterfront Precinct concept – Waterfront Five assets covering 3.5ha Existing three assets owned by DEXUS and two third party partners For personal use only DEXUS Property Group – 2016 Investor Day Slide 67 DEVELOPMENT – Gateway – Elevation DEXUS Property Group – 2016 Investor Day Slide
Slide 37: Gateway before development
DEVELOPMENT – Gateway before development For personal use only DEXUS Property Group – 2016 Investor Day Slide 69 DEVELOPMENT – Gateway – Ground floor today DEXUS Property Group – 2016 Investor Day Slide 70 36 DEXUS PROPERTY GROUP - 2016 INVESTOR DAY
Slide 38: Established industrial development track record
DEVELOPMENT – Established Industrial track record decade DEXUS APPROACH SOME OF OUR INDUSTRIAL CUSTOMERS To develop modern, functional and high quality facilities that deliver superior long term property solutions to our customers National approach – founded upon partnership, tailored and flexib
Slide 39: Larapinta speculative development
DEVELOPMENT – Hemmant – Perspective For personal use only DEXUS Property Group – 2016 Investor Day Slide 73 DEVELOPMENT – Larapinta – Success with speculative development DEXUS APPROACH Acquisition strategy: 50% prelease & speculative development With subdued industrial tenant enquiry, low vacan
Slide 40: Transactions and trading overview
TRANSACTIONS – Andrew Whiteside, Michael Kwok For personal use only DEXUS Property Group – 2016 Investor Day Slide 75 TRANSACTIONS & TRADING – Overview +$13bn of transactions across the Group and c$150m of trading profits since the start of FY12 Expertise - opportunities reviewed Product mix - acqui
Slide 41: Transactions approach and process
TRANSACTIONS – Approach and process 1 Origination Research led Opportunity led Proprietary research - target sectors, Relationships, situations requiring scale, sub-markets, asset characteristics etc. speed, or certainty Asset classes Investment strategy 2 Focus and Strategy Office Industrial Retail
Slide 42: Divestment of Southgate, Melbourne
TRANSACTIONS – Divestment of Southgate, Melbourne DEXUS APPROACH Owned and added incremental value over the past 20 years — Received compelling unsolicited offers - two parties selected to enter a short competitive process — ARA managed fund was selected based on their flexibility to transact in t
Slide 43: Trading approach and methodology
TRADING – Brenton McEwan For personal use only DEXUS Property Group – 2016 Investor Day Slide 81 TRADING – Approach and Methodology 1 Focus and Strategy Investment strategy Core Development Trading (manufacture core) 2 Due diligence & asset planning undertaken Balance Sheet Assets Acquisitions Quali
Slide 44: Leveraging capabilities to deliver trading profits
TRADING – Leveraging capabilities to deliver profits c. $150m of trading profits delivered over four years at an average unlevered IRR of 23.5% Trading property source Sector Trading strategy Acquired for Industrial Repositioned purpose 4 Office Developed of trading properties 5 6 properties propert
Slide 45: Trading - Lakes Business Park, Botany
TRADING – 105 Phillip Street, Parramatta For personal use only DEXUS Property Group – 2016 Investor Day Slide 85 TRADING – Lakes Business Park, Botany DEXUS APPROACH Lakes Acquired in January 2015, comprising two adjoining sites Site: 7.9ha Lettable: 43,617sqm located in southern Sydney Office: 30
Slide 46: Funds management overview
FUNDS MANAGEMENT – Graham Pearson For personal use only DEXUS Property Group – 2016 Investor Day Slide 87 FUNDS MANAGEMENT – Overview FUNDS MANAGEMENT HIGHLIGHTS $11.2bn Funds under management, up 99.5% since FY12 >$7.0bn equity attracted to platform since 2010 69 Investors from 7 countries BENEFITS
Slide 47: Sustainable business model
FUNDS MANAGEMENT – Sustainable business model High quality diversified wholesale investor base Other 4% Insurance 7% Govt Super — Long-term and like-minded partners 21% Best practice corporate governance Super Fund 18% Demonstrated investor liquidity Focus on annuity-style fees Diversified F
Slide 48: Best practice corporate governance
FUNDS MANAGEMENT – Best practice corporate governance Comprehensive suite of practical compliance policies and procedures, including — Clear ‘rotation’ policy for allocation of property transactions across sectors — Leasing conflict management by segregation of client interests For personal use only
Slide 49: Driving outperformance
FUNDS MANAGEMENT – Driving outperformance DWPF CONSISTENTLY DELIVERING LONG TERM BENCHMARK OUTPERFORMANCE 16% 14% DWPF 12% Benchmark 10% 8% For personal use only 6% 4% 2% 0% 1 year 3 years 5 years 7 years DEXUS OFFICE PARTNERSHIP Delivered a property level total return of 17.5% for 12 months to 30 S
Slide 50: Funds management - what's next
FUNDS MANAGEMENT – What’s next Organic growth of existing funds/partners through — $3.0bn development pipeline1 — Value-driven acquisitions and — Value-add through active asset management Implement new business initiatives which For personal use only — Complement the existing platform — Meet dem
Slide 51: Closing remarks
CLOSING REMARKS Demonstrated abilities to create value across the Group Differentiated offering and product through customer orientation Experienced capable and efficient team committed to driving performance Identified opportunities to add future value For personal use only DEXUS Property G
Slide 52: Important information
IMPORTANT INFORMATION This presentation is issued by DEXUS Funds Management Limited (DXFM) in its capacity as responsible entity of DEXUS Property Group (ASX:DXS). It is not an offer of securities for subscription or sale and is not financial product advice. Information in this presentation incl
Slide 53: Gateway, Macquarie Place, Sydney
GATEWAY, 1 MACQUARIE PLACE, SYDNEY Gateway forms part of Circular Quay’s new retail and dining precinct and offers 4,600 square metres of premium food and beverage opportunities over three levels. Gateway is set to become an iconic harbourside destination, both day and night. For personal use only A
Slide 54: For personal use only
For personal use only NEPTUNE PALACE HERO COMMERCIAL SUSHI LIFT TRAIN CARPARK LIFT VOID LEVEL OFFICE 1 CONCIERGE BURGER PROJECT VOID CHAT TOKYO THAI LAUNDRY SEATING SEATING ESPRESSO ROOM CHAT THAI TOKYO LAUNDRY Key VOID WINTERGARDEN Concierge Lift FIRE ESCAPE STAIRS Escalator Stairs PARAGON HOTEL Ma
Slide 55: Notes / About DEXUS
NOTES For personal use only ABOUT DEXUS DEXUS Property Group is one of Australia’s leading real estate groups, investing directly in high quality Australian office and industrial properties. With $22.2 billion of assets under management, the Group also actively manages office, industrial and retail
Slide 56: For personal use only
DEXUS PROPERTY GROUP - 2016 INVESTOR DAY - 25 OCTOBER 2016 For personal use only DEXUS PROPERTY GROUP - 2016 INVESTOR DAY 55