Dexus Industria Reit · ASX:DXI
Dexus Industria Reit — FY2023 Earnings Presentation
39 slides from Dexus Industria Reit's earnings presentation, Aug 9, 2023
Slide 1: Dexus Industria REIT ASX release
Dexus Industria REIT (ASX:DXI) ASX release 9 August 2023 2023 Annual Results presentation and property synopsis Dexus Industria REIT (DXI) releases its 2023 Annual Results presentation. An investor conference call will be webcast at today at 10.00am on www.dexus.com/investor-centre The property syno
Slide 2: 2023 Full Year Results
2023 Full Year Results 9 August 2023 Dexus Asset Management Limited ACN 080 674 479, AFSL 237500 as responsible entity for Industria Trust No. 1, Industria Trust No. 2, Industria Trust No. 3 and Industria Trust No. 4 Industria Company No. 1 Limited ACN 010 794 957
Slide 3: Acknowledgement of country
Acknowledgement of country Dexus Industria REIT acknowledges the Traditional Custodians of the lands on which our business and assets operate, and recognises their ongoing contribution to land, waters and community. We pay our respects to First Nations Elders past and present. Artwork: The Land and
Slide 4: Agenda
Agenda Introduction and highlights page 4 Financial overview page 9 Portfolio performance and market dynamics page 13 Summary page 20 Appendices page 22 3 2023 Full Year Results Presentation 1-3 Westrac Drive, Tomago NSW
Slide 5: Introduction and highlights
Introduction and highlights Strategy and highlights
Slide 6: DXI investment proposition
DXI investment proposition Generating superior risk-adjusted returns for investors seeking listed industrial real estate exposure in Australia Delivering organic Conservatively managing the Creating value through Aligned manager with deep real income growth balance sheet active management asset capa
Slide 7: FY23 highlights
FY23 highlights Delivered guidance and strengthened balance sheet Delivered on FY23 guidance › FFO of 17.1cps and distributions of 16.4cps Actively positioned for future growth › Executed $250 million of divestments at an average yield of 4.2%1; recycling into new development opportunities at target
Slide 8: High-quality portfolio generating income growth
High-quality portfolio generating income growth High occupancy with annual reviews, reversion and development upside Property Income resilience Growth 94 $1.6bn 135,700sqm 97.5% 6.3 year 170+ +24% 6% $237m properties portfolio total leasing1 occupancy WALE diversified 2H23 industrial target developm
Slide 9: Sustainability progress
Sustainability progress Net zero status maintained for managed assets DXI initiatives Dexus group initiatives FY23 ESG initiatives Supply chain Workplace Reflect monitoring inclusion Reconciliation Implemented EcoVadis Dexus was recognised as a Action Plan (RAP) Net zero1 2.3MW of solar Operational
Slide 10: Financial overview
Financial overview Strategy and highlights
Slide 11: FY23 financial result
FY23 financial result Delivered on guidance Profit & loss FY23 FY22 Change › Contracted rent reviews averaging 4.9% and full-period contribution Property FFO ($m) 83.4 73.7 13.3% from Jandakot, partially offset by asset sales Management fees ($m) (8.7) (7.0) 24.8% › Full-period impact of Jandako
Slide 12: Balance sheet and capital management
Balance sheet and capital management Strengthened the balance sheet with $250 million of asset sales1 Proactively positioning the balance sheet Key metrics3 30 Jun 2023 30 Jun 2022 › Repaid debt with asset sale proceeds to reduce gearing and enhance Balance sheet gearing 20.4%1 28.9% natural hedging
Slide 13: Portfolio valuation movements
Portfolio valuation movements Value reduction driven by divestments and cap rate expansion, partly offset by rents › 100% of portfolio revalued as at 30 June 20231 Property portfolio valuation summary – 30 Jun 20232 › Portfolio declined in value by $56.3 million: 30 Jun 2023 Cap rate › $26.7 million
Slide 14: Property performance and market dynamics
Property performance and market dynamics Strategy and highlights
Slide 15: Industrial performance
Industrial performance Leasing outcomes driving future property income growth Income growth › Average 5.0% rent reviews › 3.2% like-for-like income growth1, with inter-period vacancy negatively impacting $1.4bn 5.16% 100.0% 7.0 year 127,100sqm2 book value WACR occupancy WALE leased this by 2% (by in
Slide 16: Active asset management
Active asset management Executing initiatives to create value 78 Henderson Road, 80-96 South Park Drive, 34 Australis Drive, Rowville VIC Dandenong South VIC Derrimut VIC › Achieved 30% re-leasing › Worked with tenant to secure › Achieved 21% re-leasing spread on renewal early vacant possession to s
Slide 17: Jandakot performance
Jandakot performance Strong operating performance Stabilised portfolio › Average 5.4% rent reviews › 61% of income linked to CPI escalations › 45,300sqm leased1; 21.6% re-leasing spreads Jandakot Airport industrial precinct, Perth WA Developments › Targeting 6% yield on cost on new developments Rent
Slide 18: Developments
Developments Unlocking future growth › Remaining spend of $87 million on committed $39 million completed at Jandakot projects; and circa $150 million on › 50,400sqm completed and fully leased to Amazon, Hello uncommitted projects Fresh and Tyremax; Marley Spoon completed July 2023 › Amazon creates c
Slide 19: Market dynamics
Market dynamics Above-average demand and low vacancy leading to significant rent growth Structural level of demand vs. actual gross leasing Spec development and take-up to Q3’24 – Sydney and Perth sub-markets Million sqm Million sqm 4.5 0.6 › Anticipate over 2.8m-3.0m sqm required annually › Nationa
Slide 20: Brisbane Technology Park performance
Brisbane Technology Park performance Strong demand from life sciences tenants Continued leasing success › 8,700sqm leased equivalent to 27% of total area › 2,500sqm of leasing to technology and $169m 6.94% 85.7% 3.2 year 8,700sqm 5.8%1 book value WACR occupancy WALE leased like-for-like life science
Slide 21: Summary
Summary Strategy and highlights
Slide 22: Well placed to deliver long-term value
Well placed to deliver long-term value Embedded property income growth driven by development completions, double-digit re-leasing spreads achieved in FY23 and 50% of the portfolio linked to CPI rental escalations Resilient balance sheet well placed to fund growth initiatives with gearing below the t
Slide 23: Appendices
Appendices Strategy and highlights
Slide 24: Geographical presence
Geographical presence Exposure to all key markets in Australia Overview 94 assets New South Wales Western Australia $1.6bn value › Delivering new developments in core industrial markets with sub-1% vacancy › Perth’s leading master-planned estate with occupiers including Amazon, Hello › Leading inves
Slide 25: Market dynamics
Market dynamics Lack of available space has led to a rapid growth in rents Vacancy rates hit record lows across all markets Last 12 $/sqm months: 210 210 10% +32% 190 190 9% 8% 170 170 7% 150 150 6% +25% 130 130 +18% 5% +12% 4% 110 110 3% 90 90 2% 70 70 1% 50 50 0% Jun-13 Jun-13 Jun-15 Jun-15 Jun-17
Slide 26: Lease expiry profile
Lease expiry profile Industrial – 89% of portfolio value (% by total DXI income) 15.5% 8.3% 4.7% 3.1% 3.1% 5 Butler Boulevard, Adelaide Airport SA FY24 FY25 FY26 FY27 FY28 Brisbane Technology Park – 11% of portfolio value (% by total DXI income) 4.8% 3.3% 2.6% 1.2% 0.7% 1 West Park Drive, Derrimut V
Slide 27: Portfolio tenancy mix
Portfolio tenancy mix Tenant type (% by income) Tenant concentration (%) Tenant % portfolio income ASX listed Listed multinational WesTrac 16% National Australian Postal Corporation 4% Multinational Government Qube 3% 23% Private and other Sandvik 3% 28% Thornton Engineering 3% AAE Retail 3% Interac
Slide 28: Jandakot Airport industrial precinct
Jandakot Airport industrial precinct General aviation airport and Stabilised portfolio Development infrastructure operations › 100% occupancy (by income) › 19.1 year WALE (by income) › $145 million spend remaining (at DXI share) of › Recurring revenue through economic cycles, which $20 million commi
Slide 29: Jandakot
Jandakot Key metrics 55 assets $430m external valuation on investment property - $332m stabilised - $99m development $78m general aviation airport & infrastructure operations value1 338,100sqm development pipeline c. $201m development pipeline value c. $145m development spend remaining 6% target yie
Slide 30: Developments
Developments Building area (sqm Building area (sqm Development Project Project cost est.1 Remaining spend1 Est. yield on cost2 Est. final completion at 100%) at DXI ownership) status Completed Tyremax – Jul 22 Jandakot, WA 50,400 16,800 Completed $39m - 5.2% Amazon – Oct 22 Hello Fresh – May 23 Comm
Slide 31: Divestments
Divestments Settled # assets Price Settlement 1A & 1C Homebush Bay Drive, Rhodes NSW 2 $160.5m 30 Nov 22 To be settled # assets Price Settlement 16-28 Quarry Road, Stapylton QLD 1 $66.9m Oct 23 3 & 4 Forbes Close, Knoxfield VIC 2 $22.9m Aug 23 30 2023 Full Year Results Presentation 2 Maker Place, Tr
Slide 32: Independent valuations
Independent valuations Occupancy by Occupancy by Reval gain / Cap rate mvmt Property income (%) area (%) Book value ($m) (loss) ($m) Cap rate (%) (bps) 34 Australis Drive, Derrimut VIC 100% 100% $48.4 $6.0 4.88% 38 bps 80-96 South Park Drive, Dandenong South VIC 100% 100% $38.0 $(0.4) 5.50% 75 bps 1
Slide 33: Independent valuations (cont'd)
Independent valuations (cont’d) Occupancy by Occupancy by Reval gain / Cap rate mvmt Property income (%) area (%) Book value ($m) (loss) ($m) Cap rate (%) (bps) 9 Boron Street, Naranga QLD 100% 100% $45.8 $0.4 5.50% 88 bps 2 Maker Place, Truganina VIC 100% 100% $71.0 $0.8 4.50% 50 bps Jandakot – sta
Slide 34: Profit & loss and FFO reconciliation
Profit & loss and FFO reconciliation Direct investments Joint ventures1 Total portfolio (100% owned) $’000 FY23 FY22 FY23 FY22 FY23 FY22 Property revenue 77,623 77,279 27,157 15,692 104,780 92,971 Property expenses (14,993) (15,552) (6,363) (3,766) (21,356) (19,318) Property FFO 62,630 61,727 20,794
Slide 35: Summary balance sheet and gearing
Summary balance sheet and gearing Summary balance sheet Gearing (reported) $’000 30 Jun 2023 30 Jun 2022 $’000 30 Jun 2023 30 Jun 2022 Cash and cash equivalents 5,514 5,583 Balance sheet gearing Investment properties 1,016,000 1,319,450 Drawn debt 379,250 480,500 Equity accounted investments 391,733
Slide 36: Book value reconciliation
Book value reconciliation Direct investments Joint ventures1 Total portfolio (100% owned) $’000 30 Jun 23 30 Jun 22 30 Jun 23 30 Jun 22 30 Jun 23 30 Jun 22 Investment properties 1,016,000 1,319,450 - - 1,016,000 1,319,450 Investments accounted for using the equity method - - 452,044 412,074 452,044
Slide 37: Look-through interest rate hedging profile
Look-through interest rate hedging profile 400 4.5% 370 4.0% 350 4.0% 3.6% 297 3.5% 300 3.0% 250 2.6% 2.5% 2.2% 200 183 1.7% 2.0% 150 1.5% 102 100 1.0% 50 50 0.5% 0 0.0% FY24 FY25 FY26 FY27 FY28 Debt hedged (LHS) Weighted average hedge rate excl margin (RHS) 36 2023 Full Year Results Presentation
Slide 38: Important information
Important information This presentation (“Material”) has been prepared by Dexus Asset Management Limited (ACN 080 674 479, AFSL No. 237500) ("DXAM") as the responsible entity of Industria Trust No. 1 (ARSN 125 862 875), Industria Trust No. 2 (ARSN 125 862 491), Industria Trust No. 3 (ARSN 166 150 93
Slide 39: dexus
dexus