Dexus · ASX:DXS
Dexus — DEXUS Property Group — Merger or Acquisition (December 2015)
29 slides from Dexus's merger presentation, Dec 18, 2015
Slide 1: DEXUS and IOF enter into Implementation Agreement presentation
DEXUS Property Group (ASX: DXS) ASX release 18 December 2015 DEXUS and IOF enter into Implementation Agreement presentation For personal use only DEXUS Funds Management Limited, the responsible entity of DEXUS Property Group (DEXUS) refers to its announcement released to the ASX today concerning DEX
Slide 2: DEXUS Property Group and Investa Office Fund enter into Implementation Agreement
DEXUS PROPERTY GROUP DEXUS Property Group and Investa Office Fund enter into Implementation Agreement 18 December 2015 For personal use only DEXUS Funds Management Limited ABN 24 060 920 783 AFSL Combination 238163 of as DEXUS responsible Property entity Group for DEXUS and Investa Property Office G
Slide 3: Important Notice and Disclaimer
IMPORTANT NOTICE AND DISCLAIMER This presentation is issued by DEXUS Funds Management Limited (―DXFM‖) in its capacity as responsible entity of DEXUS Property Group (ASX:DXS) (―DEXUS‖) comprising DEXUS Diversified Trust (―DDF‖), DEXUS Industrial Trust (―DIT‖) DEXUS Office Trust (―DOT‖) and DEXUS Ope
Slide 4: Proposal Overview
PROPOSAL OVERVIEW DEXUS Property Group (―DEXUS‖) and Investa Office Fund (―IOF‖) (together the ―Combined Entity‖) have entered into an Implementation Agreement (―MIA‖) (the ―Proposal‖) For personal use only ― Implied equity value of $2.5 billion and enterprise value of $3.5 billion1 The Proposal
Slide 5: Key Details of the Proposal
KEY DETAILS OF THE PROPOSAL 1 DEXUS offer comprises 0.4240 DEXUS Securities and $0.8229 cash per Offer price: $4.1147 IOF Unit, implying a value of $4.1147 per IOF Unit1 For personal use only 7.4% 6.7% 5.2% 1.1% ―Mix and Match‖2 facility available, subject to scale-back on a pro rata $4.07 basis
Slide 6: Strategic Rationale
STRATEGIC RATIONALE For personal use only Combination DEXUS Property of DEXUS Group Property and Investa Group Office andFund Investa enter Office into Fund Implementation Agreement Slide 5 Slide 5
Slide 7: Strategic Rationale – Summary
STRATEGIC RATIONALE – SUMMARY Assets under Management ("AUM") increase to $24.1 billion, $17.5 billion of which is office property 1 Combination of two high quality complementary Increased exposure to office on DEXUS‘s balance sheet (89% from 85%) 1 For personal use only portfolios solidifying
Slide 8: Combination of Two High Quality Complementary Portfolios
COMBINATION OF TWO HIGH QUALITY COMPLEMENTARY PORTFOLIOS Over $17.5 billion1 in office AUM across the Group For personal use only 791 office properties located across Australian CBDs with a Prime grade focus Combined Entity – Key metrics Increased portfolio scale and expertise Combined DEXUS2,3 IOF4
Slide 9: Combination of Two High Quality Complementary Portfolios
COMBINATION OF TWO HIGH QUALITY COMPLEMENTARY PORTFOLIOS DEXUS1 + IOF2 = Combined Entity3 For personal use only WA SA ACT ACT SA ACT Geographic Exposure – Office WA WA 8% 2% 1% 3% 1% 2% 4% 7% QLD 14% NSW QLD QLD NSW NSW 16% 61% 58% 15% 60% VIC VIC VIC 12% 21% 15% Office Office Park Land/Dev Land/Dev
Slide 10: Examples of Premium-grade and A-grade properties
COMBINATION OF TWO HIGH QUALITY COMPLEMENTARY PORTFOLIOS Examples of Premium-grade properties Examples of A-grade properties For personal use only 1 Bligh St, Sydney Grosvenor Place, Sydney 45 Clarence St, Sydney 12 Creek St, Brisbane Ownership Ownership Ownership Ownership 33% 37.5% 100% 50% DEXUS1
Slide 11: >85% of IOF's tenant base represents new customers for DEXUS
COMBINATION OF TWO HIGH QUALITY COMPLEMENTARY PORTFOLIOS >85% of IOF’s tenant base represents new customers for DEXUS For personal use only Broadens DEXUS‘s exposure to Strong tenant representation Increased flexibility and ability to quality, blue chip tenants, across S&P/ASX 100, government, retai
Slide 12: Combined lease expiry profile provides opportunities to create value
COMBINATION OF TWO HIGH QUALITY COMPLEMENTARY PORTFOLIOS Combined lease expiry profile provides opportunities to create value For personal use only DEXUS‘s market leading team has substantial experience in managing leasing risks by anticipating customer needs and providing superior customer soluti
Slide 13: Combined portfolio diversifies asset and tenant exposures
COMBINATION OF TWO HIGH QUALITY COMPLEMENTARY PORTFOLIOS Combined portfolio diversifies asset and tenant exposures for both IOF and DEXUS For personal use only DEXUS‘s exposure to its Top 10 office properties DEXUS‘s exposure to its Top 10 office tenants reduces from 50% to 36% reduces from 32% to 2
Slide 14: Pro Forma Impact on DEXUS's Underlying FFO and MER
PRO FORMA IMPACT ON DEXUS’S UNDERLYING FFO AND MER Financially attractive transaction for DEXUS Security holders For personal use only FY16 Underlying FFO1 Impact per DEXUS Security impact assuming on 1 July 2015 implementation MER2 2.0% >6bps 60.0 0.50% +1.1 57.6 56.5 cents per stapled security 41b
Slide 15: Pro Forma Impact on DEXUS's Key Metrics
PRO FORMA IMPACT ON DEXUS’S KEY METRICS DEXUS’s balance sheet strength maintained and accretive to NTA per security For personal use only Impact on look-through Gearing1 Impact on NTA per security2 3.7% 2 cents 40.0% $8.00 33.9% Within DEXUS‘s $7.20 $7.22 35.0% $7.00 Look-through gearing (%) target
Slide 16: Balance Sheet Strength Maintained
BALANCE SHEET STRENGTH MAINTAINED DEXUS‘s strong and conservative capital structure maintained, including a diversified debt profile For personal use only Financing sources comprise credit approved bank debt with a 4 year term Pro forma look-through gearing is expected to increase 3.7% as a re
Slide 17: Implementation Process and Indicative Timetable
IMPLEMENTATION PROCESS AND INDICATIVE TIMETABLE For personal use only Combination DEXUS Property of DEXUS Group Property and Investa Group Office andFund Investa enter Office into Fund Implementation Agreement Slide 16Slide 16
Slide 18: Implementation Process
IMPLEMENTATION PROCESS Implementation of the Proposal requires approval by IOF Unitholders who are entitled to vote. Approval will be sought at the IOF Unitholder Meeting by both an ordinary resolution (50% vote threshold) and a For personal use only special resolution (75% vote threshold) of the
Slide 19: Indicative Implementation Timetable
INDICATIVE IMPLEMENTATION TIMETABLE Key Milestones Date1 For personal use only Process agreement signed and announced Monday, 7 December 2015 Announcement of entry into MIA Friday, 18 December 2015 DEXUS HY16 results Wednesday, 17 February 2016 IOF HY16 results Thursday, 18 February 2016 DEXUS HY16
Slide 20: Summary
SUMMARY DEXUS and IOF have entered into an Implementation Agreement For personal use only The Proposal provides a number of enduring benefits for new and existing DEXUS Security holders: ― Combines two high quality complementary portfolios solidifying DEXUS as a leading owner and manager of Aust
Slide 21: Appendices
APPENDICES For personal use only Combination DEXUS Property of DEXUS Group Property and Investa Group Office andFund Investa enter Office into Fund Implementation Agreement Slide 20Slide 20
Slide 22: Combination is consistent with DEXUS's articulated strategy
COMBINATION IS CONSISTENT WITH DEXUS’S ARTICULATED STRATEGY For personal use only IOF IS A STRATEGIC FIT FOR DEXUS DEXUS Property Group and Investa Office Fund enter into Implementation Agreement Slide 21
Slide 23: What Office Leadership Means to DEXUS
WHAT OFFICE LEADERSHIP MEANS TO DEXUS A LEADER IN OFFICE CAPABILITY For personal use only A leader in office retaining multi-sector capabilities in industrial and retail Best people, systems, processes and strongest tenant relationships Actively managing and recycling properties through the cy
Slide 24: DEXUS's Demonstrated Ability to Create Value
DEXUS’S DEMONSTRATED ABILITY TO CREATE VALUE Leasing: 60 Castlereagh St, Sydney Development: 480 Queen St, Brisbane DEXUS approach: For personal use only DEXUS approach: Acquired in April 2014 and faced with limited Acquired in April 2013 as a fund-through leasing enquiry on the lower office flo
Slide 25: Mix and Match Consideration
MIX AND MATCH CONSIDERATION ―Mix and Match‖ consideration enables IOF Unitholders to elect their preferred form of consideration For personal use only IOF Unitholders will elect their preference from three available options: 1. Standard consideration: 0.424 DEXUS Securities and $0.8229 cash per IO
Slide 26: Basis of Preparation of Pro Forma Impact on Key Metrics
BASIS OF PREPARATION OF PRO FORMA IMPACT ON KEY METRICS The metrics are prepared on the basis of current guidance provided to the market by both IOF and DEXUS (refer to Slides 26-27) For personal use only The following slides set out the key assumptions for: — Pro forma FFO and MER (slide 26) —
Slide 27: Key FFO and MER Assumptions
KEY FFO AND MER ASSUMPTIONS FFO ASSUMPTIONS DEXUS Standalone For personal use only Mid-point of DEXUS guidance of 62.9 cents per DEXUS Security (―cps‖) for FY16 FFO and 56.5 cps for FY16 Underlying FFO IOF Standalone IOF guidance of 28.1 cents per IOF Unit (―cpu‖) for FY16 FFO (refer slide 26 of
Slide 28: Key Look-Through Gearing and NTA Assumptions
KEY LOOK-THROUGH GEARING AND NTA ASSUMPTIONS DEXUS Standalone 30 June 2015 NTA of $6.68 per DEXUS Security and 30 June 2015 look-through gearing1 of 28.5% adjusted for: For personal use only — $490 million of fair value revaluations ($40 million announced 22 October 2015 and $450 million announced
Slide 29: Summary of MIA
SUMMARY OF MIA The MIA was executed on 18 December 2015 and released to the market as an attachment to the ASX announcement dated 18 December 2015. To understand the Proposal and the circumstances in which it For personal use only may be implemented, both DEXUS Security holders and IOF Unitholders
DEXUS Property Group — Merger or Acquisition (December 2015) on 6ix