Dexus · ASX:DXS
Dexus — DEXUS Property Group — FY2009 Earnings Presentation
40 slides from Dexus's earnings presentation, Aug 18, 2009
Slide 1: DXS 2009 Annual Results
DXS 2009 Annual Results — Slide 1
Slide 2: 2009 Annual Results
2009 Annual Results Victor Hoog Antink Chief Executive Officer DXS 2009 Annual Results — Slide 2
Slide 3: 2009 Results highlights
2009 Results highlights Financial results – Operating earnings $526m up 5.7% – FFO per security 10.43¢ – Devaluations $1.6bn – Total assets $8.4bn Operating results Australia International Group – Like for like income (%) 4.4 (4.9) 1.7 2008 3.8 7.2 4.5 – Occupancy1 (%) 97.2 88.0 91.5 2008 98.3 9
Slide 4: Delivering on strategy
Delivering on strategy Australia’s leading owner, manager, developer of superior quality office and industrial properties No. 1 in office and No.3 in industrial in Australia Quality portfolio delivering strong results Progressed selected non-core asset sales Repositioning international portf
Slide 5: Financial performance
Financial performance Craig Mitchell Chief Financial Officer DXS 2009 Annual Results — Slide 5
Slide 6: Financial results
Financial results June 2009 June 2008 $’m $’m Operating earnings 526.3 498.0 Finance costs and other1 (185.8) (175.1) Profit after tax and minority interests, before non-cash items 340.5 322.9 Non-cash items (1,799.6) 115.4 Net profit/(loss) attributable to stapled security holders (1,459.1) 438.3 1
Slide 7: High quality portfolio delivering sustainable results
High quality portfolio delivering sustainable results Property assets represent 92% of Rental income represents 96% of total assets operating earnings DXS 2009 Annual Results — Slide 7
Slide 8: Rental income drives operating earnings
Rental income drives operating earnings June 2009 June 2008 $’m $’m Office – Australia/New Zealand 246.8 242.6 Industrial – Australia 109.2 105.7 Industrial – International (at Constant currency) 130.0 131.9 Currency impact on Industrial – International 25.9 - Retail – Australia 16.1 27.6 Developmen
Slide 9: Portfolio fundamentals drive valuations
Portfolio fundamentals drive valuations Portfolio revaluation decrease of $1.6bn or 16.7% DEXUS weighted average capitalisation rates Average capitalisation rates have continued to soften across the portfolio – 130 bps in the last 12 months – 170 bps since the peak in Dec 2007 – Average cap rate
Slide 10: Strong capital management
Strong capital management Distribution policy Gearing at 30 June 2009 - 31.2% – Payout ratio 70% of FFO Equity raising of more than $1bn – Natural DRP participation continues Asset sales – JV with Cbus at 1 Bligh Street – Commenced $600m asset sale program over 2 years Committed developments
Slide 11: Pro-active debt management
Pro-active debt management Undrawn facilities of $1.45bn June 2009 Maturity profile1 Refinanced debt in FY09 of $860m Active negotiations of 2010 maturities 5 year MTN issue of $160m July 2009 Debt duration steady at 2.6 years1 All metrics well within key covenants2 – S&P rating reaffirm
Slide 12: Office portfolio
Office portfolio Louise Martin Head of Office DXS 2009 Annual Results — Slide 12
Slide 13: Highlights – solid performance in difficult times
Highlights – solid performance in difficult times Solid portfolio performance in times of difficult economic conditions Active management Substantial progress of developments Highest quality portfolio Quality integrated team GPT/GMT, 1 Farrer Place, Sydney, NSW DXS 2009 Annual Results — Sl
Slide 14: Strong portfolio fundamentals
Strong portfolio fundamentals Solid like on like growth NPI DXS office occupancy rate vs market Occupancy rates above market Limited market exposure Retention rates maintained Good lease duration Capitalisation rates have softened Sustainability initiatives delivering savings: energy (
Slide 15: Office leasing – strong performance, active management
Office leasing – strong performance, active management 52,475sqm leased (including Rent review profile 15,902sqm in developments)1 36,500sqm leased in investment portfolio – 103 transactions2 Average rental increase was 6.6%2 Average tenant incentive was 12.6%3 Major deals with NSW Police,
Slide 16: Diversification delivering sustained income
Diversification delivering sustained income 94% prime Market assets diversification Economic Smooth expiry diversity profile of tenants DXS 2009 Annual Results — Slide 16
Slide 17: Office developments and non-core asset sales
Office developments and non-core asset sales 123 Albert Street, Brisbane – 38,000sqm – 68% leased, marketing underway – On schedule for completion Dec 2010 1 Bligh Street, Sydney – 42,000sqm – 55% leased, marketing underway – On schedule for completion May 2011 Non core sales – 343 George Stre
Slide 18: Australian CBD office outlook
Australian CBD office outlook Office demand is currently weak, Australian demand periodically weakens and recovers but expected to recover in FY11 Supply under construction for Sydney and Melbourne CBD’s well below average Brisbane and Perth are experiencing a deeper slowdown Vacancy rates a
Slide 19: 2010 office focus
2010 office focus FY10 will continue to be challenging Quality portfolio to withstand difficult times Active management through integrated model – Property, asset and development management – Leasing focus – Tenant retention through service excellence – Operational efficiencies – Sustainabilit
Slide 20: Industrial portfolio
Industrial portfolio Andrew Whiteside Head of Industrial DXS 2009 Annual Results — Slide 20
Slide 21: Highlights – active management delivering results
Highlights – active management delivering results Sound portfolio fundamentals – Stable income profile – Strong passing income Active management approach – Intensive leasing and management of leasing risk – Solid growth in NPI Driving value and positioned for growth – Repositioned the team – A
Slide 22: Portfolio fundamentals – relative outperformance
Portfolio fundamentals – relative outperformance 4.1% like for like income growth Stable income profile – 3.6% growth from rent reviews – Limited market risk in FY10 High occupancy and tenant retention Book value supported by strong passing yield 8.9% Net Like- Occupancy Occupancy % Over/Under
Slide 23: Industrial leasing – intensive activity
Industrial leasing – intensive activity Strong leasing with 203,000sqm leased Lease expiry profile (by income) – 113 deals: 85% negotiated in-house – Average rents down 1%, incentives at 3% Major leasing deals: – Toll, DHL and Atlas Copco, Hagemeyer OO, BOC, Getronics, Tyco – Lease expiry beyond
Slide 24: Diversified portfolio – driving growth
Diversified portfolio – driving growth Quality assets, strategically located in key markets Secure income diversified by sector Development capability, proven market appeal Geographic weighting Flexible product SEL, Greystanes Estate, Greystanes, NSW DXS 2009 Annual Results — Slide 24
Slide 25: Industrial sector outlook
Industrial sector outlook Limited supply with low vacancy Industrial drivers in prime space in key markets Current slowdown continues to affect leasing demand Weak rental growth expected in FY10 Business sentiment and pre-leasing enquiry starting to improve with economic recovery expected FY
Slide 26: 2010 industrial focus
2010 industrial focus Focus on the fundamentals – Experienced team, delivering results – Active management driving income – Expanding integrated platform Positioned for future growth – Quality, diversified portfolio with capacity – Repositioning portfolio via divestment of non-core assets – Focu
Slide 27: International industrial portfolio
International industrial portfolio Paul Say Head of International DXS 2009 Annual Results — Slide 27
Slide 28: Challenging market conditions but early signs of stabilisation
Challenging market conditions but early signs of stabilisation Recession has reduced demand and US Business and Consumer Confidence increased supply Oversupply is now impacting rents Lower market rents the key factor in valuations Some early signs of improved confidence emerging Source: Deut
Slide 29: International valuers adjusting quickly
International valuers adjusting quickly 100% of the international portfolio externally valued Portfolio weighting – International valuations down by 27.1% from June 2008 – US portfolio value down by 29.6% from Dec 2007 Progressively declined over year – 1H impact of cap rates – 2H impact of rent
Slide 30: Portfolio returns down, in line with expectations
Portfolio returns down, in line with expectations Like on like earnings down 4.9% – North America down 4.6% – Germany up 5.8% – France down 31.8% Active management approach delivered – 88% occupancy, above market benchmarks – 68% tenant retention rate, in line with targets Net Property Like for
Slide 31: Actively adding value through leasing
Actively adding value through leasing Solid leasing activity: 382,300sqm leased – 343,300sqm in USA (114 deals) Summit Oaks 10 year lease Advanced Bionics – 30,300sqm in Germany – 8,700sqm in France Occupancy rates marginally down – North America down 4% – Europe up 3% Kent West Corporate Park,
Slide 32: Executing strategy remains key priority
Executing strategy remains key priority Repositioning the international portfolio Asset sales on track – European campaign commenced – US in active negotiation International strategy implementation – Create critical mass in fewer markets – Improved quality and sustainability – Servicing major
Slide 33: 2010 outlook
2010 outlook Conditions to remain tough US demand periodically weakens and recovers Cautious approach to earnings forecast – Lower retention rates and occupancy – Increased downtime allowances and lower rents for vacant space Active management focus can deliver upside via: – Active leasing and
Slide 34: Third party funds management
Third party funds management Victor Hoog Antink Chief Executive Officer DXS 2009 Annual Results — Slide 34
Slide 35: Third party funds management business
Third party funds management business Funds under management as at 30 June 2009 of $5.6 billion Lower asset values, development and leasing fees will impact FY10 income Annuity style income stream – no reliance on performance fees Diversified investor base Fund breakdown Wide network of capi
Slide 36: Summary and outlook
Summary and outlook Victor Hoog Antink Chief Executive Officer DXS 2009 Annual Results — Slide 36
Slide 37: Summary and outlook
Summary and outlook Well positioned to create value Focused strategy Highest quality portfolio Quality risk managed developments Active integrated property management Strong balance sheet Active capital management Experienced management team FY10 guidance, barring adverse changes to
Slide 38: Questions
Questions DXS 2009 Annual Results — Slide 38
Slide 39: Disclaimer
Disclaimer 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 including, wit
Slide 40: DXS 2009 Annual Results — Slide 40
DXS 2009 Annual Results — Slide 40