Slide 1: 2022 Annual Results Presentation and property synopsis
Dexus (ASX: DXS) ASX release 17 August 2022 2022 Annual Results Presentation and property synopsis Dexus releases its 2022 Annual Results Presentation. An investor conference call will be webcast at 9.30am today on www.dexus.com/investor-centre The 2022 property synopsis excel workbook is also avail
Slide 2: 2022 Annual Results
2022 Annual Results 17 August 2022 Dexus Funds Management Limited | ABN 24 060 920 783 | AFSL 238163 as responsible entity for Dexus
Slide 3: Acknowledgement of country
Acknowledgement of country Dexus 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, present and emerging. Artist: Amy Allerton, Indig
Slide 4: Agenda
Agenda Overview Darren Steinberg, CEO Financial results Keir Barnes, CFO Funds management Deborah Coakley, EGM Funds Management Office portfolio Kevin George, EGM Office Industrial portfolio Stewart Hutcheon, EGM Industrial, Retail & Healthcare Investments and Developments Ross Du Vernet, CIO Summar
Slide 5: Substantial progress towards strategic objectives
Substantial progress towards strategic objectives Acquisition of AMP Capital’s real estate and domestic infrastructure platform accelerates strategy To deliver superior risk-adjusted returns for investors from high-quality Strategy real estate in Australia’s major cities Resilient income streams Rea
Slide 6: Environmental, Social and Governance highlights
Environmental, Social and Governance highlights Achieved Net Zero emissions across the group managed portfolio 2022 Global ESG benchmark performance ESG update Global real estate leader Achieved net zero operational emissions for FY22 S&P Global Sustainability › Reducing emissions and undertaking pr
Slide 7: Financial results
Financial results
Slide 8: Key earnings drivers and valuations
Key earnings drivers and valuations Property portfolio and management operations driving earnings growth Key earnings drivers Property portfolio valuations Earnings driver FY22 result Property AFFO1 of $622.6 million 30 June 2022 Valuation Capitalisation rate value5 12-month movement6 12-month movem
Slide 9: FY22 financial results
FY22 financial results Strong underlying growth in a complex operating environment FY22 FY214 Change › Office property FFO decreased primarily due to the impact of divestments, partly offset by fixed $m $m % rent increases, the acquisition of Capital Square, Perth and non-recurring income on develop
Slide 10: Strong financial position
Strong financial position Prudent gearing and hedging management to maintain balance sheet strength › Active debt management achieving $700 million of facility extensions with an average tenor of 6.1 years Diversified sources of debt › Post 30 June 2022, completed $500 million of facility extensions
Slide 11: Funds management
Funds management
Slide 12: Dexus Funds platform
Dexus Funds platform Strong capabilities and track record Broad capital base Access to Dexus’s capabilities Grown FUM › Established capital partners in Australia and › Supported by a fully-integrated platform by an average of offshore across the real estate sector with leading 16% per annum › Ac
Slide 13: Dexus Funds platform
Dexus Funds platform Diversified management business across 19 vehicles Large diversified investor base From Australia and Offshore Investor sentiment 3% 30% 7% Superannuation & 52% Pension Funds › Investor sentiment remains positive toward Australian real estate 8% Multi Manager Australia › Under d
Slide 14: Funds management FY22 highlights
Funds management FY22 highlights Continued strong track record of performance Executing on capital partners’ investment strategies Dexus Wholesale Property Fund total returns › Further diversified investor base, welcoming high net worth, family offices and new 15% institutional investors onto our pl
Slide 15: Office portfolio
Office portfolio
Slide 16: Office portfolio performance
Office portfolio performance High occupancy maintained despite challenging operating environment › Occupancy maintained at above 95% despite the challenging operating $23.9 billion $13.3 billion environment Dexus group Dexus balance sheet office portfolio › Incentives appear to have peaked across ou
Slide 17: Staggered expiry profile and diversified tenant base
Staggered expiry profile and diversified tenant base Supporting resilient income streams Dexus office portfolio lease expiry profile (by income)1 Diversified tenant base with limited concentration risk 20% Sydney Melbourne Brisbane Perth Top customer – State of Victoria 15% 13% target threshold repr
Slide 18: Leasing observations
Leasing observations Return to office gaining momentum › Continued evidence of flight to quality as customers look to attract and retain talent › Large businesses indicating strong desire for staff to return to the office due to evidence of lower productivity, inequitable distribution of work and im
Slide 19: Industrial portfolio
Industrial portfolio
Slide 20: Industrial portfolio performance
Industrial portfolio performance Strong leasing across core and development properties › Significant leasing volumes across stablised portfolio and development $11.6 billion $4.3 billion leasing Dexus group industrial portfolio Dexus balance sheet industrial portfolio › Portfolio 4.0% under-rented a
Slide 21: Industrial take-up has long-term drivers
17 August 2022 Industrial take-up has long-term drivers Demand driven by investment in last mile fulfilment, population growth and inventory build up National industrial take-up remains above long-term average Ecommerce a long-term growth story for industrial as Australia catches up Million sqm 20%
Slide 22: Investments and Developments
Investments and Developments
Slide 23: Significant transactional activity
Significant transactional activity Reallocating into higher returning opportunities $5.0 billion $10.7 billion Group property acquisitions sourced predominantly off-market Total group transactions across office, industrial, healthcare and convenience retail sectors Capital Square, Perth WA Jandakot
Slide 24: Development track record across multiple sectors
Development track record across multiple sectors Office City retail Industrial Healthcare 180-189 Flinders Street, Melbourne VIC 175 Pitt Street, Sydney NSW 18 Momentum Way, Ravenhall VIC North Shore Health Hub, St Leonards NSW 80 Collins Street, Melbourne VIC 25 Martin Place, Sydney NSW 62 Ferndell
Slide 25: ~465,000sqm industrial completions in past three years
~465,000sqm industrial completions in past three years Completions to remain strong over the next few years › Completed ~465,000sqm developments for the group in the past three years, › Circa 2.8 million sqm of land holdings as at FY22, to be developed over the equivalent to 13% of group industrial
Slide 26: Key development pipeline projects
Key development pipeline projects Development Project Est. yield $17.7bn diversified Development Sector status cost est.1 on cost Commencement FY23 FY24 FY25 FY26 pipeline across key markets Committed 123 Albert Street, Brisbane QLD Office Construction $0.6bn c. 5% FY22 Fixed price contracts Develop
Slide 27: Trading profits
Trading profits Work underway on securing FY23 contribution › $23.4 million1 of trading profits (post tax) realised during Trading profit track record FY22 across four trading projects, in line with expectations since FY122 › Working on securing FY23 trading profits, with potential contributions fro
Slide 28: Summary
Summary 27
Slide 29: The Dexus investment proposition
The Dexus investment proposition High-quality portfolio with embedded upside from funds management and development Fully integrated, multi-sector platform of scale and deep capability Investment Funds management Development $18.4bn $25.9bn $17.7bn of capital invested directly of third party FUM grou
Slide 30: Evolution to a leading real asset manager
Evolution to a leading real asset manager Acquisition of AMP Capital domestic real estate and infra platform expected to complete during 2H CY22 up to $65.4 billion across the Dexus platform › Expanded product offering › Expanded investor base Real estate Infrastructure Dexus up to $36.8 bn up to $1
Slide 31: Summary
Summary Demonstrated resilience in uncertain times › Dexus has demonstrated resilience: – Held or grown distributions over the past few years despite the impacts of the Covid-19 pandemic – Maintained a strong balance sheet through asset recycling, with portfolio benefiting from flight to quality › W
Slide 32: Appendices
Appendices
Slide 33: Dexus today
Dexus today $44.3 billion – total funds under management1 Dexus portfolio Funds Management portfolio Real estate securities Real estate securities and other¹ 5% Office 41% and other¹ 1% Retail 1% Office 72% Healthcare 3% Healthcare 3% $18.4bn $25.9bn Industrial 23% Retail 23% Industrial 28% 1. Inclu
Slide 34: Alignment with megatrends
Alignment with megatrends to support long-term growth Urbanisation Population growth and infrastructure investment will support the ongoing 1 urbanisation of major Australian cities and the development of vibrant communities around major transport nodes. Positioned to benefit Technological change fr
Slide 35: Funds management - Wide offering across the platform
Funds management - Wide offering across the platform Diversified management business across a number of vehicles Unlisted Institutional Direct Listed Real Estate Securities Venture Institutional Joint Ventures Pooled Funds Unlisted Funds Capital External FUM External FUM External FUM External FUM Ex
Slide 36: Reconciliation to statutory profit
Financial results Reconciliation to statutory profit Reference Item 30 June 2022 30 June 20211 $m $m Statutory AIFRS net profit after tax 1,615.9 1,138.4 Investment property and inventory (Gains)/losses from sales of investment property 2.0 (6.0) Fair value gain on investment properties (926.0) (583
Slide 37: Management operations profit
Financial results Management operations profit Funds Property Development Management FY22 ($m) Management Management Management Operations Revenue 121.8 70.8 20.8 213.4 Operating expenses (45.6) (63.1) (23.0) (131.7) FY22 net profit 76.2 7.7 (2.2) 81.7 FY22 margin 63% 11% (11%) 38% FY21 margin 62% 1
Slide 38: Cash flow reconciliation
Financial results Cash flow reconciliation 30 June 2022 30 June 20211 $m $m Cash flow from operating activities 560.1 999.3 add back: payment for inventory acquisition and capex 14.8 86.7 less: cost of sale of inventory (138.6) (244.6) less: tax on trading profits not yet paid (10.0) (21.6) add back
Slide 39: Interest reconciliation
Financial results Interest reconciliation 30 June 2022 30 June 20211 $m $m Total statutory finance costs 141.8 131.7 Less: Debt modification and amortisation of exchangeable notes (5.7) 9.2 Add: Finance costs attributable to investments accounted for using the equity method2 1.5 (7.9) Less: AASB 16
Slide 40: Change in net tangible assets and revaluations
Financial results Change in net tangible assets and revaluations Investment portfolio Valuation Weighted % of change average portfolio $m cap rate FUM $m $ps Opening net tangible assets1 (1 July 21) 12,280.2 11.42 Dexus office portfolio 423 4.75% 72% Revaluation of real estate 926.0 0.86 Dexus indus
Slide 41: Direct property portfolio book value movements
Financial results Direct property portfolio book value movements Office1 Industrial1 Healthcare Dexus total1 Trading $m $m and other1,2 $m assets3 $m (inventory) $m Opening direct property 13,895.3 2,903.6 66.5 16,865.4 178.2 4 Lease incentives 98.1 14.9 - 113.0 0.8 Maintenance capex 64.9 7.5 - 72.4
Slide 42: Co-investments in pooled funds
Financial results Co-investments in pooled funds Dexus Dexus FY22 Passing Fund Ownership Number of Total assets Occupancy WALE WACR co-investment co-investment distribution look-through stake (%) properties ($m) (%) (years) (%) value ($m)1 income ($m) yield (%)2 gearing (%) Healthcare DHPF 23.1% $24
Slide 43: Capital management: FY22 position
Capital management FY22 position Debt maturity profile1 $m Key metrics 30 June 2022 30 June 2021 1,600 Total debt2 $4,882m $4,925m 1,400 1,200 Headroom (approximately)3 $1.9bn $1.1bn 1,000 Gearing (look-through)4 26.9%5 26.7% 800 600 Covenant gearing (covenant6 <55%) 25.5% 26.5% 400 Interest cover (
Slide 44: Capital management: Interest rate hedging profile
Capital management Interest rate hedging profile Hedge profile Hedging profile 30 June 2022 30 June 2021 $m 4,500 3.0% Average amount of debt hedged1 65% 81% 4,000 Average amount of debt hedged excluding caps 58% 68% 3,500 2.5% 3,000 Weighted average interest rate on hedged debt2 1.5% 1.7% 2,500 2.0
Slide 45: Capital management: Debt facilities
Capital management Debt facilities1 Facility limit Drawn Maturity Currency Facility limit Drawn A$m A$m A$m A$m Bilateral bank debt 500 500 FY24 A$ Sub total 6,625 4,639 600 577 FY25 A$ 450 160 FY26 A$ Currency translation and fair value adjustments 292 292 850 104 FY27 A$ Deferred borrowing costs a
Slide 46: COVID-19 impacts
COVID-19 impacts Rent collections of 98.5% for FY22 FY22 rent collections Rent collections1 Office Industrial Total › Strong cash collections in line with pre-covid levels across the total portfolio › Rent relief assessment nearing finalisation Total FY22 98.5% 98.5% 98.5% Total July-22 96.5% 94.4%
Slide 47: Funds management development pipeline
Funds management Development pipeline $7.4 billion Funds management development pipeline $1.6 billion $5.2 billion $0.6 billion Committed projects Uncommitted projects Concept projects Project cost on uncommitted projects in funds management business Uncommitted projects FY23 FY24 FY25+ Office - 4 p
Slide 48: Office and industrial key metrics
Property portfolio Office and industrial key metrics Key metrics Office Industrial Amount of space leased1 152,877sqm2 373,301sqm3 No. of leasing transactions 2922 753 Occupancy by income 95.6% 98.1% Occupancy by area 95.2% 99.0% 64 Momentum Way, Ravenhall VIC. Average incentives 29.4%4 13.5%5 No. o
Slide 49: Office portfolio diversification
Property portfolio Office portfolio diversification Office by asset type Office by location Sydney Prime WA 11% Premium CBD/fringe grade grade 47% 49% 94%1 QLD 11% NSW 57% $13.3bn $13.3bn Other <1% VIC 22% B-grade 5% A-grade 47% Sydney suburban 7% 1. Prime grade buildings represent 94% of the office
Slide 50: Office portfolio lease expiry profiles by region
Property portfolio Office portfolio lease expiry profiles by region Sydney CBD By Income By area Brisbane CBD By income By area 20% 16.1% 30% 15.1% 15.1% 25.0%24.3% 14.4% 14.0% 14.1% 15% 12.6% 13.5% 20% 9.9% 10.0% 14.3% 15.4% 13.0% 13.6% 10% 10.5% 11.5% 8.2% 7.7% 10% 5% 3.8% 4.0% 1.6% 2.0% 0% 0% Ava
Slide 51: Office top customers represents 17.2% of total property portfolio income
Property portfolio Office top 10 customers represents 17.2% of total property portfolio income Office top 10 customers Diversity of office customers (by income) 0% 5% 10% 15% 20% Credit % of total property Legal services Office customers1 rating2 portfolio income3 Financial and insurance services Pu
Slide 52: Case study: Vintage does not define performance
Case study: Vintage does not define performance Australia Square, Sydney – standing the test of time Built in 1960s Today, it remains a highly sought-after office premise Long-term value creation through › Sydney’s first skyscraper › Occupancy1 averaged 96.8% since FY13 (FY22: 96.6%), › Active leasi
Slide 53: Industrial portfolio diversification
Property portfolio Industrial portfolio diversification Industrial by asset type Industrial by location WA 11% Land 2% Industrial SA <1% estate 64% Data centre 3% NSW 45% QLD 14% Distribution centre 13% $4.3bn $4.3bn Business VIC 30% park 18% 47 Foundation Road, Truganina VIC. 52 Dexus 2022 Annual R
Slide 54: Industrial portfolio lease expiry profile by income
Property portfolio Industrial portfolio lease expiry profile by income 20% 17.1% 15.0% 15% 13.2% 10.9% 10% 7.8% 5% 1.9% 0% Available FY23 FY24 FY25 FY26 FY27 Key vacancies FY23 Key expiries FY24 Key expiries FY25 Key expiries FY26 Key expiries FY27 Key expiries Axxess Corp Park (0.8%) Axxess Corp Pa
Slide 55: Industrial portfolio lease expiry profiles by region
Property portfolio Industrial portfolio lease expiry profiles by region Sydney By income By area Brisbane By income By area 25% 23.1% 21.4% 28.6% 30% 20% 16.4% 14.8% 25% 21.1% 21.9% 23.2% 15% 12.4% 11.0% 10.3% 9.2% 20% 15.9% 8.8% 8.9% 12.3% 10% 15% 8.7% 5% 2.5% 1.5% 10% 5.5% 7.1% 5.6% 5% 0.0% 0.0% 0
Slide 56: Industrial top customers represent 4.3% of total property portfolio income
Property portfolio Industrial top 10 customers represent 4.3% of total property portfolio income Industrial top 10 customers Diversity of industrial customers (by income) % of total property - 5% 10% 15% 20% 25% 30% Industrial customers1 portfolio income2 Transport, postal and warehousing 24% Visy 0
Slide 57: Office portfolio sustainability metrics
Environmental metrics Office portfolio sustainability metrics Dexus portfolio net emissions intensity Dexus Office NABERS Energy ratings Dexus Office NABERS Water ratings FY08 BAU Net emissions 120 9% - Indirect 5.5 stars 5.5 stars Operational Emission 6 stars 237,890sqm 83% - Electricity 100 133,70
Slide 58: Dexus completed developments
Development Dexus completed developments Pipeline Building area1 Project cost2 Yield on cost Leased Final Third party sqm $m % % completion partner interest % Industrial Palm Springs Road, Ravenhall VIC 132,100 43 6-7% 100% Mar-22 75% Jandakot Airport, Perth WA 4,800 6 5.0% 100% Jan-22 67% 31 Innova
Slide 59: Dexus committed developments and fund-throughs
Development Dexus committed developments and fund-throughs Pipeline Building area1 Project cost Est. cost to Yield on cost3 Leased Completion due Third party partner sqm est.2 completion2 % % interest $m $m % Office 123 Albert Street, Brisbane QLD 39,600 595 185 c. 5% 34% Late 2023 - Atlassian Centr
Slide 60: Dexus uncommitted developments
Development Dexus uncommitted developments Building Project cost Est. yield on est. Third party Pipeline5 area1,5 est.2, project cost3 partner interest % sqm $m % Office Waterfront Brisbane QLD 134,600 c. 1,250 5-6% 50% 60 Collins Street, Melbourne VIC 43,100 c. 1,000 c. 5% - 4 Central Place Sydney
Slide 61: Transactions
Transactions Dexus9 Dexus acquisitions Purchase price10 Interest Settlement Dexus divestments Sale price10 Interest Settlement $m $m 1 Bligh Street, Sydney NSW1 $37.5 33% 8-Jul-21 60 Miller Street, North Sydney NSW $275.0 100% 3-Aug-21 Capital Square Tower 1, Perth WA2 $475.3 49% 22-Jul-21 436-484 V
Slide 62: Transactions: Funds management
Transactions Funds management Funds Management acquisitions Purchase price9 Interest Settlement Funds Management divestments Sale price9 Interest Settlement $m $m Bethesda Mental Health Clinic, Cockburn Central WA1 $58.3 100% 07-Jul-21 140 St Georges Terrace, Perth WA $254.9 100% 22-Sep-21 Arcadia P
Slide 63: Trading profit track record
Trading profit track record Further opportunities in pipeline Trading projects Trading strategy FY22 FY23 FY24+ Key Truganina (Laverton) properties VIC1, 2 Development √ √ Secured Unsecured Botany Quarter (Lakes Business Park South), Botany NSW2 Development √ 436-484 Victoria Road, Gladesville NSW3
Slide 64: Prime grade properties better placed
Prime grade properties better placed Dexus portfolio predominantly weighted to Prime grade › We expect quality assets to perform better in the current environment, with regard to both tenant demand (continued flight to quality) and investor demand › Strong market rental growth to provide some suppor
Slide 65: Office demand indicators are positive
Office demand indicators are positive Despite emerging cyclical risk, demand to benefit from strength in white collar industries Hiring intentions are positive despite uncertainty Net absorption positive in the four major CBDs* Net balance ‘000 jobs ‘000sqm 40 90 150 20 100 70 50 - 0 50 (20) -50 Bus
Slide 66: Office leasing inquiry improving
Office leasing inquiry improving Leasing inquiry strengthened through FY22, driven by smaller users Vacancy rates in CBD office markets plateauing 0-999sqm 1,000-2,999sqm 3,000sqm+ Syd CBD Mel CBD Bris CBD Perth CBD ‘000 sqm 900 30% 800 25% 700 600 20% 500 15% 400 300 10% 200 5% 100 - 0% Mar-19 Sep-
Slide 67: Industrial sector
Industrial sector Strong demand and low vacancy leading to significant rent growth Vacancy rates hit record lows across all markets Lack of space leading to rapid growth in rents Sydney Melbourne Brisbane Perth Adelaide $/sqm Outer West Sydney West Melbourne South Brisbane East Perth 10% 170 9% 150
Slide 68: Healthcare sector
Healthcare sector Healthcare has outperformed other sectors over the past decade Growing institutional demand drives healthcare transactions higher Indexed returns by sector (10yrs) (March 2012=100) Hospital R&D Medical Office All Property Retail Office Industrial Healthcare $ billion 450 3.5 400 3.
Slide 69: Sydney office market outlook
68 -100 0 50 -50 100 121 Castlereagh St (David Jones) 201 Elizabeth St. Podium 26-30 Lee St, 20 Lee St. FY23-FY24 32-36 York St. 150 '000 square metres FY23 333 Kent St. Source: JLL Research, Dexus Research. Poly Centre 210 George St. Salesforce Twr 180 George St. Dexus 2022 Annual Results Presentat
Slide 70: Melbourne office market outlook
69 -20 20 0 60 -40 40 World Trade - Twr 1 (Zone Q/Ouson) NAB House - 500 Bourke St (ISPT) 600 Lonsdale St (V-Leader) FY23-FY24 555 Collins St Stg 1 (Charter Hall) 263 William St (DeGroup) 80 '000 square metres FY23 Source: JLL Research, Dexus Research. 17-23 Bennetts Lane (Perri Projects) 140 Lonsda
Slide 71: Dexus's position in CBD office
Office markets Dexus’s position in CBD office CBD office market Sydney Melbourne Brisbane Perth Total NLA 5,197,561sqm 5,183,018sqm 2,340,577sqm 1,832,462sqm Prime vacancy average 12.9% 15.1% 16.8% 16.1% Dexus CBD exposure Total NLA 491,662 421,852 190,330 184,091 Number of properties 14 8 4 4 Occup
Slide 72: Other information
Other information Exchange and securities used in statutory accounts 30 Jun 2022 31 Dec 2021 30 Jun 2021 Closing rates for Statement of Financial Position USD 0.6889 0.7256 0.7518 Average rates for Statement of Comprehensive Income USD 0.7030 0.7319 0.7468 Post consolidation equivalent amounts 12 mt
Slide 73: Glossary
Glossary Distribution payout policy: Policy is to distribute in line with free cash flow for which AFFO is a proxy FFO is in line with Property Council of Australia definition and comprises net profit/loss after tax attributable to stapled security holders calculated in accordance with Australian Ac
Slide 74: Disclaimer
Disclaimer This presentation is issued by Dexus Funds Management Limited (DXFM) in its capacity as responsible entity of Dexus (ASX code: DXS). It is not an offer of securities for subscription or sale and is not financial product advice. Information in this presentation including, without limitatio
Slide 75: dexus
dexus