Slide 1: 2021 Half year results presentation
Dexus (ASX: DXS) ASX release 9 February 2021 2021 Half year results presentation Dexus provides its 2021 half year results presentation. An investor conference call will be held at 9.30am (AEDT) today, Tuesday 9 February 2021, which will be webcast via the Dexus website (www.dexus.com) and available
Slide 2: 2021 Half Year Results
2021 Half Year Results D a t e 9 February 2021 Dexus Funds Management Limited ABN 24 060 920 783 AFSL 238163 as responsible entity for Dexus
Slide 3: Agenda
Agenda › Overview Darren Steinberg, CEO › Financial results Alison Harrop, CFO › Funds management Deborah Coakley, EGM Funds Management › Office portfolio Kevin George, EGM Office › Industrial portfolio Stewart Hutcheon, EGM Industrial, Retail & Healthcare › Development and investments Ross Du Verne
Slide 4: Strategy
Strategy Focus on strategic initiatives › The COVID-19 pandemic has reinforced the importance of Dexus strategy having a diversified business model and strategy that can To create spaces where people thrive Purpose deliver through the cycle - Demonstrated by strong cashflow and resilient asset price
Slide 5: HY21 highlights
HY21 highlights Progress in challenging COVID-19 environment Financial highlights › Relatively strong rent collections and distribution for investors 96.0% 28.8 cents Dexus portfolio rent collections Distribution per security for HY21 › Achieved robust independent asset values $160.8 million value u
Slide 6: Environmental, Social and Governance update
Environmental, Social and Governance update Global ESG leadership Global ESG benchmark recognition ESG update › Continue to manage properties for emissions reductions and Principles for 1st Globally in Real Estate 1st Globally Listed Office CDP Climate A List A+ Responsible Investment invest in upgr
Slide 7: Financial Results
Financial Results 6 2021 Half Year Results 9 February 2021
Slide 8: Key earnings drivers and valuations
Key earnings drivers and valuations Strength in industrial values, resilience in office values Key earnings drivers Property portfolio valuations Earnings driver HY21 result Property AFFO1 of $326.2 million Outlook: Expect quality asset values to remain resilient due to investment demand Property +1
Slide 9: HY21 financial results
HY21 financial results Enduring property FFO despite COVID-19 impacts, supported by trading profits HY21 HY20 Change › Office property FFO reduced due to impact of divestments and rent relief, $m $m % partly offset by fixed rent increases and income from recently completed developments Office proper
Slide 10: COVID-19 impacts
COVID-19 impacts Rent collections of 96.0% for HY21 HY21 Rent collections HY21 direct COVID-19 AFFO impacts3 › Strong focus on cash collection while ensuring the sustainability of SME customer base Direct HY21 Est. FY20 Est. HY21 FY20 HY21 FY20 COVID-19 Rent Rent Provisions Provisions Total Total ›
Slide 11: Strong financial position
Strong financial position Contracted asset sale proceeds to further strengthen balance sheet › Maintained low gearing of 24.9%1 and low cost of debt Diversified sources of debt › Received $530 million2 of sale proceeds from the sale of 45 Clarence Street, Sydney with contracted Exchangeable Notes 7%
Slide 12: Funds Management
Funds Management 11 2021 Half Year Results Melbourne CBD, VIC 9 February 2021
Slide 13: Funds Management
Funds Management Provides Dexus with an annuity-style, secure income Diversified Funds Management business across 8 vehicles › Long-term and stable partners of choice, DACT $0.6bn enhancing ability to execute on opportunities through the cycle DALT $1.1bn DWPF › Strong transaction track record and c
Slide 14: Funds management: scalable and expanding suite of products
Funds management Scalable and expanding suite of products Widely held funds Joint Ventures Venture Capital Taronga Ventures Partnership3 Established 2020 › Platform and fund Dexus Wholesale Healthcare Wholesale Dexus Real Estate Dexus Office Dexus Australian Dexus Industrial Australian Industrial De
Slide 15: Dexus Wholesale Property Fund (DWPF)
Dexus Wholesale Property Fund (DWPF) Sustained growth and consistent outperformance Key features Consistent outperformance against Benchmark1 DWPF Benchmark › Prime quality diversified Australian portfolio established in 1995 with a track record of 15% outperformance1 9.1% 9.7% 8.4% 10% 7.2% 6.2% ›
Slide 16: Healthcare Wholesale Property Fund (HWPF)
Healthcare Wholesale Property Fund (HWPF) Pre-eminent Australian healthcare fund Key features HWPF portfolio composition › Australia’s largest open ended Healthcare Primary Healthcare 9% Hospital Fund established for institutional investors1 42% › Acquired Australian Bragg Centre one of the largest
Slide 17: Office portfolio
Office portfolio Images of activity in Sydney CBD, week commencing 1 February 2021 16 2021 Half Year Results 9 February 2021
Slide 18: Office leading indicators point to improving conditions
Office leading indicators point to improving conditions Leasing markets to benefit in 2021 Confidence and hiring intentions have improved sharply White collar employment back above pre-COVID-19 levels Key indicators driving leasing activity Key indicator driving increased office demand Business conf
Slide 19: Office portfolio activity
Office portfolio activity Strong six months of leasing, supported by leading indicators Leasing activity HY21 vs HY201 4,853sqm – 10yrs 2,702sqm – 10yrs 24% YoY 13,974sqm – 10yrs One Farrer Pl, 180 Flinders St, Sqm increase 101 George St, Sydney Melbourne leased Parramatta 100,870sqm 81,134sqm HY20
Slide 20: Office portfolio performance
Office portfolio performance Maintaining high occupancy at 96.0% $13.8 billion Dexus office portfolio vs PCA/MSCI office index Dexus office portfolio value at 30 September 20203 % p.a. 47 properties 1.5 million Dexus group office portfolio value 14% Across key CBDs Square metres 12.9% 12.8% 13% 140b
Slide 21: Staggered expiry profile and high occupancy
Staggered expiry profile and high occupancy Dexus portfolio occupancy consistently above market Dexus office portfolio lease expiry profile1 Historic Dexus occupancy vs market Dexus occupancy rates consistently above market, 40% Sydney Melbourne Brisbane Perth underpinned by high-quality 100% portfo
Slide 22: Our purpose: creating spaces where people thrive
Our purpose: creating spaces where people thrive Dexus offering from 1 hour to 10 years Workspace features Technology & Innovation features Traditional Offering (Core) Smart building technology › Vacant spaces (7 years+) › Remains the dominant offering but − Energy efficiency requirements are evolvi
Slide 23: Industrial portfolio
Industrial portfolio 22 2021 Half Year Results Artist Impression: Amazon, Ravenhall, VIC 9 February 2021
Slide 24: Industrial portfolio performance
Industrial portfolio performance Strong leasing and continued investment demand $2.4 billion Dexus industrial portfolio vs PCA/MSCI industrial index at Dexus industrial portfolio value 30 September 20203 % p.a. Dexus group industrial portfolio value 74 properties 1.5 million 13% 12.4% 12.3% Across c
Slide 25: Industrial growth
Industrial growth Supported by strong, national customer relationships Diverse mix of existing and repeat customers Customer partnerships driving growth in development including success Recent demand driven by e-commerce, food and beverage at Horizon 3023, Ravenhall with commitments from: and logist
Slide 26: Investments and Developments
Investments and Developments 25 2021 Half Year Results Artist Impression: Waterfront Precinct, Brisbane, QLD 9 February 2021
Slide 27: Transactions
Transactions Progressing optimisation of portfolio composition via selective asset recycling Contracted $2.8 billion of transactions for the Dexus group in Transactions since FY11: $28.4bn I $16.6bn acquisitions I $11.8bn divestments HY21 in line with our focus Divestment of Grosvenor Place, Divestm
Slide 28: $11.4 billion group development pipeline
$11.4 billion group development pipeline Minimal current commitments Committed pipeline $1.3bn (Dexus share $0.5bn) Uncommitted and concept $10.1bn (Dexus share $5.3bn) circa 3.2% of balance sheet FUM1 (of 15% limit) City-shaping projects $6.7bn2 Other key projects Key projects Committed pipeline: t
Slide 29: Office group development pipeline
Office group development pipeline Uncommitted, income producing and flexible commencement timeline Project Project Status Target development commencement date $6.7 billion1 Est. total Uncommitted city Est. current Development Est. yield on project FY21 FY22 FY23 FY24 FY25 FY26+ shaping office pipeli
Slide 30: Core industrial development
Core industrial development Progressing $1.2 billion of key projects Freeman Central, 425-479 Loop, 54 Ferndell Street, Horizon 3023, 11-167 Palm $1.2bn Freeman Road, Richlands, QLD South Granville, NSW Springs Road, Ravenhall, VIC Industrial pipeline 39% committed3 To contribute c.$650m $84m expect
Slide 31: Consistent delivery of trading profits over time
Consistent delivery of trading profits over time Delivered $436 million1 in trading profits since FY12 › Trading projects since FY12, have delivered $436 million1 in trading profits achieving an average unlevered property IRR of circa 28% per annum › These investments comprise a combination of repos
Slide 32: Trading profits
Trading profits FY21-FY22 de-risked for investors › Delivered $47.1 million of HY21 trading profits (post tax) › Increased secured trading profits across FY21 and FY22 to circa $95 million (pre tax)1 Trading projects Trading strategy FY21 FY22 FY23+ 201 Elizabeth Street, Sydney Rezoning and DA √ Nor
Slide 33: Summary
Summary 32 2021 Half Year Results 9 February 2021
Slide 34: Investment highlights
Investment highlights Dexus provides exposure to a high-quality, diversified real estate platform Fully integrated real estate ownership, management and development platform Underlying value of overall Dexus business compares favourably to current security price Trading profits Direct exposure t
Slide 35: Summary
Summary Focus on growth in capital efficient funds management business › Expect the impacts of the COVID-led recession to continue to flow through the Australian economy in 2021 › Strong leasing activity and enquiry across our property portfolio › Robust asset valuations supported by strong investme
Slide 36: Appendices
Appendices 35 2021 Half Year Results 9 Custom Place, Truganina VIC. 9 February 2021
Slide 37: Dexus today
Dexus today $32.1 billion total funds under management Dexus portfolio Funds Management portfolio Healthcare1 $0.5bn Healthcare1 Office Office $0.3bn $13.8bn $8.7bn Retail $3.3bn $16.5bn $15.6bn Industrial $2.4bn Industrial $3.1bn 1. Current ‘as is’ value as at 31 December 2020. 36 2021 Half Year Re
Slide 38: Megatrends support long-term value creation for Dexus strategy
Megatrends support long-term value creation for Dexus strategy COVID-19 pandemic has accelerated key megatrends Urbanisation /cities Growth in pension capital fund flows Technological change Urbanisation in some major cities both in Funds under management within pension funds Technological advanceme
Slide 39: Delivering sustained value
Delivering sustained value Dexus distribution per security 5.8% CAGR1 cents FY12-FY20 60 50.2 50.3 50.3 50 47.8 45.47 43.51 41.04 40 36.00 37.56 32.10 30 20 28.8 10 0 FY12 FY13 FY14 FY15 FY16 FY17 FY18 FY19 FY20 FY21 Forecast 1. Compound Annual Growth Rate (CAGR) is calculated over eight years. Adju
Slide 40: Reconciliation to statutory profit
Financial results Reconciliation to statutory profit Reference Item 31 Dec 2020 31 Dec 2019 $m $m Statutory AIFRS net profit after tax 442.9 994.2 Investment property and inventory (Gains)/losses from sales of investment property (0.7) (0.7) Fair value gain on investment properties (160.8) (724.4) F
Slide 41: Management operations profit
Financial results Management operations profit Property Funds Development Management HY21 ($m) Management Management Management Operations Revenue 31.9 34.6 6.2 72.8 Operating expenses (25.9) (13.1) (6.4) (45.5) HY21 net profit 6.0 21.5 (0.2) 27.3 HY21 margin 19% 62% (3%) 38% HY20 margin 27% 62% 8%
Slide 42: Cash flow reconciliation
Financial results Cash flow reconciliation 31 Dec 2020 31 Dec 2019 $m $m Cash flow from operating activities 499.7 439.7 payment for inventory acquisition and capex 55.7 35.2 cost of sale of inventory (220.9) (188.6) tax on trading profits not yet paid (20.2) (11.9) capitalised interest 1.3 4.6 adju
Slide 43: Rent relief treatment
Rent relief treatment HY21 rent relief $15.5 million impact on AFFO › Rent relief is provided in the form of rent waivers or rent deferrals › HY21 rent relief amounts are estimates1 › Estimated rent waivers impact AFFO in the period they relate to › Estimated rent waivers impact statutory profit onc
Slide 44: Interest reconciliation
Financial results Interest reconciliation 31 Dec 2020 31 Dec 2019 $m $m Total statutory finance costs 70.6 73.7 Less: unrealised interest rate derivative and exchangeable note MTM gain/(loss)1 (0.9) (6.0) Less: finance costs attributable to investments accounted for using the equity method2 (3.9) (0
Slide 45: Changes in net tangible assets and valuations
Financial results Changes in net tangible assets and valuations Investment portfolio Valuation Weighted % of $m $ps change average portfolio $m cap rate Opening net tangible assets1 (1 Jul 20) 11,850.8 10.86 Dexus Office portfolio 32.8 4.95% 84% Revaluation of real estate 160.8 0.15 Dexus Industrial
Slide 46: Direct property portfolio book value movements
Financial results Direct property portfolio book value movements Office1 Industrial1 Dexus total1 Trading $m $m $m assets2 (inventory) $m Opening direct property 14,171.2 2,233.2 16,404.4 335.8 3 Lease incentives 30.9 1.1 32.0 0.1 Maintenance capex 17.0 1.9 18.9 0.1 Acquisitions 92.6 104.8 197.4 - 4
Slide 47: Capital management: HY21 position
Capital management HY21 position Debt maturity profile1 Key metrics 31 Dec 2020 30 June 2020 $m 1,000 Total debt2 $4,500m $4,838m 900 800 Headroom (approximately)3 $1.7bn $1.6bn 700 600 Gearing (look-through) 24.9%4 24.3%5 500 400 Covenant gearing (covenant6 <55%) 24.9% 25.4% 300 200 Interest cover
Slide 48: Interest rate hedging profile
Capital management Interest rate hedging profile Hedge maturity profile Hedging profile 31 Dec 2020 30 June 2020 $m Average amount of debt hedged1 81% 78% 4,000 4.0% 3,500 3.5% Average amount of debt hedged excluding caps 68% 62% 3,000 3.0% 2,500 2.5% Weighted average interest rate on hedged debt2 1
Slide 49: Debt facilities
Capital management Debt facilities1 Facility limit Drawn Maturity Currency Facility limit Drawn A$m A$m A$m A$m Bilateral bank debt 300 69 FY22 A$ 400 236 FY23 A$ Sub total 5,865 4,176 350 100 FY24 A$ Currency translation and fair value adjustments 366 366 550 100 FY25 A$ 375 0 FY26 A$ Deferred borr
Slide 50: Accelerating growth in funds management
Accelerating growth in funds management Creating leading investment vehicles via unparalleled access to deal flow Track record of unlocking complex Group Transactions FY11-HY21 property and corporate transactions for capital partners › Co-investment with Dexus provides 187 $28.4bn $16.6bn manager al
Slide 51: Funds management development pipeline
Funds management development pipeline Accelerating growth of funds via high quality pipeline $5.6 billion Funds management development pipeline $0.8 billion $4.1 billion $0.7 billion Total Funds committed projects Total Funds uncommitted projects Funds concept projects Project cost on uncommitted pr
Slide 52: Case study: Dexus Office Partnership
Case study: Dexus Office Partnership Portfolio optimisation via active management Dexus Office Partnership FUM grew by 58% since FY14 Portfolio optimisation via: $5.4bn $5.4bn $5.0bn › Divestment of non-core assets › Acquisitions leading to site amalgamation $4.6bn $4.2bn including: and progression
Slide 53: Property portfolio key metrics
Property portfolio 80 Collins Street, Melbourne VIC. 5 Martin Place, Sydney NSW. Key metrics Key metrics Office Industrial Amount of space leased1 93,691sqm2 168,749sqm No. of leasing transactions 1352 46 Occupancy by income 96.0% 95.5% Occupancy by area 96.0% 97.3% 3 4 Average incentives 22.0% 19.7
Slide 54: Office portfolio: premium quality, prime locations
Office portfolio Premium quality, prime locations Well located portfolio in proximity to amenity Challenging markets see flight to quality and transport 86% Prime portfolio1 52% located in Sydney CBD Office by location Office by asset type Prime Grade WA 7% Sydney – Office1 86% CBD/Fringe 52% Premiu
Slide 55: Office lease expiry profiles by region
Office portfolio Office lease expiry profiles by region Sydney CBD Income Area Brisbane CBD 20% Income Area 17.2% 40% 13.9% 15.1% 15.8% 15.9% 29.4% 15% 13.0% 13.7% 30% 27.3% 11.0% 10% 20% 11.5% 12.5% 3.1% 2.6% 3.4% 3.5% 8.7% 8.9% 5% 10% 3.6% 3.9% 3.8% 4.2% 5.3% 5.4% 0% 0% Available FY21 FY22 FY23 FY
Slide 56: Office portfolio: strong customer covenants
Office portfolio Diversity of office customers (by income), Strong customer covenants showing limited concentration risk Public Admin and Safety (State & Federal Governments & associated agencies) 14.4% Financial and Insurance Services 14.2% Office top 10 customers Legal Services 13.1% Professional,
Slide 57: Industrial portfolio: prime quality, high conviction locations
Industrial portfolio 425 Freeman Drive, Richlands QLD. 47 Foundation Road, Truganina VIC. Prime quality, high conviction locations Industrial by asset type Industrial by location Sydney South 7% Industrial estate 42% Melbourne, North 0.5% Business park 26% Land 11% Melbourne, West 15.8% Sydney, $2.4
Slide 58: Industrial portfolio lease expiry profile
Industrial portfolio lease expiry profile1 Staggered and long dated expiries 40% 35% 30% 25% 20% 15% 15.9% 14.0% 10% 11.3% 5% 5.3% 5.8% 4.5% 0% Available FY21 FY22 FY23 FY24 FY25 FY21 Key expiries FY22 Key expiries FY23 Key expiries FY24 Key expiries Axxess Corp Park (1.3%) Axxess Corp Park (4.1%) L
Slide 59: Industrial lease expiry profiles by region
Industrial portfolio Industrial lease expiry profiles by region Sydney Income Area Brisbane Income Area 20% 16.9% 35% 30.4% 13.9% 14.7% 13.8% 28% 15% 10.7% 10.3% 17.6% 19.5% 8.6% 21% 15.8% 10% 7.0% 5.9% 6.2% 14% 11.1% 9.6% 5% 2.9% 2.1% 7% 0.8% 0.6% - - 0.3% 0.5% 0% 0% Available FY21 FY22 FY23 FY24 F
Slide 60: Industrial portfolio: strong and diverse customer covenants
Industrial portfolio 9 Custom Place, Truganina VIC. Strong and diverse customer covenants Industrial top 10 customers Diversity of industrial customers (by income), Limited individual customer exposure showing limited concentration risk Transport, Postal and Warehousing 26.0% Industrial customers1 %
Slide 61: Environmental metrics
Environmental metrics Office sustainability metrics 6 stars 19,235sqm Listed Office NABERS Energy ratings 5.5 stars 307,431sqm 3% 44% Dexus office NABERS Energy Dexus Office Energy & Green House Gas (GHG) emissions intensity portfolio average rating 0 stars 2,377sqm (star) 0.3% Dec 15 4.7 GHG emissi
Slide 62: Case Study: Innovation
Case Study: Innovation 2020 was a year of innovation for Dexus Dexus is continuously investing in innovation to secure first-mover advantage on next generation technology solutions for our customers, investors and business In February 2020, Dexus partnered with SparkBeyond to unleash AI-powered insi
Slide 63: Developments: completed – core hold
Developments Completed – core hold Pipeline Building area1 Project cost2 Yield on cost3 Leased Final Third party sqm $m % % completion partner interest % Office 180 Flinders Street, Melbourne, VIC 20,300 168 6-7% 85% Aug 2020 - Total office 168 Industrial 9 Custom Place, Truganina, VIC 45,400 53 6-7
Slide 64: Committed developments and fund-throughs
Development Committed developments and fund-throughs – core hold Pipeline Building Project Est. cost to Yield on Leased Completion Third party area1 cost est.2 completion cost3 % due partner sqm $m $m % interest % Industrial 18 Momentum Way, Ravenhall, VIC 72,000 24 8 6-7% 100% Mid 2021 75% 47 Momen
Slide 65: Uncommitted developments – core hold
Developments Uncommitted developments – core hold Pipeline Building area1,5 Project cost Est. yield on est. Third party sqm est.2,5 project cost3 partner $m % interest % Office 140 George Street, Parramatta, NSW 43,600 c. 200 6-7% 50% Waterfront Brisbane, QLD 130,700 c. 1,100 5-6% 50% Central Place
Slide 66: Transactions: Dexus and funds management
Transactions Dexus and funds management Dexus acquisitions Purchase Interest Settlement Funds Management acquisitions Purchase Interest Settlement price price $m $m 155, 159, 171 Edward Street, Brisbane, QLD $87.0 100% 3 Aug 20 37-39 Wentworth Street, Greenacre, NSW2 $49.0 49% 17 Jul 20–Feb 21 141 A
Slide 67: Yield is a positive thematic driving investor demand
Yield is a positive thematic driving investor demand Australian real estate yields are high compared to interest rates Historical low interest rates Australia provides attractive cap rates on relative global basis1 15% 10% Attractive relative cap 8% rates in 10% Australia 6% 5% 2.3% 4% 0.8% 0% 0.1%
Slide 68: Sydney CBD supply landscape for major office projects
67 -150 -100 100 0 -50 50 150 '000sqm 183-185 Clarence Street 275 George Street 36 Carrington Street 38-46 Martin Place 2021 Half Year Results 388 George Street FY21 55 Market Street 570 George Street 66 King Street 10 Carrington Street (Wynyard Place) Market outlook 210-232 George Street 426-430 Ke
Slide 69: Melbourne CBD supply landscape for major office projects
68 -100 100 0 -50 50 150 '000sqm 80 Collins Street 405 Bourke Street 180 Flinders Street FY21 74-110 Queen Street 550 Bourke Street 2021 Half Year Results Withdrawals (FY21) 140 Lonsdale Street 1000 La Trobe Street 364-378 Little Lonsdale, 283-295 Queen FY22 Street Market outlook 18-38 Siddeley St W
Slide 70: Office markets
Office markets Dexus position in CBD office CBD Office Market Sydney Melbourne Brisbane Perth Total NLA 5.1 million sqm 5.1 million sqm 2.3 million sqm 1.8 million sqm Prime vacancy average 12.5% 13.8% 12.3% 15.7% Dexus CBD Exposure Total NLA 553,530 sqm 345,999 sqm 258,824 sqm 122,235 sqm Number of
Slide 71: Other information
Other information Exchange rate and securities used in statutory accounts 31 Dec 2020 30 Jun 2020 31 Dec 2019 Closing rates for Statement of Financial Position USD 0.7702 0.6863 0.7006 Average rates for Statement of Comprehensive Income USD 0.7302 0.6714 0.6846 Post consolidation equivalent amounts
Slide 72: Glossary
Glossary Distribution payout policy: Policy is to distribute in line with free cash flow. Funds From Operations (FFO): 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 Australia
Slide 73: Important information
Important information › This presentation is issued by Dexus Funds Management Limited (DXFM) in its capacity as responsible entity of Dexus (ASX:DXS). It is not an offer of securities for subscription or sale and is not financial product advice. › Information in this presentation including, without
Slide 74: dexus
dexus