Slide 1: Dexus 2022 Half year results presentation (ASX release)
Dexus (ASX: DXS) ASX release 15 February 2022 2022 Half year results presentation Dexus provides its 2022 half year results presentation. An investor conference call will be held at 9.30am (AEDT) today, which will be webcast via the Dexus website at www.dexus.com/investor-centre and available for do
Slide 2: 2022 Half Year Results
2022 Half Year Results 15 February 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: Active six months embeds future growth
Active six months embeds future growth › Continued growth and strong performance across the funds management business – Raised circa $1.3 billion across funds1 in HY22 › Secured heads of agreement at city-shaping Jandakot Airport, Perth WA Waterfront Brisbane development and 154,534sqm industrial de
Slide 6: Our strategy
Our strategy Well positioned to leverage key megatrends Purpose To create spaces where people thrive Vision To be globally recognised as Australia’s leading real estate company To deliver superior risk-adjusted returns for investors from high-quality real estate Strategy in Australia’s major cities
Slide 7: Fully integrated real estate platform
Fully integrated real estate platform Across multiple sectors $45.3 billion1 real estate platform Office Industrial Retail Healthcare $24.9bn $11.0bn1 $6.6bn $1.4bn Dexus Funds Dexus Funds Dexus Funds Dexus Funds $13.7bn $11.2bn $4.0bn1 $7.0bn1 $0.1bn $6.5bn $0.5bn $0.9bn (HY21 $13.8bn) (HY21 $8.7bn
Slide 8: Environmental, Social and Governance update
Environmental, Social and Governance update 2021 Global ESG benchmark performance ESG update Global real estate leader Targeting Net Zero by 30 June 2022 S&P Global Sustainability › Reducing emissions and undertaking property upgrades Yearbook › Transitioning to renewables and carbon offsets for man
Slide 9: Financial results
Financial results
Slide 10: Key earnings drivers and valuations
Key earnings drivers and valuations Property portfolio valuations remain robust Key earnings drivers Property portfolio valuations Earnings driver HY22 result 31 Dec 2021 Valuation Capitalisation rate Property AFFO1 of $313.4 million value5 six-month movement6 six-month movement Property +4.4% offic
Slide 11: HY22 financial results
HY22 financial results Strong underlying growth in a complex operating environment HY22 HY214 Change › Office property FFO increased primarily due to fixed rent increases and the $m $m % acquisition of Capital Square, Perth partly offset by the impact of divestments Office property FFO 338.7 330.5 2
Slide 12: COVID-19 impacts
COVID-19 impacts Rent collections of 97.9% for HY22 HY22 rent collections Rent collections1 Office Industrial Total › Strong cash collection while ensuring the viability of small business customer base Total HY22 97.8% 98.3% 97.9% › Continuing to work with customers on rent relief requests, but rece
Slide 13: Strong financial position
Strong financial position Contracted asset sale proceeds to maintain robust balance sheet Diversified sources of debt › Gearing of 31.1%1, at the lower end of the 30-40% target range › Implemented a simplified corporate structure from 6 July 2021 Exchangeable Notes 6% › Staggered settlement dates on
Slide 14: Funds management
Funds management
Slide 15: Dexus funds platform
Dexus funds platform Key characteristics Large diversified investor base › Established capital partners in Australia and offshore Broad capital 8% 2% Superannuation & base › Access to all pools of capital including wholesale, retail, unlisted 6% 54% Pension Funds Sovereign Wealth and listed invest
Slide 16: Wide offering across the platform
Wide offering across the platform Diversified management business across a number of vehicles External FUM External FUM External FUM External FUM External FUM External FUM $6.4bn $0.1bn $16.9bn $2.2bn $1.4bn DXI Property for Income Funds 1 & 2 Newly established Broadly classified as ‘pooled funds’ J
Slide 17: Funds management HY22 highlights
Funds management HY22 highlights Strong track record of performance Raised $1.3 billion equity3 with major raisings for: › Dexus Wholesale Property Fund (DWPF) outperforming over 3, 5, 7 and 10 years1 DXI $350m DXC $56m DHPF2 $250m › Dexus Healthcare Property Fund (DHPF) delivering a 18.0% one-year
Slide 18: Office portfolio
Office portfolio
Slide 19: Office demand indicators are positive
Office demand indicators are positive Office to benefit from buoyant conditions in white collar industries Hiring intentions are positive amid current wave Net absorption positive in the 4 major CBDs* Net balance ‘000 jobs ‘000sqm 40 80 150 70 100 20 60 50 - 50 0 (20) 40 -50 Business confidence 30 -
Slide 20: Office portfolio performance
Office portfolio performance High occupancy maintained despite difficult operating environment $24.9 billion $13.7 billion › Strong leasing activity despite conditions, maintaining occupancy and Dexus group increasing WALE along with the Capital Square acquisition Dexus balance sheet office portfoli
Slide 21: Staggered expiry profile and diversified tenant base
Staggered expiry profile and diversified tenant base Dexus office portfolio well placed Dexus office portfolio lease expiry profile (by income)1 Diversified tenant base with limited concentration risk 20% Sydney Melbourne Brisbane Perth Top customer – Victoria State Government 15% 13% target thresho
Slide 22: Leasing observations
Leasing observations Positive indicators for leasing and large tenants active Dexus leasing observations › Sydney premium office occupancy costs1 are one-third of top global cities (Hong Kong Central and New York midtown), ranking Sydney the 34th most expensive city in the world › Strong demand from
Slide 23: Industrial portfolio
Industrial portfolio
Slide 24: Industrial portfolio performance
Industrial portfolio performance Strong leasing across core and development properties $11.0 billion $4.0 billion › Significant leasing volumes drove occupancy improvement Dexus group industrial and development commitments portfolio Dexus balance sheet industrial portfolio › Portfolio over-renting h
Slide 25: Industrial take-up boosted by multiple sectors
Industrial take-up boosted by multiple sectors Dexus’s customer strategy nods to integration between sectors National industrial take-up running strongly Rapid growth across multiple sectors driving demand Moving annual turnover $ billion Million sqm 5.0 45 4.5 30 4.0 15 3.5 3.0 0 Nov-16 Nov-17 Nov-
Slide 26: Investments and Developments
Investments and Developments
Slide 27: Significant transactional activity
Significant transactional activity Recycling into high-returning opportunities $4.4 billion $9.3 billion Group property acquisitions sourced predominantly off-market Total group transactions across office, industrial, healthcare and convenience retail sectors Capital Square, Perth WA Jandakot Airpor
Slide 28: Progressing the $17.8 billion development pipeline
Progressing the $17.8 billion development pipeline Progressed planning and leasing at a number of city-shaping projects ($9.3 billion) Sydney Sydney Central Place Sydney Pitt and Bridge precinct Target project timing: Stage 1 – 2023 to 2026 Target project timing: 2024 to 2029 Sydney Melbourne Brisba
Slide 29: Development track record across multiple sectors
Development track record across multiple sectors 180-189 Flinders Street, Melbourne VIC 175 Pitt Street, Sydney NSW 18 Momentum Way, Ravenhall VIC Australia Bragg Centre, Adelaide SA 80 Collins Street, Melbourne VIC 25 Martin Place, Sydney NSW 62 Ferndell Street, South Granville NSW North Shore Heal
Slide 30: Key development pipeline projects
Key development pipeline projects Development Project Est. yield Development Sector Commencement FY22 FY23 FY24 FY25 Diversified across status cost est.1 on cost eastern seaboard cities Committed 123 Albert Street, Brisbane QLD Office Construction $0.6bn 5-6% FY22 Focus on ultra-prime Ravenhall VIC
Slide 31: Developments
Developments Increasing relevance as a driver of returns Dexus annual development WIP (incl. land cost)1 $bn 3.0 ~$2.6bn 2.5 › Dexus development WIP is expected to more than double going forward 2.0 – Incremental development spend forecast $0.7 billion p.a. on average (excluding 1.5 existing land) ~
Slide 32: Consistent delivery of trading profits over time
Consistent delivery of trading profits over time Replenishment of pipeline underway › $21.6 million1 of trading profits (post tax) Trading profit track record realised during HY22 across 4 trading projects since 2012 › Working on securing FY23 trading profits, with potential contributions from 12 Fr
Slide 33: Summary
Summary 32
Slide 34: Dexus investment case
Dexus investment case High-quality portfolio with embedded upside from funds management and development Key fund terms Fully integrated platform will support generation of superior risk adjusted returns Investment Funds Management Development $18.3bn $27.0bn $17.8bn of capital invested of managed de
Slide 35: Summary
Summary Positioned for the recovery › The pandemic continues to impact on business and consumer confidence, and we are well placed in this environment › Demonstrated ability to capitalise on opportunities while also being able to address challenges › Ability to deliver long-term performance beyond t
Slide 36: Appendices
Appendices
Slide 37: Dexus today
Dexus today $45.3 billion – total funds under management1 Dexus portfolio Funds Management portfolio Real estate Office 75% securities 5% Office 42% Real estate Healthcare 3% securities <0.5% Retail <0.5% $18.3bn $27.0bn Retail 24% Healthcare 3% Industrial 26% Industrial 22% 1. Funds under managemen
Slide 38: Alignment with megatrends
Alignment with megatrends to support long-term growth Urbanisation 1 Population growth and infrastructure investment will support the ongoing urbanisation of major Australian cities and the development of vibrant communities around major transport nodes Megatrends will drive the Technological advanc
Slide 39: Investment strategy and business model
Investment strategy and business model Delivering superior risk-adjusted returns from core Australian real estate Enhancement of existing portfolio composition DEVELOPMENTS and return profile through development activity Creation of next generation product Stabilised assets provide income generating
Slide 40: Case study on growth in funds management
Case study on growth in funds management Delivering high quality healthcare product for DHPF’s investors › Launched in 2017 to capitalise on trends and HY22 highlights unprecedented growth of the Australian healthcare sector, underpinned by strong 18.0% $250m $231m demand drivers and market fundamen
Slide 41: Reconciliation to statutory profit
Financial results Reconciliation to statutory profit Reference Item 31 Dec 2021 31 Dec 20201 $m $m Statutory AIFRS net profit after tax 803.2 441.3 Investment property and inventory (Gains)/losses from sales of investment property - (0.7) Fair value gain on investment properties (486.2) (144.7) Fina
Slide 42: Management operations profit
Financial results Management operations profit Funds Property Development Management HY22 ($m) Management Management Management Operations Revenue 56.9 34.7 7.7 99.3 Operating expenses (21.3) (29.6) (11.2) (62.1) HY22 net profit 35.6 5.1 (3.5) 37.2 HY22 margin 63% 15% (45%) 37% 18 Momentum Way, Rave
Slide 43: Cash flow reconciliation
Financial results Cash flow reconciliation 31 Dec 2021 31 Dec 20201 $m $m Cash flow from operating activities 344.2 493.6 add back: payment for inventory acquisition and capex 2.3 57.5 less: cost of sale of inventory (139.3) (220.9) less: tax on trading profits not yet paid (9.2) (20.2) add back: ca
Slide 44: Interest reconciliation
Financial results Interest reconciliation 31 Dec 2021 31 Dec 20201 $m $m Total statutory finance costs 71.5 71.5 Less: Debt modification and amortisation of exchangeable notes (2.1) (1.8) Less: Finance costs attributable to investments accounted for using the equity method2 (0.3) (4.4) Less: AASB 16
Slide 45: Change in net tangible assets and revaluations
Financial results Change in net tangible assets and revaluations Investment portfolio Valuation Weighted % of change average cap portfolio $m rate FUM $m $ps Opening net tangible assets1 (1 Jul 21) 12,280.2 $11.42 Dexus office portfolio 147 4.85% 75% Revaluation of real estate 486.2 0.45 Dexus indus
Slide 46: Direct property portfolio book value movements
Financial results Direct property portfolio book value movements Office1 Industrial1 Healthcare Dexus total1 Trading $m $m and other1 $m assets2 $m (inventory) $m Opening direct property 13,895.3 2,903.6 66.5 16,865.4 178.2 3 Lease incentives 58.4 7.9 - 66.3 0.6 Maintenance capex 22.0 2.4 - 24.4 - A
Slide 47: Co-investments in pooled funds
Financial results Co-investments in pooled funds Dexus Dexus HY22 Passing Fund Ownership Number of Total assets Occupancy WALE WACR co-investment co-investment distribution look-through stake (%) properties ($m) (%) (years) (%) value ($m)1 income ($m) yield (%)2 gearing (%) Healthcare DHPF 23.1% $23
Slide 48: Capital management: HY22 position
Capital management HY22 position Debt maturity profile1 Key metrics 31 Dec 2021 30 June 2021 $m 1,600 Total debt2 $5,591m $4,925m 1,400 1,200 Headroom (approximately)3 $1.6bn $1.1bn 1,000 Gearing4 31.1%5 26.7% 800 600 Covenant gearing (covenant6 <55%) 30.3% 26.5% 400 Interest cover (covenant6 >2.0x)
Slide 49: Interest rate hedging profile
Capital management Interest rate hedging profile Hedge profile Hedging profile 31 Dec 2021 30 June 2021 $m 4,000 3.0% Average amount of debt hedged1 64% 81% 3,500 Average amount of debt hedged excluding caps 56% 68% 3,000 2.5% Weighted average interest rate on hedged debt2 1.5% 1.7% 2,500 2,000 2.0%
Slide 50: Debt facilities
Capital management Debt facilities1 Facility limit Drawn Maturity Currency Facility limit Drawn A$m A$m A$m A$m Bilateral bank debt 200 200 FY23 A$ Sub total 600 600 FY24 A$ 6,885 5,292 1,150 600 FY25 A$ Currency translation and fair value adjustments 352 352 700 308 FY26 A$ Deferred borrowing costs
Slide 51: Funds management development pipeline
Funds management Development pipeline $8.3 billion Funds management development pipeline $2.7 billion $4.9 billion $0.7 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 52: Office and industrial key metrics
Property portfolio Office and industrial key metrics Key metrics Office Industrial Amount of space leased1 112,601sqm2 115,664sqm3 No. of leasing transactions 1512 403 Occupancy by income 95.1% 98.6% Occupancy by area 94.5% 99.2% 44 Market Street, Sydney NSW 180-189 Flinders Street, Melbourne VIC Av
Slide 53: Office portfolio diversification
Property portfolio Office portfolio diversification Office by asset type Office by location Sydney Premium WA 11% CBD/fringe 46% Prime 48% grade 94%1 QLD 13% $13.7bn $13.7bn Other 1% VIC 21% NSW 55% B Grade 5% A Grade 48% Sydney Suburban 7% 1. Prime grade buildings represent 94% of the office portfo
Slide 54: Office portfolio lease expiry profiles by region
Property portfolio Office portfolio lease expiry profiles by region Sydney CBD Income Area Brisbane CBD Income Area 20% 30% 15.8% 14.1% 12.8% 13.7% 12.9% 13.0% 19.8% 20.3% 11.1% 11.8% 20% 17.0% 14.8% 10% 11.5% 12.2% 10% 7.2% 7.2% 3.6% 3.6% 3.9% 3.2% 3.4% 3.8% 4.4% 4.6% 0% 0% Available FY22 FY23 FY24
Slide 55: Office top customers
Property portfolio Office top 10 customers represents 17% of property portfolio income Office top 10 customers Diversity of office customers (by income) 0% 5% 10% 15% 20% Credit % of Office customers1 rating2 income3 Financial and Insurance Services 15% Legal services 14% State Of Victoria AA 3.3% P
Slide 56: Industrial portfolio diversification
Property portfolio Industrial portfolio diversification Industrial by asset type Industrial by location Industrial NSW 41% estate 66% Land 2% WA 19% Data centre 3% $4.0bn1 $4.0bn1 380 Dohertys Road, Truganina VIC Distribution centre 12% SA 1% VIC 27% QLD 12% Business park 17% 9 Custom Place, Trugani
Slide 57: Industrial portfolio lease expiry profile
Property portfolio Industrial portfolio lease expiry profile1 20% 14.7% 15% 10.8% 9.6% 10% 5.8% 6.0% 5% 1.4% 0% Available FY22 FY23 FY24 FY25 FY26 FY22 Key expiries FY23 Key expiries FY24 Key expiries FY25 Key expiries FY26 Key expiries Axxess Corp Park (2.7%) Distribution Ctr Lara (1.6%) Kings Park
Slide 58: Industrial lease expiry profiles by region
Property portfolio Industrial portfolio lease expiry profiles by region Sydney Income Area 25% Brisbane Income Area 19.3% 20.4% 25% 21.1% 20% 15.7% 20% 17.9% 17.3% 14.0% 15.4% 15% 9.7% 8.7% 15% 10% 6.9% 6.8% 8.7% 3.9% 4.4% 10% 6.1% 7.1% 5% 3.0% 2.5% 5.6% 5.3% 3.6% 5% 0% - - Available FY22 FY23 FY24
Slide 59: Industrial top customers
Property portfolio Industrial top 10 customers represent 3.9% of property portfolio income Industrial top 10 customers Diversity of industrial customers (by income) Industrial customers1 % of income2 Rental, Hiring and Real Estate 1% Services Autosports Group 0.7% Public Administration and Safety 1%
Slide 60: Office portfolio sustainability metrics
Environmental metrics Office portfolio sustainability metrics Dexus Office Energy and GHG Emissions Intensity Dexus Office NABERS Energy ratings Dexus Office NABERS Water ratings 5.5 stars GHG emissions intensity (kg CO2- 609 336,785sqm 47% 5 stars Energy Intensity (MJ/sqm) 168,562sqm 0 stars 1,065s
Slide 61: 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 31 Innovation Drive, Merrifield VIC 51,600 37 n/a 100% Aug-21 49% Total developments completed 51,600 37 1. At 100% ownership. 2.
Slide 62: Committed developments and fund-throughs
Development Dexus committed developments and fund-throughs Pipeline Building area1 Project cost Est. cost to Yield on Leased Completion due Third party partner sqm est.2 completion2 cost3 % interest $m $m % % Office 123 Albert Street, Brisbane QLD 39,300 560 173 5-6% 17% Mid 2023 - Total office 39,3
Slide 63: Uncommitted developments and fund-throughs
Development Dexus uncommitted developments and fund-throughs Building Project cost Est. yield on est. Third party Pipeline area1,5 est.2,5 project cost3 partner interest % sqm $m % Office Waterfront, Brisbane QLD 128,900 c.1,150 5-6% 50% 60 Collins Street, Melbourne VIC 42,800 c.950 5-6% - 4 Central
Slide 64: Consistent delivery of trading profits over time
Consistent delivery of trading profits over time Replenishment of pipeline underway Trading projects Trading strategy FY22 FY23 FY24+ Key √ Secured Truganina (Laverton) properties1, 2 Development √ Unsecured Botany Quarter (Lakes Business Park South), Botany2 Development √ 436-484 Victoria Road, Gla
Slide 65: Transactions
Transactions Dexus8 Dexus acquisitions Purchase price9 Interest Settlement Dexus divestments Sale price9 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 Vic
Slide 66: Transactions: funds management
Transactions Funds management Funds Management acquisitions Purchase price8 Interest Settlement Funds Management acquisitions (cont’d) Purchase price8 Interest Settlement $m $m Bethesda Mental Health Clinic, Cockburn Central WA1 $58.3 100% 07-Jul-21 43 Butterfield Street, Herston QLD4 $33.3 100% 17-
Slide 67: Yield is a positive thematic driving investor demand
Yield is a positive thematic driving investor demand for real estate Low interest rate environment supportive of investment demand Australia has attractive office yields on relative global basis1 Negative real interest rates support demand for real assets 10 year bond yield Real 10yr bond yield New
Slide 68: Sydney portfolio leasing recovery after past lockdowns
Sydney portfolio leasing recovery after past lockdowns Enquiries (number) ‘000sqm 200 35 180 30 160 140 25 120 20 100 15 80 60 10 40 5 20 0 0 Jul-19 Aug-19 Sep-19 Oct-19 Nov-19 Dec-19 Jan-20 Feb-20 Mar-20 Apr-20 May-20 Jun-20 Jul-20 Aug-20 Sep-20 Oct-20 Nov-20 Dec-20 Jan-21 Feb-21 Mar-21 Apr-21 May-
Slide 69: Industrial sector
Industrial sector Very strong demand leading to significant rent growth Ecommerce, logistics and wholesale trade driving total take-up Industrial rents increasing nationally Retail ecommerce Retail other Logistics Trade Outer West Sydney West Melbourne Million sqm Wholesale Trade Other $/sqm South B
Slide 70: Healthcare sector
Healthcare sector Healthcare has outperformed other sectors over the past decade Institutional demand drives healthcare transactions to record high levels Indexed returns by sector (10yrs) (September 2011=100) Hospital R&D Medical Office $ billion All Property Retail Office Industrial Healthcare 1.6
Slide 71: Market outlook: Sydney withdrawals
'000 square metres 70 -150 -100 0 50 -200 -50 100 150 570 George St - Energy Australia (Far East Org) FY2022 withdrawals FY22 Poly Centre - 210 George St (Poly) Quay Quarter - 50 Bridge St (AMP/REST) Source: JLL Research, Dexus Research. 32-36 York St David Jones - 121 Castlereagh St (CBUS, Scentre)
Slide 72: Market outlook: Mooted withdrawals
71 '000 square metres -100 -40 60 -80 -60 0 20 -20 40 80 Vic Uni - 364-378 Little Lonsdale (ISPT) The Foundry (Brookfield) FY22 withdrawals FY22 1000 La Trobe (Poly) 100 Queen St (GPT) Source: JLL Research, Dexus Research. World Trade - Twr 1 (Zone Q/Ouson) NAB House - 500 Bourke St (ISPT) FY23 with
Slide 73: Dexus's position in CBD office
Office markets Dexus’s position in CBD office CBD office market Sydney Melbourne Brisbane Perth Total NLA 5,175,793sqm 5,202,656sqm 2,310,516sqm 1,794,088sqm Prime vacancy average 11.4% 15.3% 15.7% 14.0% Dexus CBD exposure Total NLA 530,137sqm 422,429sqm 191,753sqm 189,339sqm Number of properties 17
Slide 74: Other information
Other information Exchange and securities used in statutory accounts 31 Dec 2021 30 Jun 2021 31 Dec 2020 Closing rates for Statement of Financial Position USD 0.7256 0.7518 0.7702 Average rates for Statement of Comprehensive Income USD 0.7319 0.7468 0.7302 Post consolidation equivalent amounts 6 mth
Slide 75: 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 76: 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 77: Dexus
dexus