Dexus · ASX:DXS
Dexus — DB RREEF Trust — FY2007 Earnings Presentation
62 slides from Dexus's earnings presentation, Aug 28, 2007
Slide 1: DB RREEF Trust 2007 Annual results
DB RREEF Trust 2007 Annual results 28 August 2007 Victor Hoog Antink Chief Executive Officer
Slide 2: Full year highlights – delivering on strategy
Full year highlights – delivering on strategy Strong performance from all sectors Solid financial results Growth in acquisitions – Whirlpool and expansion into Europe Creating value through developments Actively recycling capital Growing third party platform The leader in combined office and industr
Slide 3: Financial performance
Financial performance 30 June 06 30 June 07 Income growth AIFRS operating profit $1066.4m $1210.8m 13.5% Total distributions $306.3m $324.6m 6.0% Distributions per security 11.0cps 11.3cps 2.7% Portfolio returns Revaluations $695.7m $864.6m 10.8% NTA $1.53 $1.82 19% Capital management Gearing 38.3%
Slide 4: Agenda
Agenda Group overview Financial & capital management Portfolio Third party funds Summary & outlook Head office, 343 George Street, Sydney 4
Slide 5: Group overview
Group overview
Slide 6: DB RREEF - diversified property group
DB RREEF - diversified property group Australian Office $4.0bn Australian Industrial $1.8bn US & European Industrial $1.8bn Australian Retail $1.2bn Developments $3.0bn Third Party Funds $4.6bn 6
Slide 7: Portfolio at a glance
Portfolio at a glance 30 June 06 30 June 07 $ billion $ billion Funds under management $11.8 $13.6 15% DB RREEF Trust $7.9 $9.0 14% 3rd party funds $3.9 $4.6 18% Development pipeline $1.8 $3.0 DB RREEF Trust $1.3 $2.2 3rd party funds $0.5 $0.8 7
Slide 8: DB RREEF Group diversification
DB RREEF Group diversification DB RREEF group managed assets DB RREEF capital sources European Industrial Syndicates US Industrial 2.5% 1.4% Australian & Direct 10.6% NZ office Mandates 44.4% DB RREEF 17.5% Trust 66.2% Australian Industrial 16.3% $13.6bn $13.6bn DWPF 14.9% Australian Retail 24.1% Ca
Slide 9: Expanding the portfolio - $1.5 billion acquisitions
Expanding the portfolio - $1.5 billion acquisitions Australia/New Zealand Europe DB RREEF Trust DB RREEF Trust Acquisitions $59m Acquisitions $363m Disposals $193m Commitments $35m 3rd party funds Acquisitions $351m Disposals $69m North America DB RREEF Trust Acquisitions $35m Commitments $656m Disp
Slide 10: Third party funds management
Third party funds management Growth in 3rd party FUM $4.6b $667 million (16.9%) — Acquisitions $351 million — Valuation uplift $330 million Development pipeline 10 developments, $810m Strong investment performance Returns exceeding benchmark 324 Queen Street, Brisbane 10
Slide 11: Integrated platform
Integrated platform Quality workspace Increase returns Customised solutions Maximise returns Proactive management Managing risk Tenants Investors Sustainability features 5000+ 25000+ Creating new investment opportunities Properties 250 $13.6bn Employees 227 Preferred employer Reward & Recognition Ca
Slide 12: The DB RREEF team
The DB RREEF team Australia wide team: 227 Property, development, fund management, finance and operations expertise Inaugural Employee Opinion Survey in 2007: strong engagement Members of the DB RREEF team at 30 The Bond, Sydney (owned by DB RREEF Trust) DB RREEF Executive Committee, Sydney Head Off
Slide 13: Corporate Responsibility & Sustainability
Corporate Responsibility & Sustainability Market leader in sustainability Holistic approach Portfolio wide initiatives 9 year track record Achieved 2nd FTSE4Good index rating Purchased 15% green power for office CR&S report aligned to UN Global Reporting Initiative (GRI3) 30 The Bond, 30-34 Hickson
Slide 14: Finance & Capital Management
Finance & Capital Management
Slide 15: Profit composition – continuing growth
Profit composition – continuing growth 1600 1400 $38.2m $1,210.8m 1200 $864.6m 1000 Unrealised gains & other distribution 800 adjustments $m $844.2m 600 $3.8m $529.7m $11.8m $(167.9)m $(36.9)m 400 $(32.5)m Minority Interest $42.0m 200 Distribution $324.6m 0 Net Manag ement O ther Net Financ e O ther
Slide 16: Funds management business
Funds management business Increased funds under management DRT $9.0bn Third party $4.6bn Total $13.6bn 15.3% Outperforming benchmarks Growth in profit Total fee income $73.2m 29% EBIT $27.9m 20% 343 George Street, Sydney 16
Slide 17: Earnings and distribution growth
Earnings and distribution growth 17
Slide 18: Portfolio growth composition
Portfolio growth composition $10,000 $9,750 $9,718m $9,500 $691m $9,250 $865m $9,027m $9,000 $8,750 $ millions $8,500 $308m $(255)m $457m $(196m) $1,179m $8,250 $8,000 $7,848m $7,750 $9,027m $7,500 $7,848m $7,250 $7,000 FUM 2006 Ac quisitions Disposals Capital FX / Cash & Valuation FUM 2007 Committe
Slide 19: Strengthened balance sheet – capacity to grow
Strengthened balance sheet – capacity to grow 19
Slide 20: Diversified debt profile
Diversified debt profile Facility Mix June 07 Maturity Profile June 07 $3.8b Well diversified funding mix Even spread of maturities 1 90 day paper A$346, backed by standby lines of credit. 20
Slide 21: Strong financial risk management
Strong financial risk management June 06 June 07 Gearing: 38.3% 35.6% Weighted average cost of debt : 1 5.71% 5.70% Debt hedged: 89% 93% Duration of debt: 2.8 years 2.8 years Interest hedge duration: 6.5 yrs 6.0 yrs Interest cover: 3.1X 2.9X Foreign net assets hedged: 92% 91% Foreign Income hedged:
Slide 22: Portfolio
Portfolio Ben Lehmann Fund Manager, DB RREEF Trust
Slide 23: Portfolio highlights
Portfolio highlights Strong market fundamentals High quality assets delivering consistent capital and income growth Focus on office and industrial Recycling of portfolio: capturing value Expansion of development activity and pipeline Acquisitions in international markets 23
Slide 24: Tenant strategy
Tenant strategy Major corporates: market leaders locally and internationally Government bodies They demand (and we deliver): Modern buildings with quality workspace Long-term, flexible and customised solutions – to meet current and future needs Premium locations Sustainability features Owner/Develop
Slide 25: Significant development pipeline for growth
Significant development pipeline for growth Completed $198m of developments Development pipeline $2.2bn Creating value $m Aust USA Total Completed 173 25 198 Pipeline Underway 259 134 393 Future 1,674 134 1,808 Total 1,933 268 2,201 25
Slide 26: Office
DB RREEF Managed in partnership with Deutsche Bank
Slide 27: Office – highlights
Office – highlights Delivering income growth Net property income $239m: Like for like with occupancy 5.3% increase Like for like market increase 7.6% Recycling portfolio Sale of The Zenith (50%), $126.3m New leases & renewals, 72,000 sqm or 11% Increased portfolio value 12.6% to $4.0b Revaluations i
Slide 28: Market leader in office in Australia
Market leader in office in Australia Market leader in Australia 24 office buildings High quality portfolio Premium and A grade = 86% of office portfolio Strong occupancy rates continues Occupancy by area = 99.0%1 vs mkt 94.4%2 Lease duration Average lease duration = 6.2yrs Approx 20% subject to mark
Slide 29: Office – $1bn development pipeline
Office – $1bn development pipeline Property NLA Est. End sqm Value ($m) 1 Bligh Street, Sydney 42,000 490 105 Phillip Street, Parramatta 20,400 120 60 Miller Street, North Sydney 4,700 29 123 Albert Street, Brisbane 38,600 390 TOTAL 105,700 $1,029 Architect’s impression Space 1 Bligh Sydney 29
Slide 30: Office – drivers & outlook
Office – drivers & outlook Australian office markets experiencing strong growth phase Strong demand and limited near-term supply Portfolio positioned to benefit from market strength Active management of portfolio will continue to enhance returns Existing developments in key growth markets Sydney & B
Slide 31: Industrial
Industrial 31
Slide 32: Industrial - highlights
Industrial - highlights Net property income Australia $114m Like for like with occupancy 0.9% increase Like for like market increase 2.6% North America US$83.8m or A$107m Like for like with occupancy 6.2% increase Like for like market increase 5.5% Europe1 8.8m or A$15m Elhofen, Germany 1 No full ye
Slide 33: Industrial highlights
Industrial highlights Increased portfolio value of 19% to $3.6b Australia $1.8b North America $1.5b Europe $344m Revaluations Up 5.8% or $198m Acquisitions Completed $457m Future $633m 11 Talavera Road, Macquarie Park 33
Slide 34: Industrial - portfolio
Industrial - portfolio Number of properties Australia 39 North America 103 Europe 20 1 Strong occupancy rates maintained Australia 98.3% North America 95.2% Europe 92.8% Lease duration2 steady Australia 4.7yrs North America 3.4yrs Europe 4.1yrs 5823 Newton Drive, San Diego USA 1 By area 2 By income
Slide 35: Industrial - developments
Industrial - developments $m Aus USA Total Completed 173 25 198 Pipeline Underway 34 134 168 Future 645 188 833 Total pipeline 679 322 1,001 Artist Impressions: Laverton North and Axxess Corporate Park developments 35
Slide 36: Industrial – transactions
Industrial – transactions $m Aus USA Europe Total Acquisitions 59 35 363 457 Disposals (67) (3) - (70) Future commitments (58) 656 35 633 Above: Duisburg, Germany Right: Cornerstone Building 2, San Antonio 36
Slide 37: Industrial – drivers & outlook
Industrial – drivers & outlook Stable industrial markets supporting strong occupancy Benefiting from strong sector fundamentals Large, diversified quality portfolios Developments underway and pipeline to deliver Enhanced income Development profit Recycling opportunities Grow international portfolio
Slide 38: Retail
Retail EE INIA ANNIANIANY NANIZNIZNIZSIZSIZNIZS DB RREEF Managed in partnership with Deutsche Bank
Slide 39: Retail - highlights
Retail - highlights High quality portfolio of regional centres Strong turnover growth (MAT) $1.64b up 7.6% Income of $55m, 6.7% increase like for like Maintained occupancy 99.9% Average lease duration 5.5 yrs Revaluations increased $214m up 21.6% Development projects $225m Westfield Mt Druitt 39
Slide 40: Retail – developments
Retail – developments North Lakes, Qld Extension of 36,646 square metres Estimated completion value of $100 million Due for completion in November 2007 Plenty Valley, Vic Extension of 47,720 square metres Estimated completion value of $125 million Due for completion June 2008 North Lakes, QLD 40
Slide 41: Third Party Funds
Third Party Funds Victor Hoog Antink Chief Executive Officer 41
Slide 42: Third party funds - portfolio
Third party funds - portfolio Total Funds under management $4.6bn DB RREEF Wholesale Property Fund $2.0bn Separate Accounts (AXA & STC) $2.4bn Syndicates $0.2bn Diversified portfolio Industrial Retail 10.1% 45.1% Cash/ Other 1.3% Office 43.5% Port Central Shopping Centre, Port Macquarie 42
Slide 43: Third party funds – growth in FUM
Third party funds – growth in FUM Funds under management $667m to $4.6b $4,800 $88m $(33m) $54m $330m $4,616m $4,600 $4,400 $(69m) $351m $667m $4,200 $4,000 $3,949m $ millions $3,800 $3,600 $4,616m $3,949m $3,400 $3,200 $3,000 FUM 2006 Ac quisitions Disposals Valuation Capital O ther FUM 2007 Future
Slide 44: Third party funds – strong investment performance
Third party funds – strong investment performance DWPF, AXA and STC outperformed the sector benchmark over 3 and 5 years Future performance will be driven by: income growth value add activities Performance at 30 June 2007 18% 16.9% 17% 15.9% 16% 15% 14.5% 14.2% 14% 13% 12% 3 Years 5 Years Benchmark:
Slide 45: Third party funds – drivers & outlook
Third party funds – drivers & outlook Continuing focus on delivering superior investment performance Funds under management growth through acquisition DWPF’s intention to purchase 5 retail properties Purchase of 50% interest in Coles facility by AXA mandate On market acquisitions Funds under managem
Slide 46: Summary & Outlook
Summary & Outlook Victor Hoog Antink Chief Executive Officer
Slide 47: 2007 – delivering on strategy
2007 – delivering on strategy Expansion of our direct property portfolio: Continued focus on industrial and office Increasing net property income Actively managing the portfolio Increasing asset weighting to international markets Leveraging our integrated platform to extract synergies: Recycling por
Slide 48: 2008 Outlook and growth strategy
2008 Outlook and growth strategy Diversified and integrated business – strong platform for growth Build on our strengths in office and industrial Operate across more of the value chain as Owner, Manager, Developer Expand through increasing acquisitions and developments Grow third party funds Increas
Slide 49: Questions
DB RREEF Managed in partnership with Deutsche Bank
Slide 50: Appendices
DB RREEF Managed in partnership with Deutsche Bank
Slide 51: Strong balance sheet
Strong balance sheet DB RREEF Trust 30 Jun 07 30 Jun 06 Market capitalisation ($bn) 5,688 4,105 NTA per security (excluding minority interest) ($) 1.82 1.53 Gearing (net of cash) 35.6% 38.3% Investment properties increase 14.7% 17.5% $m $m Cash & receivables 96 142 Investment properties 9,152 7,979
Slide 52: Profit to distribution reconciliation
Profit to distribution reconciliation 30 June 2007 $m Net Profit (after tax) 1,210.8 Profit attributable to minority interest (42.0) Profit attributable to stapled security holders 1,168.8 Adjustments: Property revaluations (864.6) Mark to market of derivatives (38.2) Fitout and cash incentive amort
Slide 53: Contribution to DB RREEF group
Contribution to DB RREEF group DB RREEF Holdings Pty Ltd DB RREEF Operations Trust 12 months 12 months 30 June 07 30 June 07 $m $m Management Fee Revenue 73.2 Equity accounted profit (50%) 6.3 EBIT 27.9 EBIT (pre MTM of derivatives) 6.9 Interest income (50%) 5.5 Interest income 1.2 Interest expense
Slide 54: Debt profile by jurisdiction as at 30 June 2007
Debt profile by jurisdiction as at 30 June 2007 Weighted average Interest bearing cost of debt1 liabilities Australia/New Zealand ($A) 6.32% A$1,602m North America ($US)2 4.99% US$1,197m Europe ()3 4.47% 221m Average/Total 5.70% A$3,361m 1 Inclusive of margins & fees 2 AUD/USD conversion rate 0.8487
Slide 55: Interest rate and foreign exchange hedging profile
Interest rate and foreign exchange hedging profile Interest Rate Hedging FY07 FY08 FY09 FY10 FY11 FY12 A$m hedged 1,672 1,522 1,311 1,191 1,183 1,140 A$ hedge rate (%) 1 6.24 6.20 6.20 6.29 6.33 6.40 US$m hedged 2 1,000 1,061 1,011 934 847 809 US$ hedge rate (%) 1 4.89 5.07 5.11 5.46 5.63 5.62 m hed
Slide 56: Revaluation summary
Revaluation summary A$m Office Ind Ret USA Europe Total P&L Revaluations – investment properties External Valuations 98 6 184 116 (7) 397 Internal Valuations 351 77 - 7 - 434 448 82 184 123 (7) 831 Carry value – investment properties Externally Revalued 934 202 990 1,697 107 3,930 Internally Revalue
Slide 57: Developments – underway and pipeline
Developments – underway and pipeline Property Country Value on Construction to Completion completion FY08 FY09 FY10 >FY11 ($m) INDUSTRIAL 947 DB RREEF Industrial Estate, Laverton Nth Australia 34 DB RREEF Industrial Estate, Laverton Nth Australia 280 144 Wicks Road, North Ryde Australia 200 Axxess C
Slide 58: Acquisitions and disposals
Acquisitions and disposals Australia Doherty’s Road, Laverton North - $32m Wicks Road, North Ryde - $27m North America Summit Oaks, California - $6m Orlando, Florida - Whirlpool - $30m Europe German portfolio - $244m French portfolio - $119m Disposals 5 assets - $196m Post-balance date Disposal of 5
Slide 59: Developments completed
Developments completed Industrial – developments completed Property Building Area Area Value on (sqm) (sqm) completion ($m) Australia DB RREEF Industrial Estate, Laverton Nth Coles 42,307 116 DB RREEF Industrial Estate, Laverton Nth Wrightson Seeds 7,850 7 Pound Road West, Dandenong L’Oreal 7,224 9
Slide 60: Retail – centre statistics
Retail – centre statistics Centre Centre Specialty Total Total Total Total Specialty MAT MAT centre centre specialty specialty occupancy MAT MAT MAT MAT cost growth growth growth growth ($psm) ($psm) ($psm)% ($pa)% ($psm)%2 ($pa)%2 %1 Whitford City 6,724 8,634 5.8 10.2 7.5 11.9 13.2% Westlakes 5,391
Slide 61: Important Information
Important Information DB RREEF Managed in partnership with Deutsche Bank
Slide 62: Important information
Important information This presentation is issued by DB RREEF Funds Management Limited (DRFM) in its capacity as responsible entity of DRT. It is not an offer of securities for subscription or sale and is not financial product advice. Information in this presentation including, without limitation, a