Slide 1: ASX release: London and US investor presentation
Dexus (ASX: DXS) ASX release For personal use only 30 August 2019 London and US investor presentation Dexus provides the attached presentation which will be used as a basis of discussion in London and the US. For further information please contact: Investor Relations Media Relations Rowena Causley L
Slide 2: London and US investor meetings
London and US investor meetings For personal use only Overview presentation September 2019 Dexus Funds Management Limited ABN 24 060 920 783 AFSL 238163 as responsible entity for Dexus
Slide 3: Megatrends
Megatrends Dexus’s strategy is orientated around two key long-term growth thematics For personal use only 1 2 We are in a climate of rapid Urbanisation Growth in pension capital fund flows change and the context in which we operate our business, both Densification of land use in and around key Incre
Slide 4: Dexus overview
Dexus overview $31.8 billion under management1 For personal use only Dexus distribution per security (cents)2 PROPERTY PORTFOLIO - Proxy for Australian office property $15.6 billion1 • Overweight position to Sydney market 6.6% CAGR since FY12 FUNDS MANAGEMENT - Outperforming and growing Funds Manage
Slide 5: FY19 highlights
FY19 highlights Creating sustained value for Security holders For personal use only FY19 highlights Financial Office Funds People & Capabilities 2018 Environment Delivering for Security holders Office portfolio 2020 NABERS targets progressed Dexus Wholesale Property Fund +5% +5.5% 10.1% outperformed
Slide 6: Active year of transaction activity
Active year of transaction activity Securing opportunities and recycling capital, alongside third party capital partners For personal use only Replenishing industrial Acquisition of prime DWPF acquisition of Acquisition of remaining Acquisition of Acquisition of development landbank development site
Slide 7: Balance sheet strength maintained
Balance sheet strength maintained Well positioned on cost, duration and diversification For personal use only - Further diversified funding sources and maintained low gearing Maintain a strong balance sheet • Issued A$425 million Exchangeable Notes to fund Dexus’s acquisition of an FY20 additional 2
Slide 8: Valuations and outlook
Valuations and outlook Positive outlook for cap rate compression For personal use only Total Dexus portfolio FY19 valuation uplift Sydney Office cap rate spread to 10-year Aus govt bonds June 1994 – July 20193, % $773.1m 5.26% ↓ 26 bps 5% Total portfolio Total portfolio valuation uplift1 cap rate2 (
Slide 9: Office portfolio overview
Office portfolio overview Improved portfolio quality and geographic diversification For personal use only - Capitalising on buoyant Sydney and Melbourne Asset diversification office markets Premium Grade 31% - Increased exposure in Melbourne CBD - Improving conditions in Perth and Brisbane Developme
Slide 10: Office portfolio expiry profile
Office portfolio expiry profile Upside from diversified expiry profile For personal use only - Sydney accounts for 163,992 square metres of office expiries up to and including FY22, representing 23% of office portfolio income 25% 20% 16.4% 15% 13.3% 12.8% 11.6% 10% 6.9% 5% 2.0% 0% Available FY20 FY2
Slide 11: c.$9.3 billion group development and concept pipeline
c.$9.3 billion1 group development and concept pipeline Diversified across sectors and locations For personal use only $9.3 billion1 group development and concept pipeline Office Industrial City Retail/Retail/Other Healthcare Concept pipeline 0% 60% 40% 36% 55% $5.1bn $0.8bn $0.6bn $0.6bn circa $2.2b
Slide 12: Core office development pipeline
Core office development pipeline Progressing committed, uncommitted and concept projects across east coast CBDs For personal use only Waterfront Precinct Uncommitted project Dexus 50%, DWPF 50% Annex – 12 Creek Street Committed project Dexus 50%, DWPF 50% 60 & 52 Collins Street Late 2019 Uncommitted
Slide 13: Core industrial development pipeline
Core industrial development pipeline Progressing committed projects for Dexus and third party capital partners For personal use only Foundation at Truganina 54 Ferndell Street, South Granville Dexus 100% Dexus 51%, Dexus Australian Logistics Partner 49% - Secured Coles Supermarkets Australia for a 7
Slide 14: Trading business
Trading business Strong track record and progressed pipeline For personal use only Trading profit track record since FY12 - Delivered $34.7 million (net of tax) from the settlement of 32 Flinders Street, Melbourne in FY19 Trading properties - Target $35-40 million trading profits1 (net of tax) in FY
Slide 15: Funds Management
Funds Management Growth in unlisted investor base For personal use only Diversified Funds Management platform 189% growth in FUM since FY12 AUM across 79 7 vehicles investors $16 $16.2bn HWPF $0.1bn DALT $0.5bn $14 Dexus Super/Pension DWPF Industrial 73% $10.4bn $12 Partner Sovereign $10 $0.2bn Fund
Slide 16: Embedded value
Embedded value Across key earnings drivers and key areas of focus For personal use only PROPERTY Short term - Higher rents and lower incentives continuing to support asset values, PORTFOLIO particularly in Sydney and Melbourne $15.6 billion Medium to - Future portfolio value supported by ownership i
Slide 17: Summary
Summary Securing opportunities. Adding value For personal use only - Successful year of securing new opportunities - Well positioned for continued success despite increased economic uncertainty - Embedded value within group development and concept pipeline - Market guidance1 for the 12 months ending
Slide 18: Australian office capital markets
For personal use only Australian office capital markets 17 London and US investor meetings overview presentation
Slide 19: Pricing in Australia remains attractive
Pricing in Australia remains attractive Relative pricing and rent growth for Australian office compare favourably to global cities For personal use only Global yield and rent growth comparison Effective yield spread over local government bond (10yr) EU Asia US AU EU Asia US AU Effective 5% 4.0% Spre
Slide 20: Investment demand for Australian office properties
Investment demand for Australian office properties Where has direct demand come from? For personal use only Australian transaction volumes by type of buyer Here… Partly here… Not here… Foreign A-REIT Largest cross border buyers of Big investors with a Big investors Developers/Property Companies Inst
Slide 21: Australian office market trends and outlook
For personal use only Australian office market trends and outlook 20 London and US investor meetings overview presentation
Slide 22: Workspace trends – office space
Workspace trends – office space People gravitating to CBDs and occupiers increasing workspace density For personal use only NSW employment growth by region Sydney CBD workspace ratio All office space Office work areas Index State Greater City Inner City Structural: 17.4 150 78% of office work areas
Slide 23: Market outlook
Market outlook Dexus’s CBD office strategy leverages powerful urban growth trend For personal use only - Inner city areas and CBDs benefit from faster employment NSW Employment growth by region growth than other regions Index State Greater City Inner City 150 - CBDs benefit from a virtuous cycle of
Slide 24: Sydney office rents in perspective
Market outlook Sydney office rents in perspective For personal use only - Companies have steadily increased the density of workers per square metre of office space – so rent paid goes further now than in the past $/sqm Gross effective rents in Sydney CBD 1,050 Nominal rent 950 850 Rents adjusted for
Slide 25: Sydney office: well positioned given low vacancy
Market outlook Sydney office: well positioned given low vacancy For personal use only Sydney CBD waterfall chart - FY19 to FY22 Total completions only just FY19 vacancy well below Moderate withdrawals Demand just above the Vacancy to rise to 6.4% in above average levels of the long term average of 1
Slide 26: Sydney CBD supply landscape for major office projects
For personal use only 25 ‘000sqm -100 -50 0 50 100 150 10-14 Hunter 426-430 Kent 66 King Street 388 George Street FY20 Sixty Martin Place 1 Sussex Street 51-55 Pitt Street Source: Dexus Research, Company reports, Agent reports. 320 Pitt Street Korean Air House Market outlook London and US investor m
Slide 27: Melbourne CBD supply landscape for major office projects
For personal use only 26 ‘000sqm -60 -40 -20 0 20 40 60 80 Collins Arch VIC Police HQ Wesley Place FY20 477 Collins Street 85-91 Spring Street Source: Dexus Research, Company reports, Agent reports. CBW Tower 2 Market outlook 80 Collins Street South Tower London and US investor meetings overview pre
Slide 28: Office portfolio resilience
For personal use only Office portfolio resilience 27 London and US investor meetings overview presentation
Slide 29: All sectors have provided attractive long-term returns
All sectors have provided attractive long-term returns Office demonstrates lower income volatility For personal use only Total returns over various periods Total returns, %, annualised Retail Office Industrial Capital return Income return 6.2% 6.3% 2.7% 3.6% 3.0% 3.5% 8.1% 6.0% 6.8% 6.2% 6.9% 7.0% 5
Slide 30: Demand for space provides strong support for rental levels
Demand for space provides strong support for rental levels Correlation between net absorption and rent growth For personal use only Where net absorption is Sydney Office – Gross Effective Rental Growth vs. Net Absorption positive gross effective rental FY94-FY18, % growth is positive1 European Tech
Slide 31: Providing investors with stable growth in the long term
Providing investors with stable growth in the long term One-off shocks have less impact on a diversified portfolio For personal use only Passing rent (one-off rental growth changes) Rental growth CAGR (one-off rental growth changes) Indexed, annual % rental growth Upside 1.8 Downside 6.6% +10% event
Slide 32: Important information
Important information For personal use only - 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 presentati