Slide 1: HY23 results presentation
Dexus (ASX: DXS) ASX release 14 February 2023 HY23 results presentation Dexus provides its 2023 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 download lat
Slide 2: 2023 Half year results
2023 Half year results 14 February 2023 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 in subdued market
Active six months in subdued market › Maintained a strong balance sheet with 25.6% gearing, substantial headroom and 85% of debt hedged › Announced $773 million balance sheet divestments, recycling capital into higher returning opportunities › Successful equity raisings in DHPF and DREP1 within the
Slide 6: Our strategy
Our strategy Vision To be globally recognised as Australia’s leading real asset investment manager To deliver superior risk-adjusted returns for investors from Strategy high-quality real assets Strategic Resilient income streams Investment manager of choice objectives Fully integrated, Investment Fu
Slide 7: Evolution to a leading real asset manager
Evolution to a leading real asset manager Acquisition of AMP Capital domestic RE and infra platform first stage completion expected in March 2023 up to $62.3 billion under management across the Dexus platform Delayed completion and renegotiated terms have Real estate Infrastructure resulted in DXS’s
Slide 8: Environmental, Social and Governance highlights
Environmental, Social and Governance highlights Global ESG benchmarks Global leader Climate change leader Top 5% S&P Global ESG Score | Real estate A List S&P Global Sustainability Yearbook 2023 CDP Climate Change 2022 Global sector leader 5 Star HY23 ESG highlights Listed office NABERS Energy ratin
Slide 9: Financial results
Financial results
Slide 10: Key earnings drivers and valuations
Key earnings drivers and valuations Resilient property portfolio with growth in Management operations and Trading Key earnings drivers Property portfolio valuations Earnings driver HY23 result 31 Dec 2022 Valuation Capitalisation rate Property AFFO1 of $300.5 million value4 six months movement5 six
Slide 11: HY23 financial results
HY23 financial results Impact of higher interest rates offset by growth in Management operations and Trading HY23 HY22 Change › Office property FFO decreased primarily due to the impact of divestments and non-recurring income $m $m % from development impacted properties in the prior half, partly off
Slide 12: Strong financial position
Strong financial position Prudent gearing and proactive refinancing to maintain balance sheet strength › Substantial headroom, and gearing of 25.6%1 below the 30-40% target range, combined with strategic Diversified sources of debt asset recycling, provides capacity to fund growth initiatives in fun
Slide 13: Funds management
Funds management
Slide 14: An active funds platform focused on investors
An active funds platform focused on investors Focused on performance, governance, diversification and product choices Funds management platform growth and diversification 30 $25.9 billion $26.3 billion DWPF outperformed across 1, 3, 5, 7 across 19 funds across 19 funds and 10 years1 Strong, establis
Slide 15: Achieving scale in new funds
Achieving scale in new funds Dexus Real Estate Property Partnership 1 (DREP1) Dexus Healthcare Property Fund (DHPF) › Launched in 2021 as the first in a series of closed ended funds that seek to › Launched in 2017 to capitalise on unprecedented growth of the Australian provide investors with enhance
Slide 16: Office portfolio
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Slide 17: Office portfolio performance
Office portfolio performance Portfolio resilient in challenging market › Occupancy by income maintained above 95%, including recent years $23.5 billion $12.9 billion throughout the COVID-19 pandemic, consistently outperforming the wider Dexus group market Dexus balance sheet office portfolio office
Slide 18: Staggered expiry profile and diverse customer base
Staggered expiry profile and diverse customer base Supporting resilient income streams Dexus office portfolio lease expiry profile (by income)1 Diverse customer base with 16% limited concentration risk 13% target threshold Sydney Melbourne Brisbane Perth 14% Top customer – Woodside 12% represents 3.
Slide 19: Dexus observations
Dexus observations Continued flight to quality, longer conversion times a cyclical outcome Dexus portfolio Market observations › Continued evidence of flight to quality, with customers upgrading › Large tenant enquiry has picked up, however conversion times have accounting for 53% of space leased ac
Slide 20: Industrial portfolio
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Slide 21: Industrial portfolio performance
Industrial portfolio performance Strong stabilised leasing volumes › Strong leasing volumes across stabilised portfolio $11.6 billion $4.2 billion › Portfolio 9.3% under-rented as a result of strong market rent growth, which Dexus group industrial portfolio Dexus balance sheet industrial portfolio r
Slide 22: Industrial take-up has long-term drivers
14 February 2023 Industrial take-up has long-term drivers Demand driven by investment in last mile fulfilment, population growth and retail spending National industrial take-up remains above long-term average Dexus leasing observations Millions sqm › Demand is broad-based including medical 5.0 suppl
Slide 23: Investments and Developments
Investments and Developments
Slide 24: Significant transactional activity
Significant transactional activity Continued focus on capital recycling into higher returning opportunities $2.2 billion $1.9 billion $351 million Group property divestments Group property acquisitions Total group transactions › $773 million balance sheet divestments › No new balance sheet acquisiti
Slide 25: Key development projects
Key development projects $15.8 billion group pipeline, of which DXS $2.5 billion committed remaining spend › DXS $3.5 billion share of committed projects, with $2.5 billion remaining spend Project Yield on Est. cost to Key committed projects Sector Completion cost est. 2 cost3 completion across five
Slide 26: Industrial development landbank in major hubs
Industrial development landbank in major hubs Circa 2.5 million square metres of land holdings to be developed over the next seven years Dexus Dexus Dexus Jandakot Group Ravenhall Total Kemps Creek Total (33%) (39%) (50%) Land (ha) 81.7 Land (ha) 180.3 Land (ha) 36.9 Developable GLA (sqm) 351,000 De
Slide 27: Trading profits
Trading profits FY23 trading profits secured › Realised $48.7 million1 post-tax trading profits in HY23 and Trading profit track record secured approximately $5 million2 pre-tax trading profits to be since FY123 recognised across FY23 and FY24 › Three additional trading opportunities within existing
Slide 28: Summary
Summary 27
Slide 29: Summary
Summary Demonstrated resilience in challenging environment › Dexus has demonstrated resilience: – Maintained a strong balance sheet through asset recycling and proactive capital management – Maintained strong portfolio occupancy with the portfolio continuing to benefit from flight to quality › The m
Slide 30: Appendices
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Slide 31: Dexus today
Dexus today $44.1 billion1 – total funds under management Dexus portfolio1 Funds Management portfolio Other 0.5% Retail 0.5% Other 5% Healthcare 3% Office 40% Office 72% Healthcare 5% Industrial 24% $17.8bn $26.3bn Retail 22% Industrial 28% 1. Includes co-investments in pooled funds. 30 Dexus 2023 H
Slide 32: Reconciliation to statutory profit
Financial results Reconciliation to statutory profit Reference Item 31 Dec 2022 31 Dec 2021 $m $m Statutory AIFRS net profit after tax 23.1 803.2 Investment property and inventory (Gain)/loss from sales of investment property 0.5 - Fair value (gain)/loss on investment properties 236.7 (486.2) Financ
Slide 33: Management operations profit
Financial results Management operations profit Funds Property Development Management HY23 ($m) Management Management Management Operations Revenue 62.6 37.2 24.9 124.7 Operating expenses (23.5) (33.5) (15.7) (72.7) HY23 net profit 39.1 3.7 9.2 52.0 HY23 margin 62% 10% 37% 42% HY22 margin 63% 15% (45
Slide 34: Cash flow reconciliation
Financial results Cash flow reconciliation 31 Dec 2022 31 Dec 2021 $m $m Cash flow from operating activities 294.1 344.2 add back: payment for inventory acquisition and capex 10.0 2.3 less: cost of sale of inventory (62.1) (139.3) less: tax on trading profits not yet paid (20.9) (9.2) add back: capi
Slide 35: Interest reconciliation
Financial results Interest reconciliation 31 Dec 2022 31 Dec 2021 $m $m Total statutory finance costs 75.7 71.5 Less: Debt modification and movements related to exchangeable notes (5.0) (2.1) Add: Finance costs attributable to investments accounted for using the equity method1 3.9 (0.3) Less: AASB 1
Slide 36: 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 22) 13,206.6 12.28 Dexus office portfolio (236.1) 4.89% 72% Revaluation of real estate (236.7) (0.22) Dex
Slide 37: 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) $m Opening direct property 13,294.7 3,955.8 136.5 17,387.0 54.4 3 Lease incentives 57.5 8.0 - 65.5 0.3 Maintenance capex 13.1 - - 13.1 - Acq
Slide 38: Co-investments in pooled funds
Financial results Co-investments in pooled funds Dexus Dexus HY23 Passing Fund Ownership Number of Total assets Occupancy WALE WACR co-investment co-investment distribution look-through stake (%) properties ($m) (%) (years) (%) value ($m)1 income ($m) yield (%)2 gearing (%) Healthcare DHPF 19.3% $25
Slide 39: Capital management
Capital management HY23 position Debt maturity profile1 Key metrics 31 Dec 2022 30 June 2022 $m 2,500 Total debt2 $4,531m $4,882m 2,000 Headroom (approximately)3 $3.0bn $1.9bn 1,500 Gearing (look-through)4 25.6% 26.9% 1,000 Covenant gearing (covenant5 <55%) 24.4% 25.5% 500 Interest cover (covenant5
Slide 40: Interest rate hedging profile
Capital management Interest rate hedging profile Hedge profile Hedging profile 31 Dec 2022 30 June 2022 $m 5,000 4.0% Hedged debt (incl caps)1 85% 65% 4,500 3.5% Weighted average interest rate on hedged debt2 1.8% 1.5% 4,000 3,500 Cost of debt3 3.6% 2.7% 3.0% 3,000 Weighted average maturity of hedge
Slide 41: Debt facilities
Capital management Debt facilities1 Facility limit Drawn Maturity Currency Facility limit Drawn A$m A$m A$m A$m Bilateral bank debt 300 200 FY24 A$ Sub total 7,500 4,384 600 389 FY25 A$ 450 - FY26 A$ Currency translation and fair value adjustments 252 252 750 - FY27 A$ Deferred borrowing costs and d
Slide 42: Development pipeline
Funds management Development pipeline $7.0 billion Funds management development pipeline $2.6 billion $4.4 billion Committed projects Uncommitted projects Project cost on uncommitted projects in funds management business Uncommitted projects FY24 FY25 FY26+ Office - 4 properties $2.9bn Industrial -
Slide 43: Property portfolio: Office and industrial key metrics
Property portfolio Office and industrial key metrics Key metrics Office Industrial Amount of space leased1 106,751sqm2 153,989sqm3 No. of leasing transactions 1542 343 Occupancy by income 95.3% 97.4% Occupancy by area 94.8% 98.6% Average incentives 31.8%4 10.9%5 No. of effective deals 36 11 Weighted
Slide 44: Property portfolio: Office portfolio diversification
Property portfolio Office portfolio diversification Office by asset type Office by location Premium Prime Sydney WA 11% CBD/fringe 50% grade 95%1 51% QLD 11% $12.9bn $12.9bn Other <1% VIC 20% B Grade 5% NSW 58% A Grade 45% Sydney suburban 7% 1. Prime grade buildings represent 95% of the office portf
Slide 45: Office portfolio lease expiry profiles by region
Property portfolio Office portfolio lease expiry profiles by region1 By income By area Melbourne CBD By income By area Sydney CBD 20% 15% 15.8% 15.9% 16.0% 15.1% 15.7% 11.7% 12.2% 14.3% 15% 9.6% 9.3% 9.5% 11.5% 12.1% 10% 8.7% 8.7% 7.6% 7.7% 6.3% 6.6% 10% 4.3% 4.9% 4.5% 4.0% 5% 2.4% 5% 0% 0% Availabl
Slide 46: Office top customers
Property portfolio Office top 10 customers represents 16.3% of total property portfolio income Office top 10 customers Diversity of office customers (by income) 0% 5% 10% 15% 20% Credit % of total property Financial and insurance services 17% Office customers1 rating2 portfolio income3 Legal service
Slide 47: Industrial portfolio diversification
Property portfolio Industrial portfolio diversification Industrial by asset type Industrial by location Industrial WA 11% estate 63% SA 1% NSW 45% Land 4% QLD 10% Data centre 4% $4.2bn $4.2bn Distribution centre 11% VIC 33% Business park 18% 8 Felstead Drive, Truganina VIC. 46 Dexus 2023 Half year r
Slide 48: Industrial portfolio lease expiry profile by income
Property portfolio Industrial portfolio lease expiry profile by income 20% 18.4% 15% 12.7% 12.2% 10% 8.2% 5% 4.4% 2.6% 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 (1.6%) Axxess Corp Par
Slide 49: Industrial lease expiry profiles by region
Property portfolio Industrial portfolio lease expiry profiles by region1 Income Area Brisbane 40% Sydney Income Area 31.2% 30% 30% 24.0% 21.4% 22.0% 20% 20% 16.6% 12.7% 14.3% 8.6% 8.3% 12.0% 10% 6.4% 5.3% 10.5% 4.5% 8.7% 9.0% 1.0% 2.2% 10% 0.0% 0.0% 3.1% 2.7% - 1.6% 0.6% Available FY23 FY24 FY25 FY2
Slide 50: Industrial top customers
Property portfolio Industrial top 10 customers represent 4.2% of total property portfolio income Industrial top 10 customers Diversity of industrial customers (by income) % of total property - 5% 10% 15% 20% 25% 30% 35% Industrial customers1 portfolio income2 Transport, Postal and Warehousing 30% Vi
Slide 51: Environmental metrics
Environmental metrics Office portfolio sustainability metrics FY08 BAU Net emissions Dexus office net emissions intensity Dexus Office NABERS Energy ratings Dexus Office NABERS Water ratings 120 6 stars 5.5 stars 5 stars 21,236sqm Operational Emission sources 11% - Indirect 100 5.5 stars 93,593sqm 3
Slide 52: Dexus completed developments
Development Dexus completed developments Pipeline Building area1 Project cost2 Yield on cost Leased Completion due Third party sqm $m % % partner interest % Industrial Palm Springs Road, Ravenhall VIC 51,100 17 6.0% 100% Jul-22 75% Jandakot Airport, Perth WA 34,300 22 4.8% 100% Oct-22 67% 12 Frederi
Slide 53: 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 39,300 597 160 c. 5% 54% Late 2023 - Atlassian Centr
Slide 54: Dexus uncommitted developments
Development Dexus uncommitted developments Pipeline5 Building Project cost Est. yield on est. Third party partner area1,5 est.2 project cost3 interest sqm $m % % Office Stage 2 Waterfront Brisbane QLD 57,500 c. 450 5-6% 50% 60 Collins Street, Melbourne VIC 43,200 c. 950 c. 5% - 4 Central Place Sydne
Slide 55: Transactions: Dexus
Transactions Dexus1 Dexus acquisitions Purchase price2 Interest Settlement Dexus divestments Sale price2 Interest Settlement $m % $m % 3 Spring, 58 Pitt and 60 Pitt Streets, Sydney NSW3 $46.2 50% Aug 18-Aug 22 383-395 Kent Street, Sydney NSW $385.0 100% 29-Jul-22 Lot 2 884-928 Mamre Road, Kemps Cree
Slide 56: Transactions: Funds management
Transactions Funds management Funds Management acquisitions Purchase price1 Interest Settlement Funds Management divestments Sale price1 Interest Settlement $m % $m % 3 Spring, 58 Pitt and 60 Pitt Streets, Sydney NSW2 46.2 50% Aug 18-Aug 22 140 & 150 George Street, Parramatta NSW 77.3 50% 29-Jul-22
Slide 57: Prime grade properties better placed
Prime grade properties better placed Dexus portfolio predominantly weighted to Prime grade › We expect quality assets to continue performing better in the current environment, with regard to both tenant and investor demand › Strong market rental growth to provide some support for industrial valuatio
Slide 58: Office demand indicators
Office demand indicators Demand indicators positive to December 2022, despite emerging cyclical risks Job advertisements Business conditions remain positive Job ads Professional job vacancies ‘000sqm Net Absorption - 4 major CBDs Business conditions Index ‘000 jobs ‘000 Vacancies 150 30 400 100 100
Slide 59: Office market outlook
Office market outlook Flight to quality, strong employment yet to translate into CBD demand Net absorption by grade in the four major CBDs Sydney CBD occupied stock vs. Sydney CBD white-collar employment ‘000 sqm Prime Secondary Index Dec-12 = 100 Sydney CBD occupied stock 200 Sydney CBD white-colla
Slide 60: Sydney CBD net absorption
Sydney CBD net absorption Flight to quality, expansion and centralisation the key themes Tenant moves by grade (Sydney CBD, C2022) Sydney CBD: expansion and centralisation accounted for 40% of occupier moves by area in 2022 (moves >1000sqm) Annual net absorption ‘000s sqm 30 Expansion - tenant same
Slide 61: 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% 210 9% 190
Slide 62: Healthcare sector
Healthcare sector Healthcare has outperformed other sectors over the past decade Growing institutional demand drives healthcare transactions higher Indexed returns1 by sector (15yrs) (September 2007=100) Hospitals Seniors housing and nursing homes All Property Retail Office Industrial All Healthcare
Slide 63: Market outlook
62 -100 0 50 100 -50 150 121 Castlereagh St (David Jones) 201 Elizabeth St. Podium '000 square metres 32-36 York St. FY24-FY26 333 Kent St. FY23 Source: JLL Research, Dexus Research. Poly Centre 210 George St. Salesforce Twr 180 George St. Sydney Metro West withdrawals - Net supply is 3.5% of stock
Slide 64: Market outlook
63 -20 20 -40 0 40 60 80 World Trade - Twr 1 (Zone Q/Ouson) 555 Collins St Stg 1 (Charter Hall) '000 square metres FY24-FY26 263 William St (DeGroup) 17-23 Bennetts Lane (Perri Projects) FY23 140 Lonsdale St (Charter Hall) Source: JLL Research, Dexus Research. 130 Little Collins St (Golden Age) - Ne
Slide 65: Dexus's position in CBD office
Office markets Dexus’s position in CBD office CBD office market Sydney Melbourne Brisbane Perth Total NLA 3,364,481 3,630,167 1,350,464 1,118,136 Prime vacancy average 14.7%1 16.0% 14.7% 15.0% Dexus CBD exposure Total NLA 523,968 422,153 262,816 183,849 Number of properties 14 8 4 4 Occupancy (by ar
Slide 66: Other information
Other information Exchange and securities used in statutory accounts 31 Dec 2022 30 Jun 2022 31 Dec 2021 Closing rates for Statement of Financial Position USD 0.6775 0.6889 0.7256 Average rates for Statement of Comprehensive Income USD 0.6752 0.7030 0.7319 Post consolidation equivalent amounts 6 mth
Slide 67: 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 68: 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 69: dexus
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