Dexus Industria Reit · ASX:DXI
Dexus Industria Reit — H1 FY2024 Earnings Presentation
38 slides from Dexus Industria Reit's earnings presentation, Feb 7, 2024
Slide 1: Dexus Industria REIT 2024 half year results ASX release
Dexus Industria REIT (ASX:DXI) ASX release 7 February 2024 2024 half year results presentation and property synopsis Dexus Industria REIT (DXI) releases its 2024 half year results presentation. An investor conference call will be webcast today at 10.00am on www.dexus.com/investor-centre The property
Slide 2: Half year results
Half year results 7 February 2024 Dexus Asset Management Limited ACN 080 674 479, AFSL 237500 Dexus Asset Management Limited | ACN 080 674 479, AFSL 237500 as responsible entity for Industria Trust No. 1, Industria Trust No. 2, Industria Trust No. 3 As responsible entity for Industria Trust No. 1, I
Slide 3: Acknowledgement of Country
Acknowledgement of Country Dexus Industria REIT 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 and present. Artwork: The Land and
Slide 4: Agenda
Agenda 01 02 03 Introduction Financial Portfolio performance and highlights overview and market dynamics Page 4 Page 9 Page 13 04 05 Summary Appendices Page 19 Page 21 3 | 2024 Half Year Results
Slide 5: Introduction and highlights
01 Introduction and highlights 4 | 2024 Half Year Results 2 Maker Place, Truganina VIC
Slide 6: DXI investment proposition
DXI investment proposition Generating superior risk-adjusted returns for investors seeking listed industrial real estate exposure in Australia Delivering organic income Conservatively managing Creating value through Aligned manager with deep growth from high-quality assets the balance sheet active m
Slide 7: HY24 highlights
HY24 highlights Further strengthened balance sheet, guidance on track and leasing success at BTP On track to deliver FY24 guidance - HY24 FFO of 8.6 cents per security - HY24 distributions of 8.2 cents per security Delivering organic income growth - Portfolio like-for-like growth of 7.3%1, expected
Slide 8: High-quality portfolio generating strong growth
High-quality portfolio generating strong growth High occupancy with annual reviews, reversion and development upside Property Embedded growth Income resilience Track record of leasing success Fixed reviews with strong inflation protection Stable earnings with development upside (sqm)1 (% by income)
Slide 9: Sustainability progress
Sustainability progress Carbon neutral status maintained for controlled building portfolio DXI initiatives Aligned to Dexus group sustainability strategy Carbon neutral 140KW 20%+ improvement maintained across business of solar arrays in recycling rates at BTP operations and controlled installed in
Slide 10: Financial overview
02 Financial overview 9 | 2024 Half Year Results Amazon, Jandakot Airport industrial precinct, Perth WA
Slide 11: HY24 financial result
HY24 financial result Benefiting from active management initiatives, partly offset by higher interest rates Profit & loss HY24 HY23 Change Portfolio like-for-like growth of 7.3%4 supported by 4.8% average rent reviews and Property FFO ($m) 41.1 42.21 (2.6)% increased occupancy, offset by the impact
Slide 12: Balance sheet and capital management
Balance sheet and capital management Low gearing, high interest rate hedging and capacity to fund future opportunities Key metrics1 31 Dec 2023 30 Jun 2023 Proactively positioning Active debt the balance sheet management Balance sheet gearing 18.9%2 20.4%3 - Asset sale proceeds used to reduce - Pro
Slide 13: Portfolio valuation movements
Portfolio valuation movements Rental growth partly offsetting the impact of cap rate expansion Property portfolio valuation summary – 31 Dec 20231 100% of portfolio independently revalued as at 31 Dec 2023 Reval Cap rate 31 December 20233 Reval Cap rate Portfolio book value change 6 month mvmt chang
Slide 14: Property performance and market dynamics
03 Property performance and market dynamics 13 | 2024 Half Year Results 1-3 Westrac Drive, Tomago NSW
Slide 15: Industrial performance
Industrial performance Delivering strong property income growth Embedded rental growth - Average 4.9% rent reviews - 6.0%1 like-for-like income growth; expected to $1.3bn 5.57% 99.6% 6.7 year 23,600sqm3 maintain strong growth for FY24 book value WACR occupancy WALE leased across 7 deals - Maintained
Slide 16: Jandakot performance
Jandakot performance Continued solid performance Amazon, Jandakot Airport Stabilised Developments General aviation airport and industrial precinct, Perth WA portfolio infrastructure operations - 5.2%1 like-for-like income - Targeting 6%+ yield on cost - Long WALE growth supported by 59% of on new de
Slide 17: Developments
Developments Disciplined approach to activating value-enhancing developments Marley Spoon, Jandakot Airport Total pipeline of $269 million across 331,400sqm – anticipate industrial precinct, Perth WA completion around 20271 Remaining spend of $42 million on committed projects; and circa $125 million
Slide 18: Industrial market outlook
Industrial market outlook Growth in population will increase supply requirements, vacancy remains low globally Population growth will lead to structurally higher demand Australian industrial vacancy low compared to global markets Million sqm Sydney 4.5 Melbourne › Anticipate additional 2.8m-3.0m sqm
Slide 19: Brisbane Technology Park performance
Brisbane Technology Park performance Material increase in occupancy driven by strong leasing outcomes Strong leasing outcomes +10ppts - 4,400sqm leased equivalent to 14% of total area: • 400sqm of leasing to technology and life sciences tenants $165m 7.17% 95.7% 3.4 year 15.4%1 • Average WALE of 4.3
Slide 20: Summary
04 Summary 19 | 2024 Half Year Results 140 Sharps Road, Tullamarine VIC
Slide 21: Well positioned to deliver resilient income with embedded growth
1 West Park Drive, Derrimut VIC Well positioned to deliver resilient income with embedded growth High income visibility and embedded rental growth with only 18% of income expiring to FY26 and 54% of the portfolio linked to CPI rental escalations Strong balance sheet position with gearing below the t
Slide 22: Appendices
05 Appendices 21 | 2024 Half Year Results 1-3 Westrac Drive, Tomago NSW
Slide 23: Geographical presence
Geographical presence National portfolio at scale Competitive advantage New South Wales Western Australia Delivering new developments in core Perth’s leading master-planned Queensland industrial markets with sub-1% estate with occupiers including $230m 17% 14 vacancy Amazon, Hello Fresh and Marley S
Slide 24: Market dynamics
Market dynamics Rent growth beginning to taper as vacancy normalises Lack of available space has led to a rapid growth in rents Vacancy rates low across all markets Outer West Sydney West Melbourne South Brisbane South Perth Sydney Melbourne Brisbane Perth Adelaide Last 12 $/sqm months: 10% $230 9%
Slide 25: Lease expiry profile
78 Henderson Road, Rowville VIC Lease expiry profile Industrial – 89% of portfolio value (% by total DXI income) 15.0% 8.3% 7.2% 0.5% 2.6% 2H24 FY25 FY26 FY27 FY28 Brisbane Technology Park – 11% of portfolio value (% by total DXI income) 4.8% 2.8% 2.1% 1.6% 1.2% 2H24 FY25 FY26 FY27 FY28 24 | 2024 Ha
Slide 26: Portfolio tenancy mix
Portfolio tenancy mix Tenant type (% by income) Tenant % portfolio income WesTrac 16% Australian Postal Corporation 4% Qube 3% Sandvik 3% 23% 29% AAE Retail 3% Thornton Engineering 3% 10% Interactive 2% Autopact 2% 3% 15% Baker Hughes 2% 20% Kmart 2% Top 10 40% Other 60% Total 100% ASX listed Listed
Slide 27: Jandakot Airport industrial precinct
Jandakot Airport industrial precinct Stabilised Developments General aviation airport and Jandakot Airport industrial precinct, Perth WA portfolio infrastructure operations - 98.9% occupancy (by income) - $145 million spend remaining - 18.8 year WALE (by income) - 6.0 year WALE (by income) (at DXI s
Slide 28: Jandakot
Jandakot Key metrics1 55 assets $421m external valuation on investment property - $342m stabilised - $79m development $80m general aviation airport & infrastructure operations value2 313,500sqm development pipeline c. $223m development pipeline value c. $145m development spend remaining 6% target yi
Slide 29: Developments
Developments Building area Building area Development Est. project Remaining Est. yield on Project (sqm at DXI Est. final completion (sqm at 100%) status costs1 spend1 cost2 ownership) Completed3 Marley Spoon – Jul 23 Jandakot, WA 18,000 6,000 Completed $16m - c. 5.3% Caddy – Jul 23 Committed Jandako
Slide 30: Divestments
Divestments Price Settled pre 31 December 2023 # assets Settlement 37 Brandl Street, Brisbane Technology Park QLD ($m) 3 & 4 Forbes Close, Knoxfield VIC 2 $22.9 Aug-23 16-28 Quarry Road, Stapylton QLD 1 $66.9 Oct-23 Price Settled post 31 December 2023 # assets Settlement ($m) 57-67 Mark Anthony Driv
Slide 31: Independent valuations
Independent valuations Occupancy by Occupancy by Reval gain/(loss) Cap rate mvmt Property Book value ($m) Cap rate (%) income (%) area (%) ($m) (bps) 34 Australis Drive, Derrimut VIC 100% 100% $48.4 - 5.75% 88 bps 80-96 South Park Drive, Dandenong South VIC 100% 100% $43.3 $5.2 5.50% - 1 West Park D
Slide 32: Independent valuations (cont'd)
Independent valuations (cont’d) Occupancy by Occupancy by Reval gain/(loss) Cap rate mvmt Property Book value ($m) Cap rate (%) income (%) area (%) ($m) (bps) Jandakot – stabilised portfolio 98.9% 99.2% $342.3 $(18.9) 5.38% 38 bps Jandakot – development n.a. n.a. $78.9 $(1.5) n.a. n.a. 12 Church Roa
Slide 33: Profit & loss and FFO reconciliation
Profit & loss and FFO reconciliation Direct investments (100% owned) Joint ventures1 Total portfolio $’000 HY24 HY23 HY24 HY23 HY24 HY23 Property revenue 36,049 40,122 15,097 13,116 51,146 53,238 Property expenses (6,500) (8,016) (3,574) (3,035) (10,074) (11,051) Property FFO 29,549 32,106 11,523 10
Slide 34: Summary balance sheet and gearing
Summary balance sheet and gearing Summary balance sheet Gearing $’000 31 Dec 2023 30 Jun 2023 $’000 31 Dec 2023 30 Jun 2023 Cash and cash equivalents 5,080 5,514 Balance sheet gearing Investment properties1 998,050 1,105,775 Drawn debt 295,250 379,250 Equity accounted investments 379,182 391,733 Tot
Slide 35: Book value reconciliation
Book value reconciliation Direct investments (100% owned) Joint ventures1 Total portfolio $’000 31 Dec 2023 30 Jun 2023 31 Dec 2023 30 Jun 2023 31 Dec 2023 30 Jun 2023 Investment properties 958,050 1,016,000 - - 958,050 1,016,000 Investments accounted for using the equity method - - 442,947 452,044
Slide 36: Interest rate hedging profile
Interest rate hedging profile Balance sheet Look-through $400m 4.5% $400m 4.5% 369 4.0% 4.0% 3.9% 3.8% 4.0% 4.0% $350m $350m 3.6% 3.5% 299 3.5% $300m 286 $300m 3.0% 2.7% 3.0% 2.6% $250m $250m 2.5% 2.2% 206 2.5% $200m 1.9% 216 $200m 2.0% 1.8% 2.0% $150m $150m 123 1.5% 1.5% 102 $100m 90 $100m 1.0% 1.0
Slide 37: Important information
Important information This presentation (“Material”) has been prepared by Dexus Asset Management Limited (ACN 080 674 479, AFSL No. 237500) ("DXAM") as the responsible entity of Industria Trust No. 1 (ARSN 125 862 875), Industria Trust No. 2 (ARSN 125 862 491), Industria Trust No. 3 (ARSN 166 150 93
Slide 38: Dexus
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Dexus Industria REIT — H1 FY2024 Earnings Presentation on 6ix