Dexus · ASX:DXS
Dexus — DB RREEF Trust — H1 2005 Earnings Presentation
61 slides from Dexus's earnings presentation, Feb 28, 2005
Slide 1: DB RREEF Trust December 2004 Interim Results
DB RREEF Trust December 2004 Interim Results DB RREEF Funds Management Limited ABN 24 060 920 783 As Responsible Entity Presented by Victor Hoog Antink CEO, DB RREEF Funds Management Limited 28 February 2005
Slide 2: Overview
OVERVIEW 1. Highlights 2. December 2004 Results 3. DRT 4. Third Party Funds Management 5. Board 6. Management 7. Future Direction & Strategy 8. Annexures 9. Important Information 1 Farrer Place, Sydney Page: 2
Slide 3: 1 Highlights
DB RREEF Managed in partnership with Deutsche Bank 2]
Slide 4: Highlights
1 HIGHLIGHTS EPS / DPS on target with Explanatory Memorandum forecasts – Net income before capital items $137.2m – Distribution to investors $136.5m – EPS 5.23 cents – DPS 5.20 cents – Confirm FY05 forecast distribution 10.50 cps Restructure initiatives on track – Asset sales and acquisitions pr
Slide 5: 2 December 2004 Results
DB RREEF Managed in partnership with Deutsche Bank 2]
Slide 6: December 2004 Results
2 DECEMBER 2004 RESULTS Statutory EM Actual – Accounts1 Forecasts1 Grouped 1 $98.1 Net Profit before capital items ($m) 2 $134.2 $137.2 5.94 Earnings per security (cps) 5.16 5.23 5.20 Distribution per security (cps) 5.20 5.20 $74.4 Net Profit Attributable to Security holders ($m) 3 $115.4 $117.3 4.5
Slide 7: Profit & Loss Statement
2 DECEMBER 2004 RESULTS Profit & Loss Statement Consolidated EM Grouped Dec 04 AUD ($000s) Dec 04 Dec 04 % 149,660 Total Income 215,920 213,441 Responsible Entity Fees & Other (7,501) Expenses (15,058) (14,104) (40,975) Borrowing Costs (63,734) (59,051) 101,184 Income after Interest & Expenses 137,1
Slide 8: DRT Net Sector Income - Analysed
2 DECEMBER 2004 RESULTS DRT Net Sector Income - Analysed EM Grouped $000s Dec 04 Dec 04 Commercial Portfolio 107,450 109,371 Industrial Portfolio 52,641 52,439 Retail Portfolio 21,665 20,614 US Industrial Portfolio 27,346 27,141 Total Sector Income 209,102 209,565 144 Edward St Impact (Sold Nov 04)
Slide 9: DRT Balance Sheet
2 DECEMBER 2004 RESULTS DRT Balance Sheet AUD $'000 Cash 56,250 Investment properties (including equity accounted) 6,328,036 Other equity accounted investments, receivables & other 125,941 Total assets 6,510,227 Payables, provisions & other 266,415 Gearing 44% Interest bearing liabilities 2,924,22
Slide 10: 3 DRT
3 DRT 3.1 Portfolio 3.2 Commercial 3.3 Industrial 3.4 Retail 3.5 US Industrial 3.6 DB RREEF Operations Trust (DRO) 3.7 Capital Management
Slide 11: DRT - Portfolio: Asset Diversification
3.1 DRT - PORTFOLIO Asset Diversification As at $ bn % Occupancy Avg US Industrial 31 Dec 04 %2 Lease 17% Term3 Commercial 3.1 51 92.3 5.9 Retail Industrial 1.3 21 98.1 4.1 11% Commercial 51% US Industrial1 1.1 17 87.4 3.4 Retail 0.6 11 99.5 6.0 TOTAL 6.1 100 Industrial 21% 1 represents 80% ownershi
Slide 12: Transactions Completed
3.1 DRT - PORTFOLIO Transactions Completed Transactions totalling $476m during the period delivered profits on sale of $19.6m Sales Settled $m P & L - $m Whitford City, WA (50%) Aug 04 $192.5 $15.0 Plenty Valley, Vic (50%) Aug 04 $19.0 $ 1.3 Axxess Corporate Park, Seven Hills, NSW Oct 04 $16.6
Slide 13: Transactions On-going
3.1 DRT – PORTFOLIO Transactions On-going Sales $m Settlement Status Rothschild Ave, Rosebery, NSW $22.0 Feb 05 1 Chifley Square, Sydney, NSW $54.0 Due March 05 West Lakes, SA (50%) $122.5 Due April 05 Acquisitions $m Settlement Status 16-20 Barrack Street, NSW $44.5 Feb 05 Hurstville Shop
Slide 14: Valuations
3.1 DRT - PORTFOLIO Valuations Property Date Cap Rate % Valuation Revaluation New / Old $m $m GPT/GMT Complex, Sydney, NSW* Dec 04 7.0 / 7.0 512.5 24.1 Whitford City, Hilarys, WA** Aug 04 7.13 / 7.5 192.5 15.0 201 Elizabeth St, Sydney, NSW * Dec 04 7.25 / 7.25 117.0 (0.4) O’Connell St*, Bligh St* &
Slide 15: DRT - Commercial: Earnings
3.2 DRT - COMMERCIAL Earnings ($000s) EM Grouped Actual Dec 04 Dec 04 Dec 03 Net Property Income 107,450 109,371 97,189 144 Edward St Impact (Sold Nov 04) 1,752 1,179 1,801 Net Sector Income 109,202 110,550 98,990 Page: 15
Slide 16: DRT - Commercial
3.2 DRT - COMMERCIAL Portfolio income up 12% over Dec 03 Portfolio quality enhanced – 45 Clarence Street, Sydney refurbishment completed – Lumley Centre, Auckland scheduled for completion in June 05 Leasing – Over 70,000 sqm of new leasing, renewals and heads of agreement – 13% of the portfoli
Slide 17: Commercial Leasing Update
3.2 DRT - COMMERCIAL Leasing Update Significant leasing transactions Property Area (sqm) Major Tenant Term (yrs) 45 Clarence Street, Sydney 12,055 Hudson Global (6,811) 7.0 HBOS Australia (5,244) 8.0 130 George St, Parramatta 7,200 NSW Police 5.0 Australia Square, Sydney 6,121 Various 6.1
Slide 18: Key Leasing Tasks
3.2 DRT- COMMERCIAL Key Leasing Tasks Property Vacant Area (sqm) % Total Portfolio Ferguson Centre (under refurbishment) 10,970 2.1% 45 Clarence St 9,608 1.8% Australia Square* 7,129 1.4% Others 13,196 2.4% * Represents 50% ownership interest 40,903 7.7% Page: 18
Slide 19: Commercial Lease Expiry Profile
3.2 DRT - COMMERCIAL Lease Expiry Profile 50% 40% 30% 20% 10% 0% le 05 06 07 08 09 10 11 12 13 14 5+ ab FY FY FY FY FY FY FY FY FY FY 1 vail FY A Area Income Page: 19
Slide 20: Development & Refurbishment Update
3.2 DRT – COMMERCIAL Development & Refurbishment Update Completed 45 Clarence Street, Sydney Refurbishment works complete Underway 1 Chifley Square, Sydney Refurbishment due for completion & settlement, Mar 05 309-321 Kent Street, Sydney Development Approval received, works forecast for comple
Slide 21: DRT - Industrial: Portfolio Earnings
3.3 DRT - INDUSTRIAL Portfolio Earnings ($000s) EM Grouped Actual Dec 04 Dec 04 Dec 03 Net Property Income 52,641 52,439 49,823 Net Sector Income 52,641 52,439 49,823 52 Holbeche Road, Arndell Park Page: 21
Slide 22: Industrial Leasing Update
3.3 DRT - INDUSTRIAL Leasing Update Portfolio income up 5% over Dec 03 Leasing – New leases, renewals and heads of agreement of over 82,000 sqm – 8% of portfolio by area – Portfolio occupancy 98.1% (95.0% in June 04) – Average lease term 4.1 years by income (4.3 years at June 04). Significant
Slide 23: Industrial Key Leasing Focus
3.3 DRT- INDUSTRIAL Key Leasing Focus Property Vacant Area (sqm) Total % 706 Mowbray Rd, Lane Cove, NSW 4,951 0.4% 11 Talavera Rd, North Ryde, NSW 4,530 0.4% 1-15 Rosebery Ave, Rosebery, NSW 4,209 0.4% Others 7,147 0.7% Total 20,837 1.9% Building C, 11 Talavera Road, North Ryde Page: 23
Slide 24: Industrial Lease Expiry Profile
3.3 DRT – INDUSTRIAL Lease Expiry Profile 50% 40% 30% 20% 10% 0% bl e 05 06 07 08 09 10 11 12 13 14 15 + i la FY FY FY FY FY FY FY FY FY FY FY A va Area Income Page: 24
Slide 25: Industrial Development Update
3.3 DRT - INDUSTRIAL Development Update Completed – Approximately 63,000sqm delivered Property Tenant Area (sqm) Completed Laverton, Vic Visy Steel 20,234 Dec 04 Dandenong, Vic Aluminium Specialties 7,580 Dec 04 Axxess Corporate Park, Draeger Medical 3,000 Nov 04 Vic Kings Park, NSW CSL Limited 1,
Slide 26: DRT - Retail: Portfolio Earnings
3.4 DRT - RETAIL Portfolio Earnings ($000s) EM Grouped Actual Dec 04 Dec 04 Dec 03 Net Property Income 21,665 20,614 17,304 Net Sector Income 21,665 20,614 17,304 Timing difference - actual income is less than EM forecast due to differences between actual & forecast settlement dates of Whitford Ci
Slide 27: Retail Centre Statistics
3.4 DRT – RETAIL Centre Statistics Centre Centre T/O Specialty T/O Total Centre Total Occ Cost $psm $psm MAT Growth Specialty MAT Specialty % Growth Whitford City 6,078 7,387 20.3% 32.7% 13.9% Westlakes N/A N/A 4.4% 2.9% 12.9% Plenty Valley 8,644 6,623 15.9% 8.3% 10.6% North Lakes 4,834 5,787 N/A N/
Slide 28: Retail Development Update
3.4 DRT – RETAIL Development Update Westlakes, SA – $64 million, 8.75% forecast return – Stages 1,2 & 3 complete – Stage 4 –Due to complete May 05 Mount Druitt, NSW – $60 million, 7.63% forecast return – Stage 1: 17 shops, 5 kiosks due Sept 05 – Completion due Mar 06 Development pipeline – Ple
Slide 29: DRT - US Industrial: Portfolio Earnings
3.5 DRT – US INDUSTRIAL Portfolio Earnings ($000s) EM Grouped Dec 04 Dec 04 Net Property Income ($USD) 18,634 19,492 Net Property Income ($AUD) 27,346 27,141 US Income Support 2,436 0 Net Sector Income 29,782 27,141 NPI ($USD) up 4.6% before Income Support EM assumed Income Support, which has no
Slide 30: US Industrial Leasing Update
3.5 DRT – US INDUSTRIAL Leasing Update New leases and renewals of more than 880,000 square feet (4.4% of portfolio area) Occupancy 87.4% (87.0% at June 04) Average lease term 3.4 years (3.2 years at June 04) Significant leasing transactions during the period include: Property Tenant Area (sq
Slide 31: US Industrial Key Leasing Focus
3.5 DRT – US INDUSTRIAL Key Leasing Focus Vacant Area % Total Property (Sq Ft) Portfolio 9842 International Blvd Cincinnati OH 204,800 1.0% 1855 Dornoch Court San Diego CA 131,600 0.7% 3601 East Plano Parkway Plano TX 123,365 0.6% 3520 Westinghouse Blvd Charlotte NC 121,900 0.6% 3550 Westinghouse Bl
Slide 32: US Industrial Lease Expiry Profile
3.5 DRT – US INDUSTRIAL Lease Expiry Profile 50% 40% 30% 20% 10% 0% e 05 06 07 08 09 10 11 12 13 14 + bl 15 la FY FY FY FY FY FY FY FY FY FY FY ai Av Area Income Page: 32
Slide 33: US Industrial Outlook
3.5 DRT – US INDUSTRIAL Outlook US industrial vacancies reduced by 60 basis points in 2004, the first reduction since 2000. Net absorption in 2004 rose to 175 million sq ft, the strongest year since 2000 and following negative absorption in 2002 (-9m sq ft) and a low base in 2003 (19m sq ft). Co
Slide 34: DRT - DRO Earnings
3.6 DRT – DRO Earnings ($000s) EM Grouped Dec 04 Dec 04 Income from DRO 1,807 1,947 Income Tax 113 311 Net Income from DRO 1,694 1,636 50% contribution from DB RREEF Holdings Pty Ltd Income comprises asset and property management fees less operating costs Management Expense Ratio for the perio
Slide 35: DRO Active Opportunity
3.6 DRT - DRO Active Opportunity 16-20 Barrack Street, Sydney DRT to exercise call as outlined in EM Purchase Price $44.5 m Opportunity to reposition and add value Strata title opportunity Page: 35
Slide 36: Capital Management: Equity
3.7 DRT – CAPITAL MANAGEMENT Equity 2,583.8m securities Issued to previous DDF, DIT and DOT security holders 41.5m securities issued to Deutsche Australia Limited as consideration for 50% of DB RREEF Holdings Limited at $1.312 106.7m securities issued through December DRP at $1.279 in Feb 05
Slide 37: Capital Management: Debt
3.7 DRT – CAPITAL MANAGEMENT Debt Refinancing Completed - A$900m Syndication facility - US $200m US Private Placement (7,10,12 years) Bank debt - secured Commercial 12% paper - secured 19% Bank debt - unsecured 32% CMBS - secured 30% USPP - unsecured 7% Page: 37
Slide 38: Debt Profile
3.7 DRT – CAPITAL MANAGEMENT Debt Profile Duration of debt increased from 2.5 years to 3.5 years Current % of debt hedged at 82% Interest hedge duration: 4.6 years Interest cover 3x Cost of debt 5.43% (inclusive of margins & fees) - A 6.18% - US 4.12% - NZ 7.20% Gearing (net of cash) as
Slide 39: Debt Maturity Profile
3.7 DRT – CAPITAL MANAGEMENT Debt Maturity Profile 800 700 600 500 400 300 200 100 0 05 06 07 08 09 10 11 12 13 14 15 16 17 20 20 20 20 20 20 20 20 20 20 20 20 20 US $ Debt (in AUD equivalent) A$ Debt Page: 39
Slide 40: 4 Third Party Funds Management
4 THIRD PARTY FUNDS MANAGEMENT
Slide 41: Third Party Funds Management
4 THIRD PARTY FUNDS MANAGEMENT DWPF $1.4bn (126 investors) Managed under delegated authority DWPF Proposed transfer of RE to be considered at A$1.4bn AGM 3Q 05 No DRT investment – existing investor priority Separate Acquired 50% of Regents Park, NSW Accounts A$2.3bn Syndicates Separate Accou
Slide 42: 5 Board Composition
DB RREEF Managed in partnership with Deutsche Bank 2]
Slide 43: Board Composition
5 BOARD COMPOSITION 4 Independent Board Members (including Strength of Board Composition Chairman) 9 Majority Independent Directors Chris Beare (Chairman) 9 Independent Chairman Elizabeth Alexander AM (Chair of Audit Committee) 9 Independent Chairman of Audit Committee Barry Brownjohn 9 Strong exper
Slide 44: 6 Management
DB RREEF Managed in partnership with Deutsche Bank 2]
Slide 45: Management: Client Service Model
6 MANAGEMENT Client Service Model Principals Structure Client – centric approach to CLIENTS maximise returns for all funds Service providers - integrated DRFM DRT Portfolio DWPF Mandates Syndicates New Business platform to individual portfolio/fund managers S E Property R Services: V Outcomes I
Slide 46: Property Services Management Structure
6 PROPERTY SERVICES MANAGEMENT STRUCTURE Organisational Chart Ben Lehmann Greg Lee Portfolio Services Transaction Services Tony Gulliver Peter Studley John Swadling TBA (Ben Lehmann) TBA (Greg Lee) John Campbell Acquisitions Dev Mgmt & Bill Reynolds Commercial Industrial Retail US Industrial New Ini
Slide 47: Group Management Structure
6 GROUP MANAGEMENT STRUCTURE Organisational Chart Board of Directors Chris Beare – Chairman Elizabeth Alexander AM Barry Brownjohn Stewart Ewen Victor Hoog Antink Charles Leitner Shaun Mays (alternate) Brian Scullin Victor Hoog Antink CEO Ben Lehmann Greg Lee Mark Turner Goran Ujdur Portfolio Servic
Slide 48: 7 Future Direction and Strategy
7 FUTURE DIRECTION AND STRATEGY
Slide 49: Future Direction & Strategy
7 FUTURE DIRECTION & STRATEGY Portfolio performance – Continued leasing focus on existing assets – Stabilise income stream Management platform – Strengthen DRFM Management team – Incremental resources Enhance eps growth – Extract enhanced returns from existing asset base – Assess new investmen
Slide 50: 8 Annexures
8 ANNEXURES 8.1 Commercial 8.2 Industrial 8.3 Retail 8.4 US Industrial 8.5 DRT Capital Management 8.6 DRH – DRO Analysis
Slide 51: Annexures - Commercial Portfolio
8.1 ANNEXURES – COMMERCIAL Commercial Portfolio Dec 04 Dec 03 1 Chifley Square, Sydney 2.1 0.4 Property NOI - Six months ending (A$m) (A$m) Garema Court, Canberra 2.0 2.4 Governor Phillip & Macquarie Tower Complex, Sydney (50%) 15.0 15.3 15 Bent St, Sydney 1.7 1.7 Southgate Complex, Southbank 14.1 1
Slide 52: Annexures - Industrial Portfolio
8.2 ANNEXURES - INDUSTRIAL Industrial Portfolio Dec 04 Dec 03 3 Brookhollow Ave, Norwest 1.6 1.6 Property NOI - Six months ending (A$m) (A$m) Target Distribution Centre, Lot 1 Tarras Road, Altona North 1.5 1.5 11 Talavera Rd, North Ryde 5.2 7.0 2 Minna Close, Belrose 1.4 1.8 Axxess Corporate Park, C
Slide 53: Annexures - Industrial Portfolio
8.2 ANNEXURES - INDUSTRIAL Industrial Portfolio 27-33 Frank St, Wetherill Park 0.7 0.7 19 Chifley St, Smithfield 0.7 0.6 Wallgrove Road, Eastern Creek 0.4 0.0 68 Hasler Rd, Herdsman 0.4 0.4 Axxess Corporate Park, Station Road, Seven Hills (sold Jul-Nov-0 0.6 0.8 27-29 Liberty Rd, Huntingwood 0.3 0.3
Slide 54: Annexures - Retail Portfolio
8.3 ANNEXURES - RETAIL Retail Portfolio Dec 04 Dec 03 Property NOI - Six months ending (A$m) (A$m) Whitford City Shopping Centre, Hillary (50%) 8.2 9.1 Whitford Avenue, Hillary (50%) 0.2 0.8 Westlakes Shopping Centre, Westlakes 6.6 6.8 Plenty Valley Town Centre, South Morang (50%) 0.6 0.6 Westfield
Slide 55: Annexures - US Industrial Portfolio
8.4 ANNEXURES – US INDUSTRIAL US Industrial Portfolio NOI Charlotte Metro $m USD Commerce Park 0.1 Atlanta Brookford St 0.0 Atlanta Industrial Drive 0.0 Westinghouse Blvd 0.2 Highlands Parkway 0.2 Cincinnati/NKY Town Park Drive 0.1 Airport Exchange Blvd 0.1 Empire Drive 0.0 Williams Drive 0.1 Intern
Slide 56: Annexures - US Industrial Portfolio
8.4 ANNEXURES – US INDUSTRIAL US Industrial Portfolio Dallas Los Angeles Arlington 0.1 Glendale 0.5 Diplomat Drive 1900 0.1 Industry Circle 0.1 Diplomat Drive 2055 (0.0) Alonda/Altura 0.4 Bradley Lane 0.1 San Fernando Rd 0.3 North Lake Drive 0.2 Memphis Airline Drive - 555 0.1 Memphis Industrial 0.2
Slide 57: Annexures - US Industrial Portfolio
8.4 ANNEXURES – US INDUSTRIAL US Industrial Portfolio Orlando Orlando CP 1.0 San Diego Exchange Drive 0.1 Dornoch Court (0.1) Phoenix Airway Road 0.1 South 41st Ave 0.2 Newton Drive 0.3 South 40th Ave 0.2 West Van Buren St 0.2 Oak Ridge Way 0.1 44th Ave 0.1 Seattle South 9th St 0.1 Kent West 0.5 Nor
Slide 58: Annexures - Interest Rate Hedging Profile
8.5 ANNEXURES - DRT CAPITAL MANAGEMENT Interest rate hedging profile FY05 FY06 FY07 FY08 FY09 A$m hedged 1523 1383 1018 838 338 A$ hedge rate 1 6.22% 6.26% 6.26% 6.21% 6.33% Average rate 2 6.18% 6.23% 6.23% 6.21% 6.34% US$m hedged 3 646 635 619 611 550 US$ hedge rate 1 4.37% 4.48% 4.47% 4.52% 4.47%
Slide 59: Annexures - DRH – DRO Analysis: P&L Summary
8.6 ANNEXURES - DRH – DRO ANALYSIS P&L Summary DB RREEF Holdings Pty Ltd DB Operations Trust 3 Months 3 Months 31 Dec 04 31 Dec 04 $m $m Asset Management fees 6.4 Interest Income (50%) 1.3 Other Fees 6.2 Equity accounted profit *50%) 0.8 Total Income 12.6 Total income 2.1 Profit before interest & ta
Slide 60: 9 Important Information
DB RREEF Managed in partnership with Deutsche Bank 2]
Slide 61: Important Information
9 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,