Dexus · ASX:DXS
Dexus — DEXUS Property Group — HY2010 Earnings Presentation
44 slides from Dexus's earnings presentation, Feb 24, 2010
Slide 1: Half Year Results 31 December 2009
2009 DEXUS Property Group HALF YEAR results 31 December 2009 DEXUS Funds Management Limited ABN 24 060 920 783 AFSL 238163 as responsible entity for DEXUS Property Group
Slide 2: Disclaimer
Disclaimer This presentation is issued by DEXUS Funds Management Limited (DXFM) in its capacity as responsible entity of DEXUS Property Group (ASX: DXS). It is not an offer of securities for subscription or sale and is not financial product advice. Information in this presentation including, without
Slide 3: DEXUS Property Group
TITLE SLIDE DEXUS HEADER GROUP PROPERTY (Trebuchet Bold 28pt) Victor Hoog (Trebuchet Sub title Antink 16 pt) Chief Executive Officer Victor Hoog Antink Chief Executive Officer DXS 2009 Annual Results — Slide 3
Slide 4: Results Summary: Financial and operational performance
RESULTS SUMMARY Financial and operational performance Financial Portfolio weighting1 Operating EBIT: $240.5m — Stable operating income FFO per security: 3.8c — Dilution impact of capital raisings Shareholder total return (3yrs to Dec 2009) — Outperformed index2 by 8.8% pa Operational Dec 2009 Dec 20
Slide 5: Operational Achievements
OPERATIONAL ACHIEVEMENTS Delivering on strategy Sold $108m in Australia and US$206m in US Commenced US repositioning to fewer markets Sold remaining retail property A$256m Acquired Australian industrial property A$46m Acquired 3 remaining Whirlpool properties US$202m Raised MTN finance A$160m Raised
Slide 6: Results Summary: CR&S and Employee Engagement
RESULTS SUMMARY Achievements in CR&S and Employee Engagement Corporate Responsibility & Sustainability (CR&S) Inclusion in DJSI World Index, SAM 2010 Real Estate Sector Mover 100 Most Sustainable Corporations at Davos - 2 yrs running Resource consumption Energy GHG — Office – Aus (8.6%) (6.8%) — Ind
Slide 7: Financial Performance
TITLE SLIDE PERFORMANCE FINANCIAL HEADER (Trebuchet Bold 28pt) Sub title (Trebuchet 16 pt) Victor Hoog Antink Chief Executive Officer DXS 2009 Annual Results — Slide 7
Slide 8: Financial Results at a glance
FINANCIAL RESULTS At a glance HY Dec 2009 HY Dec 2008 $’m $’m Operating EBIT 240.5 243.2 Net loss after tax to stapled security holders1 (107.0) (975.2) Funds from Operations 181.1 188.7 Funds from Operations per security 3.8c 5.4c 1. Refer to a full reconciliation at http://www.dexus.com/Investor-C
Slide 9: Core Operating Metrics
CORE OPERATING METRICS HY Dec 2009 HY Dec 2008 $’m $’m Office – Aust/NZ 121.9 119.1 Industrial – Aust 52.7 53.4 Industrial – North America 54.0 66.0 Management EBIT 6.3 5.4 Non core1 18.6 19.3 Other (13.0) (20.0) Operating EBIT 240.5 243.2 Finance costs (68.1) (76.6) Other2 8.7 22.1 Funds from Opera
Slide 10: Valuations
VALUATIONS Devaluations affect NTA by 6 cents Fair value Change WACR movement % % NTA now 95c $’m Office – Aus (22) (1%) 7.6 Portfolio valuations have likely bottomed Industrial – Aus (21) (2%) 8.8 — Australia has stabilised Industrial – US1 (153) (10%) 8.7 — North America still lags Developments –A
Slide 11: Capital Management
CAPITAL MANAGEMENT Pro-actively maintaining a strong balance sheet Gearing 31.9% Maturity profile Accessing multiple debt sources (MTN, US Bonds) Undrawn facilities $1.5bn 2010 maturities of $1.1bn Next debt refinancing: mid to late 2010 All metrics well within key convenants1 1. Refer to appendices
Slide 12: Looking Forward
LOOKING FORWARD Australian earnings and valuations are stabilising North America shows early signs of stabilisation Strong capital structure GPT/GMT, 1 Farrer Place, Sydney NSW 2009 Half Year Results — Slide 12
Slide 13: Office Portfolio
TITLE OFFICE SLIDE HEADER PORTFOLIO (Trebuchet Bold 28pt) Sub title (Trebuchet 16 pt) Victor Hoog Antink Chief Executive Officer DXS 2009 Annual Results — Slide 13
Slide 14: Office: Solid performance
OFFICE Solid performance – challenging times Stable portfolio performance continues due to: — Active management – team focus — Quality portfolio – retains appeal — Tenant mix – diversity Demand drivers improving Strength returning to our core markets Woodside Plaza, 240 St Georges Terrace, Perth WA
Slide 15: Office: Sound portfolio fundamentals
OFFICE Sound portfolio fundamentals Stable income – NPI at $122m DXS office value movement history Like for like growth at 2.7% Occupancy rate well above market benchmark Retention rates reflect market conditions Value bottomed at December 2009 Net Property Like-for- Occupancy Occupancy Over/under R
Slide 16: Office Sustainability
OFFICE SUSTAINABILITY Continuous commitment and improvement Resource consumption reductions1 Improved sustainability performance – consumption reductions 3yrs 1yr — Energy 13.0% 8.6% — Water 21.9% 10.3% — GHG 11.8% 6.8% Average portfolio NABERS energy rating 3.2 Star and water rating 3.0 Star Commit
Slide 17: Office: Leasing outcomes driving growth in FY11
OFFICE Leasing outcomes driving growth in FY11 Started FY10 with 10% expiries – completed Stable income profile 40,226sqm leased in investment portfolio (ownership level) – 57 transactions1 Average rental increase was 9.2% Average tenant incentive was 23.6%2 Current vacancy 3.5%: half under negotiat
Slide 18: Office Developments
OFFICE DEVELOPMENTS On schedule 123 Albert Street, Brisbane – 38,000sqm — On schedule for completion Dec 2010 — 68% leased at 31 Dec 2009 — Of the remaining 8 floors: 1 floor is under Heads of Agreement 3 floors in final negotiations — Forecast yield on cost 6.8% 1 Bligh Street, Sydney – 43,000sqm —
Slide 19: Office: 2010 focus
OFFICE 2010 focus Demand now returning with lag effect on Australian CBD demand income ('000, sqm net absorption & number of jobs Economic slowdowns Demand Jobs lost/gained Growth expected in FY11 due to: 700 600 — Rising business confidence & earnings 500 — Employment growth 400 300 — Limited new s
Slide 20: Industrial Portfolio
TITLE SLIDE HEADER INDUSTRIAL PORTFOLIO (Trebuchet Bold 28pt) Sub title (Trebuchet 16 pt) Victor Hoog Antink Chief Executive Officer DXS 2009 Annual Results — Slide 20
Slide 21: Industrial: Increased activity and consistent performance
INDUSTRIAL Increased activity and consistent performance Delivering continued performance in a tough market — Key metrics improved — Positive income growth — Asset values now stable Repositioning portfolio through sales and acquisitions Development activity capitalising on rebound in tenant demand D
Slide 22: Industrial: Sound portfolio fundamentals
INDUSTRIAL Sound portfolio fundamentals Consistent income growth DXS industrial value movement history High occupancy and tenant retention Lease duration up 9% since June 2009 Cap rates peaked, asset values now stabilised Portfolio underpinned by strong passing rents Net Like-for- Occupancy Occupanc
Slide 23: Industrial: Active management delivering results
INDUSTRIAL Active management delivering results Intensive leasing focus Stable income profile — 72,000sqm1 existing space and 36,000sqm pre-leased — Average rents down 1.1%, incentives at 6.0%2 Property transactions – repositioning portfolio — $62m disposals since May: yield of 7.6% — $46m acquisiti
Slide 24: Industrial: Staged developments underway
INDUSTRIAL Staged developments underway - acted early to capture growth Greystanes 47.2ha (15% pre-leased) — Major project approval in Nov 2009 — Two tenant pre-commitments at 8.8% yield — EQBD Converting – 18,600sqm, 10 yrs — Symbion Pharmacy Services – 17,300sqm, 15 yrs Laverton 149ha (3 stages) S
Slide 25: Industrial: 2010 focus
INDUSTRIAL 2010 focus Early signs of market activity returning Industrial drivers Industrial Activity (RHS) Sydney rent Melbourne rent 2010 improving with stronger growth 30% 15% expected in FY11 20% 10% Experienced team building leadership 10% 5% position 0% 0% -10% -5% Further enhance & position p
Slide 26: North American Industrial Portfolio
NORTH TITLE AMERICAN SLIDE HEADER (Trebuchet INDUSTRIALBold 28pt) PORTFOLIO Sub title (Trebuchet 16 pt) Victor Hoog Antink Chief Executive Officer DXS 2009 Annual Results — Slide 26
Slide 27: North America: Market conditions weak but improving
NORTH AMERICA Market conditions weak but improving Leading economic indicators Substantial improvement in business confidence turning positive — Property markets lag economy — Wide variances from market to market Portfolio performance in line with expectations Source: Deutsche Bank, DEXUS Research U
Slide 28: North America: Portfolio fundamentals reaching cyclical lows
NORTH AMERICA Portfolio fundamentals reaching cyclical lows Portfolio continues to track industry benchmarks North America value movement history Portfolio earnings down — US$ half year income down 6.6% Occupancy down — Impacted by assets sales and Whirlpool but like for like down Valuations US$1.2b
Slide 29: North America: Half year results reflect improving confidence
NORTH AMERICA Half year results reflect improving business confidence Continued focus on leasing & retention Stable income profile — 2.3m sf (214,000sqm) leased — 67 transactions (include 31 new lease deals) — First positive absorption in 6 quarters Looking forward FY10 income trend expected to cont
Slide 30: North America: Capital transactions
NORTH AMERICA Capital transactions Whirlpool program now complete — Atlanta, Seattle & Columbus acquired for US$202.6m — New 10 year triple net leases US property sales initiate portfolio repositioning — 22 properties sold for US$206m — Transactions driven by leasing and valuation risk, scale and gr
Slide 31: North America: Preferred west coast markets
NORTH AMERICA Preferred west coast markets Preferred markets: Los Angeles, San Francisco, Seattle Major gateways for US trade with Asia — Represents 70% of US trade California is major market — US largest economy (8th largest in world) — Lower cost and more flexible employment base — Combined popula
Slide 32: North America: Repositioning portfolio over time
NORTH AMERICA Repositioning portfolio over time Objectives North American markets To build local DEXUS capability over time — Establish DEXUS office — RREEF continue as asset and transaction managers — CBRE directly appointed for property management Reposition the portfolio — National ‘footprint’ no
Slide 33: North America: 2010 focus
NORTH AMERICA 2010 focus Market conditions showing signs of Substantially through the worst leasing conditions in 20 years improvement Transactions underpinning values Continued focus on leasing Recovery likely to be slow and patchy Source: RREEF Research / Torto Wheaton 3691 North Perris Boulevard,
Slide 34: Third Party Funds Management
THIRDSLIDE TITLE PARTY FUNDS HEADER (Trebuchet MANAGEMENT Bold 28pt) Sub title (Trebuchet 16 pt) Victor Hoog Antink Chief Executive Officer DXS 2009 Annual Results — Slide 34
Slide 35: Third Party Funds Management
THIRD PARTY FUNDS MANAGEMENT Funds under management of $5.5 billion Funds breakdown Early signs of fund inflows — Equity from new and existing investors — Domestic funds increasingly at under weight — Australia attractive to international capital Institutional investors looking for: — Largely core s
Slide 36: Summary and Outlook
TITLE SLIDEAND SUMMARY HEADER OUTLOOK (Trebuchet Bold 28pt) Sub title (Trebuchet 16 pt) Victor Hoog Antink Chief Executive Officer DXS 2009 Annual Results — Slide 36
Slide 37: Objectives into 2011
OBJECTIVES INTO 2011 Objectives Continue to focus on high quality Australian office assets Capitalise on demand from large industrial space users Continue to reposition US portfolio Dispose of European portfolio Outperform domestic operational benchmarks Build US operational platform Target 90% leas
Slide 38: Outlook and Guidance
OUTLOOK AND GUIDANCE Property operations — Office: stable FY10 with growth in FY11 — Industrial: consistent growth FY10 and FY11 — US: stabilising in FY11 Property values — At or near bottom — Value returning in FY11 FY10 guidance reconfirmed1 — FFO per security: 7.3 cents — Distribution per securit
Slide 39: DEXUS Property Group Half Year Results
2009 DEXUS Property Group HALF YEAR RESULTS 31 December 2009 DEXUS Funds Management Limited ABN 24 060 920 783 2009 238163 AFSL Half Year Results — Slide as responsible 39for DEXUS Property Group entity
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Slide 41: Notes
NOTES
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Slide 44: www.dexus.com
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