DEXUS — Investor Presentation 2015

May 5, 2015

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DEXUS Property Group (ASX: DXS)
ASX release
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6 May 2015

Macquarie Australia Conference presentation

DEXUS Property Group (DEXUS) today releases an overview presentation that will be presented at the 2015 Macquarie Australia Conference which is being held at Sheraton on the Park, 161 Elizabeth Street, Sydney.

For further information please contact: Investor relations Media relations Rowena Causley T: +61 2 9017 1390 Louise Murray T: +61 2 9017 1446 M: +61 416 122 383 M:+61 403 260 754 E: rowena.causley@dexus.com E: louise.murray@dexus.com

About DEXUS

DEXUS Property Group is one of Australia’s leading real estate groups, investing directly in high quality Australian office and industrial properties. With $18.5 billion of assets under management, the Group also actively manages office, industrial and retail properties located in key Australian markets on behalf of third party capital partners. The Group manages an office portfolio of 1.6 million square metres located predominantly across Sydney, Melbourne, Brisbane and Perth and is the largest owner of office buildings in the Sydney CBD, Australia’s largest office market. DEXUS is a Top 50 entity by market capitalisation listed on the Australian Securities Exchange under the stock market trading code ‘DXS’ and is supported by more than 32,000 investors from 18 countries. With 30 years of expertise in property investment, development and asset management, the Group has a proven track record in capital and risk management, providing service excellence to tenants and delivering superior risk-adjusted returns for its investors. www.dexus.com

Download the DEXUS IR app to your preferred mobile device to gain instant access to the latest stock price, ASX Announcements, presentations, reports, webcasts and more.

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DEXUS Funds Management Ltd ABN 24 060 920 783, AFSL 238163, as Responsible Entity for DEXUS Property Group (ASX: DXS)

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DEXUS PROPERTY GROUP

MACQUARIE AUSTRALIA CONFERENCE PRESENTATION – 6 MAY 2015

DEXUS Funds Management Limited ABN 24 060 920 783

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AFSL 238163 as responsible entity for DEXUS Property Group DEXUS Property Group 2015 Macquarie Australia Conference Presentation Slide 1
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AGENDA

• DEXUS today

• Property portfolio

• Third party funds management

• Trading

• Summary

Slide 2

DEXUS Property Group 2015 Macquarie Australia Conference Presentation

DEXUS TODAY

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PROPERTY FUNDS MANAGEMENT TRADING
PORTFOLIO & PROPERTY SERVICES
Maximising Driving performance Delivering trading
performance from and generating profits from
the DEXUS property revenue from funds identified properties
portfolio management and
property services
80-90% of FFO [1] 10-20% of FFO [1]
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1. Represents target contribution to FFO. FFO means Funds from Operations. As previously announced, DEXUS adopted FFO as defined by the PCA White Paper “Voluntary Best Practice Guidelines for disclosing Funds from Operations (FFO) and Adjusted Funds from Operations (AFFO)” for its reporting from 1 July 2014.

DEXUS Property Group 2015 Macquarie Australia Conference Presentation Slide 3

– PROPERTY PORTFOLIO Overview

$9.1bn portfolio on balance sheet

$7.6bn Prime quality office portfolio

$1.5bn Prime quality industrial portfolio

• Largest listed office portfolio in Australia

• 62% located in the Sydney CBD

• DEXUS and its capital partners own interests in four of the seven premium grade towers in Sydney

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• Focused on major industrial hubs and arterial roadways in Sydney, Melbourne and Brisbane

• Allocation to value add/repositioning and development in partnership with capital partners

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Slide 4

DEXUS Property Group 2015 Macquarie Australia Conference Presentation

– PROPERTY PORTFOLIO Actively managing forward office leasing risks

Historical outperformance

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vs. National office occupancy rates [1]
100%
95%
90%
85%
80%
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 HY15 3Q15
DEXUS National
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• DEXUS has maintained office occupancy rates well above National average and 90%[2 ] since 2004

• No more than 12.5%[2] of the Group’s existing office leases expire in any single fiscal period for the next three financial years

• No single tenant represents more than 4.6% of income[3]

DEXUS office portfolio lease expiry as at 31 March 2015[2]

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14%
12%
12.5%
10%
8.2% [4] 9.9% 9.5%
8%
6%
4% 5.4%
2%
0.8%
0%
Available FY15 FY16 FY17 FY18
1. Source: DEXUS Research and Jones Lang LaSalle.
2. By income.
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1. 31 December 2014 fully leased DEXUS Portfolio passing income annualised.

2. As at 30 June 2014 including DEXUS Office Partnership properties.

DEXUS Property Group 2015 Macquarie Australia Conference Presentation

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Slide 5
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– PROPERTY PORTFOLIO Case study 1: DEXUS Office Partnership

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DEXUS APPROACH

• Successfully acquired Commonwealth Property Office Fund (CPA) with JV partner Canada Pension Plan Investment Board in April 2014 for $3.4 billion

• Established the DEXUS Office Partnership comprising 21 properties

• Leased 106,241sqm from April 2014 to 31 March 2015

OUTCOMES SO FAR

• Improved occupancy from 92.2%[1] at April 2014 to 94.5% at 31 March 2015

• Achieved a $125.3 million valuation[2] uplift across DEXUS Office Partnership properties at December 2014

• Achieved a 12.1%[3] total return for the 12 months ending 31 March 2015

• Occupancy of 92.2% excludes the five properties sold. Occupancy was 93.5% including these five properties at acquisition.

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1. Valuation increase at 31 December 2014 represents 100% interest, of which DEXUS has a 50% share. 3. Unlevered total return based on acquisition price.

Slide 6

DEXUS Property Group 2015 Macquarie Australia Conference Presentation

– PROPERTY PORTFOLIO Case study 2: 1 Farrer Place, Sydney

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DEXUS APPROACH

• Faced with State Government vacating 20,000sqm at Governor Macquarie Tower in December 2014 and major tenant expiries in Governor Phillip Tower

• Leveraged strong tenant relationships to target potential tenants and secure existing tenants

• Improved End of Trip amenity and undertaking refresh focusing on ground floor amenity

OUTCOMES SO FAR

• Mitigated 68% of leasing risk since December 2013

• Governor Macquarie Tower – secured a long term lease across circa 9,500sqm with Minter Ellison

• Governor Phillip Tower – renewed long term leases with two existing tenants across circa 15,500sqm and is currently 98.5% leased

• Increased WALE from 3.3 years at September 2013 to 5.3 years at December 2014

Slide 7

DEXUS Property Group 2015 Macquarie Australia Conference Presentation

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– PROPERTY PORTFOLIO Case study 3: 480 Queen St, Brisbane development

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DEXUS APPROACH

• Acquired in April 2013 as a fund-through development[1] on attractive pricing metrics

• Accessed quality product in a market with limited new premium offerings in the medium term

• Building a high calibre tenancy profile that will underpin the long term investment value

• Satisfying the demand of key corporations looking to reposition their business through workplace solutions

Acquisition cap rate 7.06-7.25% sliding scale

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Yield on cost 7.0-7.5%
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OUTCOMES

• Ten tenants secured, with 80.7% office space[2] pre-committed

• Tenants include:

• Allens

• PricewaterhouseCoopers

• BHP Billiton

• Herbert Smith Freehills

• The Executive Centre

Target 10yr IRR circa 10%

1. Grocon has provided DEXUS and DWPF (50%/50% ownership) with a two-year income guarantee on any remaining vacancies at practical completion. 2. Includes Heads of Agreement.

Slide 8

DEXUS Property Group 2015 Macquarie Australia Conference Presentation

THIRD PARTY FUNDS MANAGEMENT

Growing investor/fund base

Significant growth of third party funds platform

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DEXUS Industrial
$bn Partner
10 DEXUS Office <$0.1bn
Partner
DWPF
$1.7bn
>60% 8 $5.7bn
Australian
growth through 6 48 Industrial
Partner
new partnerships, 4 investors $0.3bn $9.4bn
acquisitions and
developments 2 Australian
Mandate
0 $1.7bn
2012 Today
Significant development pipeline of organic growth
Committed projects as at 31-Dec-14 FY15 FY16 FY17/FY18
$2.2bn Office - 4 properties $360m
of committed and
uncommitted
Retail - 6 properties $290m [2]
development
projects [1]
Industrial - 4 properties $130m
Remaining spend - committed 3 [rd] Party $780m
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1. Third party funds’ or partners’ share of development spend as at 31 December 2014.

2. Including DEXUS third party funds’ or partners’ share of Westfield redevelopments.

DEXUS Property Group 2015 Macquarie Australia Conference Presentation Slide 9

THIRD PARTY FUNDS MANAGEMENT – DWPF pipeline of developments

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Drive Industrial Estate, Richlands in Brisbane, a DWPF development.

Slide 10

DEXUS Property Group 2015 Macquarie Australia Conference Presentation

THIRD PARTY FUNDS MANAGEMENT – DWPF pipeline of developments

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Gateway, 1 Macquarie Place, Sydney, NSW a DWPF development.

DEXUS Property Group 2015 Macquarie Australia Conference Presentation Slide 11

THIRD PARTY FUNDS MANAGEMENT – Significant revenue growth

• Funds Management revenues have increased from additional capital partners and expanded business

• Property services revenue to increase from growth in retail business and developments combined with leasing fees

Funds management & property services profit

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circa $35-$40m
Expected increase since FY12 of >100%
$27.9m
$20.8m
$17.9m
FY12 FY13 FY14 FY15
Property Services Funds Management Forecast
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Slide 12

DEXUS Property Group 2015 Macquarie Australia Conference Presentation

– TRADING Types of trading opportunities

• ‘Trading’ is the activity of developing/repositioning assets with a view to selling for profit

TYPE OF TRADING OPPORTUNITY Repositioning/ value-add Development Change of use	TYPE OF TRADING OPPORTUNITY Repositioning/ value-add Development Change of use	TYPE OF TRADING OPPORTUNITY Repositioning/ value-add Development Change of use	TYPE OF TRADING OPPORTUNITY Repositioning/ value-add Development Change of use	TYPE OF TRADING OPPORTUNITY Repositioning/ value-add Development Change of use	TYPE OF TRADING OPPORTUNITY Repositioning/ value-add Development Change of use	TYPE OF TRADING OPPORTUNITY Repositioning/ value-add Development Change of use
KEY ELEMENTS	Acquire, reposition, sell		Acquire, develop, sell		Transfer to trading package/develop and sell
PROPERTIES SOLD OR EXCHANGED	� 50 Carrington Street, Sydney � 40 Market Street, Melbourne � 57 -101 Balham Road, Archerfield		� 163-183 Viking Drive, Wacol � 30 Distribution Drive, Laverton North � 94-106 Lenore Drive, Erskine Park		� 154 O’Riordan Street, Mascot � 5-13 Rosebery Avenue and 25-55 Rothschild Avenue, Rosebery

DEXUS Property Group 2015 Macquarie Australia Conference Presentation

Slide 13

TRADING – Case study 4: Repositioning/value-add – 40 Market Street, Melbourne

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DEXUS APPROACH

• Packaging the value-add

• Acquired in November 2012 for $46.7m at a price per square metre of $3,888

• Set the trading strategy following market and feasibility analysis

• Secured a 15 year lease renewal with Powercor

• Undertook a capital works program to drive realisation of value

OUTCOMES

• Improved WALE from 6 years to 15 years

• Sold in September 2014 for $105m at a price per square metre of $8,770

• Expected IRR of circa 20%

• Settlement will contribute to FY15 trading profits

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DEXUS Property Group 2015 Macquarie Australia Conference Presentation Slide 14

– TRADING Case study 5: Change of use - Rosebery NSW[1]

DEXUS APPROACH

• Negotiated with council to extend LEP[2]

• Conducted packaging activities

• Commenced residential development plans

• Commenced JV discussions

• High value, low risk development

• Strong and established residential market

• DA risk minimal & vacant possession risk acceptable

OUTCOMES

• Sold properties to deliver trading profits in FY15-FY16 with limited risk and requiring no additional capital

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1. 5-13 Rosebery Avenue and 25-55 Rothschild Avenue, Rosebery.

2. Local environmental plan.

DEXUS Property Group 2015 Macquarie Australia Conference Presentation

Slide 15

SUMMARY

• Solid operating business setup to deliver growth through the cycle

• Delivering consistent performance

• Third party funds management business is set up for strong organic growth

• FY15 distribution per security guidance[1] of 41.04 cents represents growth of 9.3%

Distribution growth – cents per security[2]

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42.0
Average growth rate of 8.6% p.a.
40.0
38.0
36.0
34.0
41.04
32.0 37.56
36.00
30.0
32.10
28.0
26.0
FY12 FY13 FY14 FY15 (Guidance)
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1. Guidance supported by: Targeting positive like-for-like income growth across the office and industrial portfolios, weighted average cost of debt of approximately 5.2%, trading profits of approximately $40 million, Management Operations revenue of approximately $35-40 million.

2. Previous corresponding per security figures are on a one-for-six consolidated basis.

DEXUS Property Group 2015 Macquarie Australia Conference Presentation Slide 16

IMPORTANT INFORMATION

• 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 limitation, any forward looking statements or opinions (the Information) may be subject to change without notice. To the extent permitted by law, DXFM, DEXUS Property Group and their officers, employees and advisers do not make any representation or warranty, express or implied, as to the currency, accuracy, reliability or completeness of the Information and disclaim all responsibility and liability for it (including, without limitation, liability for negligence). Actual results may differ materially from those predicted or implied by any forward looking statements for a range of reasons outside the control of the relevant parties.

• The information contained in this presentation should not be considered to be comprehensive or to comprise all the information which a DEXUS Property Group security holder or potential investor may require in order to determine whether to deal in DEXUS Property Group stapled securities. This presentation does not take into account the financial situation, investment objectives and particular needs of any particular person.

• The repayment and performance of an investment in DEXUS Property Group is not guaranteed by DXFM, any of its related bodies corporate or any other person or organisation.

• This investment is subject to investment risk, including possible delays in repayment and loss of income and principal invested.

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DEXUS Property Group 2015 Macquarie Australia Conference Presentation Slide 17
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QUESTIONS
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Slide 18

DEXUS Property Group 2015 Macquarie Australia Conference Presentation