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DEXUS — Investor Presentation 2016
Oct 24, 2016
64807_rns_2016-10-24_dc405802-8b6f-4c87-ab4d-429e64ec49ef.pdf
Investor Presentation
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DEXUS Property Group (ASX: DXS)
ASX release
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25 October 2016
2016 Investor Day
DEXUS Property Group (DEXUS) provides the presentation that will be presented today at its 2016 Investor Day event.
A webcast of the presentation will commence at 11.00am and will be available at www.dexus.com
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: [email protected] E: [email protected]
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 $22.2 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 1.8 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 31,000 investors from 20 countries. With more than 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 INVESTOR DAY - 25 OCTOBER 2016
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DEXUS PROPERTY GROUP
2016 INVESTOR DAY PRESENTATION – 25 OCTOBER 2016
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DEXUS Funds Management Limited
ABN 24 060 920 783
AFSL 238163 as responsible entity for DEXUS Property Group DEXUS Property Group – [presentation title] Slide 1
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DARREN STEINBERG
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DEXUS Property Group – 2016 I[presentation title]vestor Day Slide 2
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2 DEXUS PROPERTY GROUP - 2016 INVESTOR DAY
AGENDA
SESSION 1 SPEAKERS 11.00am WELCOME Darren Steinberg STRATEGY – Leadership in office Ross Du Vernet - Funds management partner of choice CREATING VALUE THROUGH: - Technology & Innovation Mark Hansen – Customer focus Deborah Coakley – Leasing Kevin George, Chris Hynes, Andy Collins, Richard Garing, Ellie Schwab, Mark Cuddy 12.15pm Q&A panel session All speakers from Session 1 SESSION 2 12.30pm CREATING VALUE THROUGH: - Development Paul Oates, Chris MacKenzie – Transactions Andrew Whiteside, Michael Kwok - Trading Brenton McEwan - Funds Management Graham Pearson CLOSING REMARKS Darren Steinberg 1.20pm Q&A panel session All speakers from Session 2 1.40pm Lunch 2.00pm Gateway Retail tour Stewart Hutcheon, Paul Oates
DEXUS Property Group – 2016 Investor Day Slide 3
COMMITMENT TO STRATEGY
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DEXUS Property Group – 2016 Investor Day
Slide 4
DEXUS PROPERTY GROUP - 2016 INVESTOR DAY 3
COMMITMENT TO STRATEGY
DEXUS’S ASPIRATION - EXTRACT FROM 2012 ANNUAL RESULTS & STRATEGIC REVIEW PRESENTATION
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PROGRESS TO DATE
-
Proxy for high quality Australian CBD office
-
Leveraged multi-sector capabilities and scale to access diverse pools of capital
-
Actively acquired, developed and recycled assets to drive superior investment performance
-
Customer focus is strengthening existing relationships, attracting new customers and differentiating our product
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DEXUS Property Group – 2016 Investor Day Slide 5
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STRATEGY – Ross Du Vernet
DEXUS Property Group – 2016 I[presentation title]vestor Day Slide 6
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4 DEXUS PROPERTY GROUP - 2016 INVESTOR DAY
LEADERSHIP IN OFFICE
Leadership in office = superior investment performance AND the best customer experiences
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Core capabilities Customer orientation
Asset management
Property Identification of
customer needs
management
Leasing and the capability
Development Superior to develop
Transactions investment solutions
Research
performance
DEXUS Property Group – 2016 Investor Day Slide 7
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– LEADERSHIP IN OFFICE Is producing superior investment performance
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People & process Customer orientation
Customer pain
points
Customers with
α
high lifetime
value
Superior
investment
performance
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DEXUS Property Group – 2016 Investor Day
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Slide 8
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DEXUS PROPERTY GROUP - 2016 INVESTOR DAY 5
– LEADERSHIP IN OFFICE Performance underpinned by customer focus
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Real estate performance Customer orientation
DEXUS balance sheet – office portfolio returns Customer focus driving improved NPS
20% 40
16.0% 33
16% 14.6% 28
11.7% 11.0% 11.7% 10.9% 30
12% 18
20
8%
4% 10
0% –
DEXUS IPD FY14 FY15 FY16
1 year 3 year 5 year Office portfolio Net Promoter Score
DEXUS Group – office portfolio returns Supported by high employee engagement
20% 16.6% 100% 87.0% 87.0% 84.0%
16% 12.2% 11.2% 14.6% 11.7% 10.9% 80%
12%
60%
8%
40%
4%
20%
0%
DEXUS Group IPD 0%
FY14 FY15 FY16
1 year 3 year 5 year DEXUS employee engagement score
Source: IPD, IPSOS, DEXUS portfolio information.
DEXUS Property Group – 2016 Investor Day Slide 9
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– LEADERSHIP IN OFFICE Relevance of scale to investment outperformance
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SCALE IN OFFICE
Balance sheet & P&L Portfolio Platform
Access to transaction Tenant diversification Talent attraction & retention
pipeline Asset diversification Partner attraction
Capacity to innovate Superior access to customers (innovators)
Financing access and costs Partner attraction (capital)
Operating costs
Customer insights
When incremental scale is not beneficial:
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-
Distracts management – Return on Management Effort (ROME)
-
No material cost or revenue benefit – can’t ‘touch’ customer or control costs
-
Adds unnecessary complexity
-
No embedded optionality
-
No ‘halo effects’ or other intangible benefits
DEXUS Property Group – 2016 Investor Day
Slide 10
6 DEXUS PROPERTY GROUP - 2016 INVESTOR DAY
– LEADERSHIP IN OFFICE Relevance of scale to investment performance
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Increased diversity
Increased portfolio scale Reduced operating costs
of income
$9.2bn
39%
+$4.5bn +24 50 16ppt 67 bps 32bps
increase properties reduction reduction
$4.7bn 26 23%
35 bps
FY12 FY16 FY12 FY16 FY12 FY16 FY12 FY16
Reduced exposure to Top 10 Increased scale enables the
Enlarged portfolio provides increased capacity to undertake value customers supports greater DEXUS management platform
accretive acquisitions and developments income certainty and to unlock benefits from
lower volatility operating leverage
DEXUS Property Group – 2016 Investor Day Slide 11
MER %
Office AUM $bn
No. of office properties
Top 10 customers (% of income)
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– LEADERSHIP IN OFFICE Scale, capabilities and product development
Scale also improves our ability to develop and refine products
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‘First call’ partner for innovators and service
providers outside of industry I
D
E
A
S
Customer data and insights
I
Financial and portfolio capacity for measured M
experiments P
L
E
M
Scalable platform – resources and systems to E
implement N
T
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DEXUS Property Group – 2016 Investor Day Slide 12
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DEXUS PROPERTY GROUP - 2016 INVESTOR DAY 7
– LEADERSHIP IN OFFICE Capabilities and product development
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DEXUS Property Group – 2016 Investor Day Slide 13
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– FUNDS MANAGEMENT PARTNER OF CHOICE Aligned to leadership in office
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SCALE CAPABILITY CULTURE
Doubles CBD office footprint Development and Stable scalable team aligned to
highest and best use industrial long term performance
Retail place-making
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DEXUS Property Group – 2016 Investor Day
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Slide 14
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8 DEXUS PROPERTY GROUP - 2016 INVESTOR DAY
– FUNDS MANAGEMENT PARTNER OF CHOICE Aligned to leadership in office
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ASSETS UNDER MANAGEMENT OFFICE INVESTMENT ACTIVITY [1]
DEXUS Portfolio (Balance Sheet) Total value Total value
$6.9bn $1.7bn
16%
100%
$11.0bn
DEXUS Group 80%
45.1%
50.0%
19%
84% 60%
Office Industrial
$22.2bn 40%
14%
54.9%
50.0%
Funds Management 20%
67%
37%
Office Industrial Retail –
Office acquisitions Office developments
$11.2bn 51%
DEXUS Funds business
12%
Office Industrial Retail
1. Both office acquisitions and office developments includes 100 Mount Street, North Sydney, Kings Square, Perth and 480 Queen Street, Brisbane.
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DEXUS Property Group – 2016 Investor Day Slide 15
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– FUNDS MANAGEMENT PARTNER OF CHOICE Increased opportunities
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Funds platform increases access to investment opportunities
Transaction
480 Queen Street Kings Square DEXUS Office Waterfront Place 100 Mount Street
(Apr 13) (May 13) Partnership (Jan 14) (Jul 15) (Feb 16)
Structure Fund-Through Fund-Through Public markets Acquisition Development
Development Development
Transaction value
0.6 0.4 3.4 0.6 0.5
$bn (100% share)
DEXUS share 50% 50% 50% 50% 50%
Capital Partner DWPF DWPF CPPIB DWPF DWPF
IRR %
20.9% 13.6% 14.4% 12.8% n/a
(since acquisition)
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DEXUS Property Group – 2016 Investor Day
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Slide 16
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DEXUS PROPERTY GROUP - 2016 INVESTOR DAY 9
– STRATEGY Summary
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Two key strategic objectives - Leadership in office and partner of choice in funds
Leadership in office
–
Must ultimately translate to investment outperformance
–
Customer orientation key
Scale critical to improving the customer experience – people & product innovation
Funds management aligned to office leadership objective – scale, capability, culture
DEXUS Property Group – 2016 Investor Day Slide 17
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–
TECHNOLOGY & INNOVATION Mark Hansen
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DEXUS Property Group – 2016 I[presentation title]vestor Day Slide 18
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10 DEXUS PROPERTY GROUP - 2016 INVESTOR DAY
– TECHNOLOGY DEXUS’s approach
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Customer Delivering superior customer experience through technology and
Solutions innovation
Operating Improving operational agility and reducing costs to serve by delivering
Platforms integrated and scalable technologies
Business Empowering our people with rich information to make insightful
Intelligence decisions and accelerate business performance
Technology Building robust technology foundations to support and sustain our
Foundations business services
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DEXUS Property Group – 2016 Investor Day Slide 19
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TECHNOLOGY – DEXUS initiatives and projects
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66 opportunities to be delivered over 3 years
Stage 1 Stage 2 Stage 3
Customer Solutions Leading the property
industry by leveraging
technology as a true enabler
Business of value-add for DEXUS
Intelligence
Operating
Platforms
Technology
Foundations
July 15 July 16 July 17 July 18
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DEXUS Property Group – 2016 Investor Day
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Slide 20
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DEXUS PROPERTY GROUP - 2016 INVESTOR DAY 11
– TECHNOLOGY Blueprint for smart buildings
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Customer
Solutions …superior customer experience
Building Management Systems Digital Systems Management
Lift controls Cyber security
Environmental controls Security centralised
operations
CCTV and access controls Enterprise Applications
Tenant services - cloud
Fire monitoring
Building analytics
Activated Spaces
Performance Dashboards
Internet of Things
Communications infrastructure
Sensory system Connectivity
DEXUS Property Group – 2016 Investor Day Slide 21
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–
TECHNOLOGY Workday implementation
Operating Platforms …improving operational agility
Where we started What it looks like today
Learning Payroll Employee Self
Tracking Service
Learning Delivery AttendanceTime &
Performance
Management Off boarding
Talent
Management
/ Succession Employee Files
Remuneration Core HR Data
Reporting
/ Analytics Org Charts
Recruitment On boarding
HR Admin
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DEXUS Property Group – 2016 Investor Day Slide 22
12 DEXUS PROPERTY GROUP - 2016 INVESTOR DAY
– TECHNOLOGY Data management and reporting
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Business
Intelligence …accelerating business performance
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Where we started What it looks like today
Standardised
Reporting
TM1
Data Consolidation
Data Warehouse
Structured Source
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DEXUS Property Group – 2016 Investor Day Slide 23
– INNOVATION DEXUS’s approach
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INNOVATION HORIZONS FOR DEXUS
Horizon 1
Horizon 2
Horizon 3
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DEXUS Property Group – 2016 Investor Day Slide 24
DEXUS PROPERTY GROUP - 2016 INVESTOR DAY 13
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–
CUSTOMER FOCUS Deborah Coakley
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DEXUS Property Group –DEXUS P o 2016 I[presentation title]2016 I vestor Dayvestor Day Slide 25Sli 5
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– CUSTOMER FOCUS Why has DEXUS adopted a customer-centric approach?
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VALUE ADD ALIGNING DELIVERY DIFFERENTIATION TOUCH POINTS
Attraction of new Knowing what Intelligent Understanding
customers, portfolio matters to innovation decision making &
retention, improved customers Data driven product customer journey
incentives and
& services
downtime
Quality partnerships
DEXUS Property Group – 2016 Investor Day Slide 26
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14 DEXUS PROPERTY GROUP - 2016 INVESTOR DAY
– CUSTOMER FOCUS Customer initiatives
CREATING INTEGRATED COMMUNITIES
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On-line portal
DEXUS building
DEXUS Place Products & Five Star Service DEXUS Place Technology
services
DEXUS Suites
<500 sqm
3-5 year leases
Expansion of
DEXUS network
& brand
Traditional leases Community Parking Solutions Childspace
Third party
7+ year terms users
Building services
Opportunities
to source new
tenants Flexible Finance Health and Sustainability
Wellbeing
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DEXUS Property Group – 2016 Investor Day
Slide 27
– CUSTOMER FOCUS DEXUS Place
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Level 5 Level 15 Level 14 Level 31
1 Margaret Street 1 Farrer Place 385 Bourke Street 1 Eagle Street
Sydney Sydney Melbourne Melbourne
>$8m of leasing transactions in conjunction More than
with DEXUS Place membership 150 customers
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DEXUS Property Group – 2016 Investor Day
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Slide 28
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DEXUS PROPERTY GROUP - 2016 INVESTOR DAY 15
– CUSTOMER FOCUS Launch of Childspace
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DEXUS Property Group – 2016 Investor Day Slide 29
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– CUSTOMER FOCUS Measuring satisfaction and probability of recommendation
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Recommendation / Overall Satisfaction with
Net Promoter Score property manager
Total Portfolio
2016
2015
2013 4 2014 10 23 28 OFFICE
7.8 8.0 8.0 8.1
2013 2014 2015 2016
OFFICE
15 18 28 35
2013 2014 2015 2016
INDUSTRIAL
6.8 7.0 7.4 7.6
INDUSTRIAL
2013 2014 2015 2016
-24 -7 -7 6
2013 2014 2015 2016
Source: IPSOS DEXUS tenant Engagement Survey 2016.
DEXUS Property Group – 2016 Investor Day Slide 30
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16 DEXUS PROPERTY GROUP - 2016 INVESTOR DAY
– CUSTOMER FOCUS DEXUS ranks highly in NPS versus B2C groups
NPS LEADERS BY INDUSTRY IN AUSTRALIA
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-60 -50 -40 -30 -20 -10 0 +10 +20 +30 +40 +50 +60 +70
Aldi
Retail
EBay
Optus
Telecom
B2B
NPS scores
Utilities AGL are typically
Property +28 lower than
B2C
Airlines Virgin
Financial
services
Tech Apple
(USA) (USA)
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Source: IPSOS.
DEXUS Property Group – 2016 Investor Day Slide 31
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–
LEASING Kevin George
1. Movement since 30 June 2016 & Sydney vacancy.
DEXUS Property Group – 2016 I[presentation title]vestor Day Slide 32
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DEXUS PROPERTY GROUP - 2016 INVESTOR DAY 17
– CUSTOMER Overview of office customer base
Majority of DEXUS’s office portfolio is occupied by a relatively small number of large space occupiers Most customers are SMEs without specialist in-house real estate resources
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OFFICE CUSTOMERS BY NLA DIVERSITY OF OFFICE CUSTOMERS BY INCOME
less than 500sqm 100% Other
10% Non‐metallic mining/quarrying
Tourism
501‐1,000sqm 90%
9% Superannuation
Food and beverage manufacturing
1,001‐2,000sqm greater than 80% Electricity, gas, water and waste service
12% 5,000sqm Employment Placement and Recruitment Services
54% 70% Engineering Consultancy Services
Healthcare and social assistance
Retailing (non‐food)
2,001‐5,000sqm 60% Investment banks
15%
Insurance
OFFICE CUSTOMERS BY NUMBER 50% Food RetailingRental & Real Estate services
2,001-5,000sqm5% greater than 5,000sqm4% 40% Construction servicesOther finance
1,001-2,000sqm8% Business Services Other
30% Metal ore mining
501-1,000sqm less than Federal Government
13% 500sqm 70% 20% Car park services
Accounting services
Oil and Gas
10% State Government
Banks & building societes
Information media and telecommunications
0%
Legal services
Source: Office portfolio based on Argus Summary as at 30 September 2016.
DEXUS Property Group – 2016 Investor Day Slide 33
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– CUSTOMER Overview of industrial customer base
Majority of DEXUS’s industrial portfolio is occupied by medium to large space occupiers SMEs tend to occupy business park properties in the CBD fringe and port precincts
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INDUSTRIAL CUSTOMERS BY NLA DIVERSITY OF INDUSTRIAL CUSTOMERS BY INCOME
501‐1,000sqm 100% Other
less than 500sqm1% 3%1,001‐2,000sqm4% 90% Healthcare and social assistance
2,001‐ Engineering Consultancy Services
5,000sqm 80% Scientific and Technical Services
11%
Business Services Other
70%
greater than 5,001‐ Food and beverage manufacturing
10,000sqm68% 10,000sqm13% 60% Pharmaceutical wholesaling
Postal and courier pick‐up and delivery
services
INDUSTRIAL CUSTOMERS BY NUMBER 50% Retailing (non‐food)
greater than
10,000sqm less than 40% Construction services
14% 500sqm Transport support services
27%
5,001‐10,000sqm10% 30% Other manufacturing
Road, rail, water, air and space transport
20%
2,001‐5,000sqm Information media and telecommunications
17%
501‐1,000sqm 10% General wholesaling
18% Warehousing and storage services
1,001‐2,000sqm 0%
14%
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Source: Industrial portfolio based on Argus Summary as at 30 September 2016.
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DEXUS Property Group – 2016 Investor Day Slide 34
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18 DEXUS PROPERTY GROUP - 2016 INVESTOR DAY
– LEASING Group asset management and leasing structure
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Office & Industrial Kevin George
Office & Industrial asset management
Head of Head of
Head of Office Head of Office Head of Office Head of
Portfolio - 1 Portfolio - 2 Portfolio - 3 Industrial Portfolio Leasing Management Property
Sydney
Melbourne Office &
Sydney Sydney Perth Melbourne National Industrial
Brisbane Brisbane
Adelaide National
Adelaide
Andy Collins Richard Garing Ellie Schwab Mark Cuddy Chris Hynes Wayne Hall
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DEXUS Property Group – 2016 Investor Day Slide 35
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–
LEASING APPROACH Chris Hynes, Andy Collins, Richard Garing, Ellie Schwab
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DEXUS Property Group – 2016 I[presentation title]vestor Day Slide 36
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DEXUS PROPERTY GROUP - 2016 INVESTOR DAY 19
LEASING APPROACH
Forward leasing - solving for future leasing risks
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Live data Meeting review Strategy Property portfolio Review and execution
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Vacancies - Solving for available space
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Strategy Agency selection Marketing strategy Review and execution Leasing campaign
DEXUS Property Group – 2016 Investor Day Slide 37
–
LEASING APPROACH Leveraging future value of leasing management system
Listing
Market Prospect
Market Lease
Database Prospect
Target Prospect
Leasing
Leasing Workflow Submission Inspection Deal Exhaust Minutes
Listing(s)
Prospect
Supporting Conflict Embedded Approvals & Lease doc Clause
functionality management Deal analysis calculators workflows generator library
DEXUS Property Group – 2016 Investor Day Slide 38
Information
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20 DEXUS PROPERTY GROUP - 2016 INVESTOR DAY
– LEASING OFFICE
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DEXUS Property Group – 2016 I[presentation title]vestor Day Slide 39
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– LEASING OFFICE : Lease structures and lease expiry profile
-
Standard annual fixed increases of 3.5-4% (Sydney pushing to 4%+)
-
8-15% of leases (by income) expire each year
-
Average lease terms of 5 to 12 years, with smaller tenants and suites on average terms of 3 to 5 years
OFFICE LEASE EXPIRY PROFILE AS AT 30 SEPTEMBER 2016[1]
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16%
14% 13.0%
12% 11.6% 11.3%
10%
8.1%
8%
5.9%
6%
4.0%
4% 8.3%
5.9% 6.2%
2% 3.9% 4.2%
2.1%
0%
Available FY17 FY18 FY19 FY20 FY21
Sydney Total TotalAs at June 2016As at June 2016 Sydney Vacancy Forecast
1. Movement since 30 June 2016 & Sydney vacancy.
DEXUS Property Group – 2016 Investor Day Slide 40
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DEXUS PROPERTY GROUP - 2016 INVESTOR DAY 21
LEASING – OFFICE : Portfolio opportunities and challenges
-
SYDNEY (60% of DEXUS’s office portfolio[1] )
-
OPPORTUNITY: 66% of FY17, 52% of FY18 and 72% of FY19 office expiries located in Sydney - where demand is strong, supply constrained and flight to quality is accelerating — PROGRESS: Forward leasing continues where prudent; Vacancies filling fast
-
CHALLENGE: CBA FY18 expiry at 2 Dawn Fraser Avenue, Homebush (0.8% of total office income)
-
MELBOURNE (13% of DEXUS’s office portfolio[1] )
-
OPPORTUNITY: Pre-leasing 180 Flinders Street, Melbourne to enable commencement of 20,000sqm office development — PROGRESS: Pre-commitment discussions underway
-
CHALLENGE: 222 Lonsdale Street, Melbourne FY19 expiry (2.6% of total office income) — PROGRESS: Significant interest already flagged
-
PROGRESS: In dialogue with a number of parties
-
BRISBANE (17% of DEXUS’s office portfolio[1] )
-
OPPORTUNITY: Capitalising on high NPS scores and market share with Brisbane tenants — PROGRESS: Uptick in demand, particularly at smaller end
-
CHALLENGE: FY17 >4 full floors at Waterfront Place (0.6% of total office income) — PROGRESS: Staged implementation of fitted suites strategy and finalise HoAs
-
PERTH (8% of DEXUS’s office portfolio[1] )
-
OPPORTUNITY/CHALLENGE: Woodside FY19 expiry at 240 St Georges Terrace (3.2% of total portfolio income) — PROGRESS: Agents appointed, refurbishment/repositioning planning underway dealing with FY17 & FY18 expiries
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1. By value as at 30 June 2016.
DEXUS Property Group – 2016 Investor Day Slide 41
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– LEASING OFFICE: Sydney Premium grade office positive momentum
SEPTEMBER QUARTER – PREMIUM LEASING ACTIVITY
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2 leases 1,141sqm
12 leases 2,939sqm
New Renewals New Renewals
AVERAGE SYDNEY INCENTIVE LEVELS [1]
Renewals Premium 14.7%
A Grade 3.7%
New Offers Premium 15.3%
A Grade 9.5%
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GOVERNOR PHILLIP TOWER
Face Rents - Increased 8.8%
Effective Rents - Increased 20.4%
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- Statistics from DEXUS leasing management system for all offers currently out including effective deals.
DEXUS Property Group – 2016 Investor Day
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Slide 42
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22 DEXUS PROPERTY GROUP - 2016 INVESTOR DAY
LEASING – OFFICE : 56 Pitt Street, Sydney - capitalising on demand
DEXUS APPROACH
-
Sydney A & B grade office demand has increased substantially over the past 12 months as a result of building withdrawal in the CBD, mainly being driven by the Sydney Metro as well as residential conversion opportunities
-
Ability to adapt quickly to changing market conditions to drive both effective and face rental growth as well as reduce incentives
-
Leveraged internal and external leasing resources to capitalise on under rented tenancies
OUTCOMES
-
Leased over 7,100sqm (36% of the building) to achieve 100% occupancy since July 2015
-
Achieved face rental growth of 10-12% and effective rental growth of 20-30%
-
Decreased incentives from >20% (12 months ago) to <10%, with some recent deals at zero
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DEXUS Property Group – 2016 Investor Day Slide 43
LEASING – OFFICE : Scale benefits providing options for customers
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60 Albert St Arrow Energy 12 Creek St 10 Eagle St
(DWPF 100%) Lease surrender (DXS 50% (DXS 50%
of 4,754sqm DWPF 50%) DEXUS Office Partner 50%)
Rowlands
Sub-leased 1,493sqm to State Govt.
Worley Parsons with direct lease to DEXUS in 2019
Lease surrender of 9,340sqm New lease across 541sqm
at 60 Albert St
New lease across 3,264sqm
State at 12 Creek St
Government
New lease across
14,446sqm
KEY
BHP
New customer
Early surrender of 480 Queen St
4,352sqm at 12 Creek St
Exiting customer New lease across (DXS 50%
16,425sqm at 480 Queen St DWPF 50%)
Relocating customer
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DEXUS Property Group – 2016 Investor Day
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Slide 44
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DEXUS PROPERTY GROUP - 2016 INVESTOR DAY 23
LEASING – OFFICE : 30 The Bond leasing success
DEXUS APPROACH
-
Expression of Interest Campaign to the market during lease surrender negotiations with Lend Lease ensured we had a list of tenants to attract to the asset, minimising downtime
-
Transform into multi-tenanted asset rather than single tenant approach with maximum use of common spaces for all tenants
-
Utilise in-house leasing resources to run pre-leasing campaign while asset team focused on finalising terms with Lend Lease
OUTCOMES
-
10,874sqm leasing secured in the September quarter
-
New Effective rent is 14.5% higher than current passing
-
Significant AFFO upside on 3 and 5 years
-
Two floors remaining to lease (5,347sqm) with significant interest in the space
-
Acquired 36 Hickson Road adjacent to 30 The Bond - leasing success to result in valuation upside
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DEXUS Property Group – 2016 Investor Day
Slide 45
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LEASING – OFFICE : 385 Bourke Street, Melbourne leasing strategy success
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DEXUS APPROACH
-
Repositioned asset through new best-in-class End-of-Trip facilities, lobby upgrade, DEXUS Place launch, retail revamp and refurbishment of on-floor lobbies
-
Diversified our offer to meet market demand appeal to a wider cross section of occupiers across full/multi floors, part floors and fitted suites
-
Leveraged DEXUS Place to solidly support leasing momentum through provision of increased workplace flexibility
-
Introduced in-house leasing team – more customer touch points and personalised service to secure deals
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OUTCOMES
-
Reduced vacancy from 19,278sqm at acquisition in April 2014 to 852sqm to date – 97.9% occupied
-
Achieved 4.4 year WALE (up from 2.9 years) with a diverse tenant expiry profile
-
Achieved valuation uplift of $119m since acquisition
DEXUS Property Group – 2016 Investor Day
Slide 46
24 DEXUS PROPERTY GROUP - 2016 INVESTOR DAY
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–
LEASING INDUSTRIAL – Mark Cuddy
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DEXUS Property Group – 2016 Investor Day Slide 47
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– LEASING INDUSTRIAL: Lease structures and lease expiry profile
-
Standard annual fixed increases of 3-3.5%
-
10-20% of leases (by income) expire each year
-
Negative rent reversion common in Industrial as fixed increases exceed market rent growth
INDUSTRIAL PORTFOLIO LEASE EXPIRY PROFILE AT 30 SEPTEMBER 2016
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20.0% 20.0%
18.0% 18.0%
16.0% 16.0%
14.0% 14.0%
12.2%
12.0% 10.5% 12.0%
10.0% 9.5% 8.9% 8.2% 10.0%
7.7%
8.0% 8.0%
6.0% 6.0%
4.0% 4.0%
2.0% 2.0%
0.0% 0.0%
Available FY17 FY18 FY19 FY20 FY21
Sydney Total As at June 2016
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DEXUS Property Group – 2016 Investor Day
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Slide 48
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DEXUS PROPERTY GROUP - 2016 INVESTOR DAY 25
– LEASING INDUSTRIAL: Driving performance and value-add opportunities
STRONG PERFORMANCE IN SEPTEMBER 2016 QUARTER
- 158,811 square metres leased across 47 deals during the quarter
Occupancy from 90.4% at 30 June 2016 to 92.3%
Retention from 32% for FY16 to 54%
WALE from 4.1 years at 30 June 2016 to 4.5 years
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DEXUS INDUSTRIAL BY LOCATION
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SA 3%
QLD 5%
VIC 40%
NSW 52%
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DEXUS Property Group – 2016 Investor Day
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Slide 49
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– LEASING INDUSTRIAL: Lakes Business Park North, Botany
DEXUS APPROACH
OUTCOMES
-
Acquired in January 2015 consistent with our strategy to invest in markets where we expect superior rental growth
-
Leased total of 12,200sqm (42% of total GLA)
-
Increased occupancy (by area) from 93.9% at acquisition to 96.3%
-
Leveraged scale and project efficiencies with the asset adjoining DWPF’s Sir Joseph Banks Corporate Park (73,300sqm in total GLA on a combined site of 12.7ha)
-
Continuing lease negotiations over further 3,800sqm
-
Achieved rents 10.2% above underwrite assumptions
-
Targeted specific precinct industry groups to drive occupancy and rental growth
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DEXUS Property Group – 2016 Investor Day
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Slide 50
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26 DEXUS PROPERTY GROUP - 2016 INVESTOR DAY
– LEASING INDUSTRIAL: Securing FedEx at 2-4 Military Road, Matraville
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DEXUS APPROACH
-
Acquired in December 2009 in line with DEXUS’s strategy
-
Salmat vacated in March 2015, leaving 18,000sqm to lease
-
Tailored leasing strategy to high volume/just in time express couriers that were highly dependant on both sea & airport precinct locations
-
Formally engaged with FedEx to customise the premises into their flagship head office and express service for Asia Pacific
-
Implemented a substantial D&C project, transforming the traditional warehouse into a fully automated facility
-
Project completed within a limited timeframe, exceeding FedEx’s expectations
OUTCOMES
-
Established relationship with World’s 4th largest logistics group
-
Asset repositioned into a modern and highly specified domestic express service centre
-
51.8% increase in asset value as at 30 June 2016 from acquisition
-
Rental uplift >10%
DEXUS Property Group – 2016 Investor Day
Slide 51
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Q&A PANEL SESSION
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DEXUS Property Group – 2016 I[presentation title]vestor Day Slide 52
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DEXUS PROPERTY GROUP - 2016 INVESTOR DAY 27
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DEVELOPMENT – Paul Oates, Chris MacKenzie
DEXUS Property Group – 2016 I[presentation title]vestor Day Slide 53
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– DEVELOPMENT O&I development team
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Development
Office Industrial City Retail
Finance & Analytics
15+ Development Professionals
Planning & Authority Approvals
DEXUS Platform (Research, Leasing, Asset & Property Management,
WH&S, Sustainability, IT, Legal, Marketing, Govt. Relations)
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DEXUS Property Group – 2016 Investor Day Slide 54
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28 DEXUS PROPERTY GROUP - 2016 INVESTOR DAY
– DEVELOPMENT Rationale & Parameters
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RATIONALE
Customers
Quality Portfolio
Highest and Best Use
Enhanced Returns
PARAMETERS
<15% of FUM allocated to development and trading activities
HURDLES
Yield on Cost >7% Development Margin >10% IRR target>10%
DEXUS Property Group – 2016 Investor Day Slide 55
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–
DEVELOPMENT Capabilities and approach
Concept Conversion Delivery
In house resources
Outsourced resources
Value Add
In house – Development Manager, leasing, planning & authority
approvals, finance & analytics, DEXUS platform
Outsource – Project manager, D&C contractor, concept design,
detail design, agents, check consultants
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DEXUS Property Group – 2016 Investor Day Slide 56
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DEXUS PROPERTY GROUP - 2016 INVESTOR DAY 29
– DEVELOPMENT Development excellence method
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Live demonstration of internal system used for Development
(system contains DEXUS proprietary information and no visual slides
have been provided for this section)
Development
Introduction Excellence Method Change Request
(DEM)
Document Owners & DEM Process Owner
Responsibilities & Responsibilities
DEXUS Property Group – 2016 Investor Day Slide 57
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– DEVELOPMENT Committed and uncommitted projects in detail
| DEVELOPMENT–Commit | ted and u | ncommitt | ed proje | cts in detail | ||
|---|---|---|---|---|---|---|
| DEXUS development pipeline | Building area | Project cost | Est. cost to | Yield on cost | Leased | Completion |
| as at 30 June 2016 | sqm1 | est. | completion | % | % | due |
| $m2 | $m | |||||
| Office 100 Mount Street,North Sydney,NSW |
41,419 | 226 | 176 | >7.3% | 15% | Jan 2019 |
| Industrial 2A Basalt Rd & 1 Charley Cl (Precinct E) Quarrywest, Greystanes, NSW |
36,045 | 34 | 7 | 8.0% | 74% | Sep 2016 |
| 13 Felstead Dr, Laverton North, VIC | 10,194 | 12 | 8 | 7.2% | 100% | Nov 2016 |
| 5 Dolerite Way (Precinct B), Quarrywest, Greystanes, NSW |
10,100 | 9 | 5 | 7.5% | 100% | Mar 2017 |
| Quarrywest, Greystanes, NSW | 80,480 | 58 | 34 | 8.1% | nil | Aug 2018 |
| 141 Anton Road,Hemmant,QLD | 68,410 | 50 | 36 | 8.0% | nil | Jan 2019 |
| Total committed developments | 246,648 | 389 | 266 | |||
| Office/City Retail | ||||||
| Waterfront Place Precinct, Brisbane, QLD | 167,500 | 495 | 495 | |||
| Sydney CBD office opportunity | 51,195 | 382 | 382 | |||
| 180 Flinders St, Melbourne, VIC | 22,765 | 154 | 154 | |||
| 12 Creek St, Brisbane, QLD | 6,730 | 31 | 31 | |||
| 321 Kent St Retail Podium, Sydney, NSW3 | 4,655 | 21 | 21 | |||
| 175 Pitt St, Sydney, NSW3 | 3,915 | 28 | 28 | |||
| 44 Market St, Sydney, NSW3 | 2,767 | 22 | 22 | |||
| Total Industrial | 99,952 | 182 | 118 | |||
| Total uncommitted developments | 359,479 | 1,315 | 1,251 |
-
At 100%.
-
DEXUS interest in development cost (including land). 3. City retail developments. DEXUS Property Group – 2016 Investor Day
Slide 58
30 DEXUS PROPERTY GROUP - 2016 INVESTOR DAY
– DEVELOPMENT 100 Mount Street North Sydney - Perspective
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41,419sqm premium tower 15-year low market vacancy expected at completion
DEXUS Property Group – 2016 Investor Day Slide 59
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– DEVELOPMENT 100 Mount Street, North Sydney - Ground floor plane
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Located next to
North Sydney metro station
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DEXUS Property Group – 2016 Investor Day
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Slide 60
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DEXUS PROPERTY GROUP - 2016 INVESTOR DAY
31
– DEVELOPMENT 100 Mount Street, North Sydney - Elevation
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DEXUS Property Group – 2016 Investor Day Slide 61
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– DEVELOPMENT 180 Flinders Street, Melbourne – Site location
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DEXUS Property Group – 2016 Investor Day Slide 62
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32 DEXUS PROPERTY GROUP - 2016 INVESTOR DAY
– DEVELOPMENT 180 Flinders Street, Melbourne – Proposed building
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22,765sqm of office space Currently seeking pre-commitment
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DEXUS Property Group – 2016 Investor Day Slide 63
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– DEVELOPMENT 180 Flinders Street, Melbourne – Building components
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DEXUS Property Group – 2016 Investor Day Slide 64
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DEXUS PROPERTY GROUP - 2016 INVESTOR DAY 33
– DEVELOPMENT 180 Flinders Street, Melbourne – Proposed atrium
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DEXUS Property Group – 2016 Investor Day
Slide 65
– DEVELOPMENT Waterfront Precinct concept – Brisbane River
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Masterplanning phase Mixed use – office, retail, residential
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DEXUS Property Group – 2016 Investor Day Slide 66
34 DEXUS PROPERTY GROUP - 2016 INVESTOR DAY
– DEVELOPMENT Waterfront Precinct concept – Waterfront
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Five assets covering 3.5ha Existing three assets owned by
DEXUS and two third party partners
DEXUS Property Group – 2016 Investor Day Slide 67
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– DEVELOPMENT Gateway – Elevation
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DEXUS Property Group – 2016 Investor Day Slide 68
DEXUS PROPERTY GROUP - 2016 INVESTOR DAY
35
– DEVELOPMENT Gateway before development
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DEXUS Property Group – 2016 Investor Day
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Slide 69
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– DEVELOPMENT Gateway – Ground floor today
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DEXUS Property Group – 2016 Investor Day
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Slide 70
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36 DEXUS PROPERTY GROUP - 2016 INVESTOR DAY
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– DEVELOPMENT Established Industrial track record decade
SOME OF OUR INDUSTRIAL CUSTOMERS
DEXUS APPROACH
- To develop modern, functional and high quality facilities that deliver superior long term property solutions to our customers
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- National approach – founded upon partnership, tailored and flexibility solutions for current and future customers
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- DEXUS Standard – design and quality points of difference – our experience and expertise – 4 star Green Star minimum
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- Integrated solutions – office and warehouse fit outs
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OUTCOMES
- Provided a variety of offerings in Sydney, Melbourne and Brisbane with flexibility to deal with customers with a national presence
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- Developed more than 500,000sqm of prime industrial facilities across the eastern seaboard since 2010
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- Delivered 49 high quality facilities with an average size of circa 10,300sqm and a WALE of circa 8.5 years
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- Secured repeat business – Toll, Kathmandu, Reece, Target and Steinhoff
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DEXUS Property Group – 2016 Investor Day
Slide 71
– DEVELOPMENT Quarry at Greystanes – The past decade
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DEXUS Property Group – 2016 Investor Day
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Slide 72
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DEXUS PROPERTY GROUP - 2016 INVESTOR DAY 37
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–
DEVELOPMENT Hemmant – Perspective
DEXUS Property Group – 2016 Investor Day Slide 73
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– – DEVELOPMENT Larapinta Success with speculative development
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DEXUS APPROACH
-
Acquisition strategy: 50% prelease & speculative development
-
With subdued industrial tenant enquiry, low vacancy (under 2%) and significant tender savings (circa 8%) - 100% speculative basis was approved
-
Target – lease whole facility by August 2016
OUTCOMES
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Design
Site Development 8 Spec Construction Practical Let Up -
Acquisition mths DA Approvals Decision Commencement Completion 6 mths
Jul-14 Mar-15 Mar-15 Mar-15 Apr-15 Feb-16 Aug-16
100% leased in August 2016 to two tenants Greens Foods
and MJ Logistics
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- Achieved: Value $30.5m, Margin >10%, target unlevered project IRR >20%
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DEXUS Property Group – 2016 Investor Day
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Slide 74
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38 DEXUS PROPERTY GROUP - 2016 INVESTOR DAY
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–
TRANSACTIONS Andrew Whiteside, Michael Kwok
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DEXUS Property Group – 2016 Investor Day Slide 75
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–
TRANSACTIONS & TRADING Overview
+$13bn of transactions across the Group and c$150m of trading profits since the start of FY12
Expertise - opportunities reviewed Product mix - acquisitions Market - divestments by
since 2012 by strategy by sector since 2012 geography since 2012
Retail SA WA ACT NZ
178 Investment
Trading/Value Add Office QLD NSW
Development
425
198 Industrial
VIC
Combined expertise to execute for the investment strategy, package
and deliver trading profits and replenish development pipeline
Transactions Trading Capabilities
Agility
Scale
Relationships
8 people α 4 people Research
Planning
Negotiation
(councils/tenants)
Leveraging from the fully integrated DEXUS platform and utilising the proven transactions methodology
DEXUS Property Group – 2016 Investor Day Slide 76
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DEXUS PROPERTY GROUP - 2016 INVESTOR DAY 39
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–
TRANSACTIONS Approach and process
1 Origination Research led Opportunity led
Proprietary research - target sectors, Relationships, situations requiring scale,
sub-markets, asset characteristics etc. speed, or certainty
Asset classes Investment strategy
2 Focus and Strategy
Office Industrial Retail Core Development(manufacture core) Trading
3 Funding Balance Sheet DWPF Joint ventures / mandates
Investment committee review &
4 Execution submission of Expression of Interest
Detailed due diligence & asset
planning undertaken
Approval
Fully integrated DEXUS platform provides framework for identification,
origination, evaluation and execution of acquisition opportunities
across entire asset and product spectrum
DEXUS Property Group – 2016 Investor Day Slide 77
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–
TRANSACTIONS Transactions process demonstration
Live demonstration of internal system used for Transactions process
(system contains DEXUS proprietary information and no visual slides
have been provided for this section)
Acquisitions Process Divestment Process
Document Owners & Process Owner &
Change Request
Responsibilities Responsibilities
DEXUS Property Group – 2016 Investor Day Slide 78
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40 DEXUS PROPERTY GROUP - 2016 INVESTOR DAY
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– TRANSACTIONS Divestment of Southgate, Melbourne
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DEXUS APPROACH
-
Owned and added incremental value over the past 20 years
-
Received compelling unsolicited offers - two parties selected to enter a short competitive process
-
ARA managed fund was selected based on their flexibility to transact in two 50% tranches at a premium price of $578m
-
Divestment rationale
-
Despite being a quality building, it was expected to be more capex intensive due to asset age, expiry profile and proposed retail upgrade works
-
Reducing IBM and HWT leasing risk by securing lease renewals and locking away 28% of total income
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- Opportune timing as limited stock has seen investors move up risk curve
OUTCOMES
-
Achieved 12% premium to book value at 30 June 2016
-
Favourable transaction structure with flexibility to sell other 50% up to 16 months after Tranche A, which is expected to settle in December 2016
-
Accretive to DEXUS office portfolio total returns
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DEXUS Property Group – 2016 Investor Day
Slide 79
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– TRANSACTIONS Acquisition of 36 Hickson Road, Sydney
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DEXUS APPROACH
-
Strategic location benefits and attributes
-
Adjacent to 30 The Bond and provides control for future redesign of entrance and forecourt, as well as improved amenity
-
Unique boutique office space and F&B retail offering
-
Set to benefit from direct exposure to Barangaroo precinct and new Metro station
-
Acquisition rationale
-
Consistent with strategy to acquire adjacent properties that add long term value to existing assets
-
64% vacancy provides opportunity for strong reversions
-
Potentially ~9,700sqm of under utilised FSR or Heritage Floor Space, which may be able to transferred to other DEXUS properties
OUTCOMES
-
Outperformed acquisition underwrite by
-
Leasing vacancies within several weeks of settlement
-
Achieving higher rents, and lower incentives
-
Strategy was proved up as new office tenants and a renowned bar operator were attracted to the property
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DEXUS Property Group – 2016 Investor Day
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Slide 80
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DEXUS PROPERTY GROUP - 2016 INVESTOR DAY 41
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–
TRADING Brenton McEwan
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DEXUS Property Group – 2016 Investor Day Slide 81
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– TRADING Approach and Methodology
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1 Focus and Strategy Investment strategy
Core Development(manufacture core) Trading
2 Due diligence & asset
planning undertaken Balance Sheet Assets Acquisitions
Qualify & Quantify Value
3 Identify Value Strategic Planning & DevelopmentInfrastructure ResearchMarket RepositioningAsset H&BU Customer
4
Package Value Implement initiatives to capture value
5 Execute
Leverage DEXUS capabilities to deliver
value
6 Transact
Trade
7 Realise Value through
Divestment Trading Profit Realised
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DEXUS Property Group – 2016 Investor Day Slide 82
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42 DEXUS PROPERTY GROUP - 2016 INVESTOR DAY
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–
TRADING Leveraging capabilities to deliver profits
c. $150m of trading profits delivered over four years at an average unlevered IRR of 23.5%
Trading property source Sector Trading strategy
Acquired for Industrial Repositioned
purpose 4 Office Developed
of trading properties 5
6 properties properties
8 Transferred 10 9
properties from properties properties
Investment
portfolio
TRADING ACTIVITY
>180,000sqm leased
160,000sqm development either complete, under construction or mooted
120,000sqm approx. of land rezoned
13 development applications and planning proposals
PRE-TAX TRADING PROFITS GENERATED
FY12-FY16 FY17 secured FY17-FY19 unsecured
8 disposals completed by FY16 for c.$150m settled+$12m exchanged+$25m remaining 4 priority projects + $90-100m from Restocking future pipeline
$184m total pre-tax trading profits already completed or exchanged
DEXUS Property Group – 2016 Investor Day Slide 83
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– TRADING 105 Phillip Street, Parramatta – NSW Department of Education
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-
25,000sqm of net lettable area
-
Under construction
-
Due for completion in March 2018
-
5 star Green Star, 5 star NABERS Energy and 4 star NABERS Water ratings
-
North facing atria with interconnecting stairs
-
Double height lobby and sheltered external landscape connecting into mezzanine conference space
-
Expansive roof terrace communal space with an outdoor dining area and sports court
-
Landscaped through site link between Phillip Street and George Street
-
Extensive end of trip facilities
DEXUS Property Group – 2016 Investor Day
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Slide 84
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DEXUS PROPERTY GROUP - 2016 INVESTOR DAY 43
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–
TRADING 105 Phillip Street, Parramatta
DEXUS Property Group – 2016 Investor Day Slide 85
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– TRADING Lakes Business Park, Botany
DEXUS APPROACH
-
Acquired in January 2015, comprising two adjoining sites located in southern Sydney
-
Northern site comprising 70% of net property income to be actively managed
-
Southern site comprising 30% of net property income acquired as part of inventory for future trading opportunity and held in trading trust (DXO)
-
Value proposition
-
Superior rental growth in the medium term due to constrained supply and competing land use interests in the area
-
Unlocking value through strategic planning and negotiation with local and state authorities to obtain mixed use rezoning of Southern site
OUTCOMES SO FAR
-
Obtained Council approval for a rezoning proposal for a mixed-use complex providing up to 54,900sqm of residential floor space
-
Rezoning proposal with Dept. of Planning & Environment for determination
DEXUS Property Group – 2016 Investor Day
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Lakes
Site: 7.9ha
Lettable: 43,617sqm
Office: 30,379sqm
Ind/wh: 13,238qm
Sir Joseph Banks (DWPF)
Site: 4.8ha
Lettable: 31,658sqm
Lakes (North)
Site: 4.9ha
Lettable: 29,432sqm
Office: 22,474sqm
Ind/wh: 6,958sqm
Lakes (South)
Site: 3.0ha
Lettable: 14,185sqm
Office: 7,905sqm
Ind/wh: 6,280sqm
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Slide 86
44 DEXUS PROPERTY GROUP - 2016 INVESTOR DAY
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–
FUNDS MANAGEMENT Graham Pearson
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DEXUS Property Group – 2016 Investor Day Slide 87
– FUNDS MANAGEMENT Overview
FUNDS MANAGEMENT HIGHLIGHTS
$11.2bn Funds under management, up 99.5% since FY12
>$7.0bn equity attracted to platform since 2010
69 Investors from 7 countries
BENEFITS TO DEXUS - ENHANCED RETURN ON EQUITY
Provides annuity style income stream Increases capital sources, improving access to opportunities Improves scale in markets, resources and operations
DEXUS Property Group – 2016 Investor Day Slide 88
DEXUS PROPERTY GROUP - 2016 INVESTOR DAY
45
– FUNDS MANAGEMENT Sustainable business model
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High quality diversified wholesale investor base Other 4%
Insurance 7%
— Long-term and like-minded partners Govt Super21%
Best practice corporate governance
Super Fund
Demonstrated investor liquidity 18%
Focus on annuity-style fees Diversified
investor base
Alignment of interest through co-investment
Wealth
—
Strength of DEXUS balance sheet Management 7%
Govt Funds
Historic outperformance against benchmarks Management
Sovereign 21%
Wealth Fund
23%
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DEXUS Property Group – 2016 Investor Day
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Slide 89
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FUNDS MANAGEMENT – Broad and respected client base
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DEXUS Wholesale
The Australian Australian Industrial DEXUS Office DEXUS Industrial
Property Fund
Mandate Partnership Partnership Partnership
(DWPF)
65 unitholders Australian Major international CPPIB The Future Fund
superannuation fund pension fund
$7.3bn diversified $1.8bn diversified $0.6bn industrial $3.8bn office Industrial partnership
wholesale fund mandate partnership [1] partnership [1] with $0.8bn [1] target
Established 1995 Managed since 1997 Established Oct 2012 Established Dec 2013 Established June 2014
40 assets 9 assets 21 assets 19 assets 4 assets
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- Including DEXUS’s 50% ownership interest. DEXUS Property Group – 2016 Investor Day Slide 90
46 DEXUS PROPERTY GROUP - 2016 INVESTOR DAY
– FUNDS MANAGEMENT Best practice corporate governance
Comprehensive suite of practical compliance policies and procedures, including — Clear ‘rotation’ policy for allocation of property transactions across sectors
- Leasing conflict management by segregation of client interests
DEXUS PARTNERSHIPS DWPF GOVERNANCE FRAMEWORK
-
Alignment of interest established with 50% Independent Board with four external directors co-investment from DEXUS balance sheet
-
Investor Advisory Committee with unitholder
-
Management decisions by unanimous approval of elected representatives both partners
-
Introduction of scaled base fees
-
Transparent reporting of conflict of interest management
-
Timely investor reporting framework
-
Ongoing redemption rights and effective management of unitholder liquidity needs
-
Defined process pre-agreed with partners for approvals where the manager may be conflicted
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DEXUS Property Group – 2016 Investor Day Slide 91
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– FUNDS MANAGEMENT Implementing clear and focused investment strategies
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INCREASING EXPOSURE TO ESTABLISHED NEW OFFICE PARTNERSHIP
NON-DISCRETIONARY RETAIL
Four retail centres acquired for $319.2m Off-market takeover and de-listing of CPA
for DWPF in line with strategy with partner CPPIB to acquire a portfolio
since December 2014 of office properties for $3.4bn
DIVESTING NON-CORE ASSETS DIVESTING AT SUBSTANTIAL PREMIUM
TO BOOK VALUE
Strategic divestment of non-core assets
in 2015 for the Australian Mandate Sale of 36 George Street, Burwood for
including Capalaba Central Shopping DEXUS Office Partnership in Sept 2015 for
Centre ($148.5m) $95m, at a 44% premium to book value
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SEEDED NEW INDUSTRIAL PARTNERSHIP
Secured three industrial sites (43ha) with
partner, The Future Fund, with c$400m
value on development completion
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IMPROVING OFFICE PORTFOLIO QUALITY
AND DIVERSITY
Secured two fund-through prime
developments in 2013 for DWPF at 480
Queen St, Brisbane and Kings Square,
Perth for c$490m (50%)
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DEXUS Property Group – 2016 Investor Day
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Slide 92
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DEXUS PROPERTY GROUP - 2016 INVESTOR DAY 47
– FUNDS MANAGEMENT Driving outperformance
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DWPF CONSISTENTLY DELIVERING LONG TERM BENCHMARK OUTPERFORMANCE
16%
14% DWPF
12% Benchmark
10%
8%
6%
4%
2%
0%
1 year 3 years 5 years 7 years
DEXUS OFFICE PARTNERSHIP
Delivered a property level total return of 17.5% for 12 months to 30 September 2016
Exceeded the Fund’s ‘underwrite’ total return since inception by 5.9% pa
AUSTRALIAN MANDATE
Out-performed performance benchmark over 1, 3, 5 and 10 years
AUSTRALIAN INDUSTRIAL PARTNERSHIP
Since inception portfolio return of 11.5% pa (unlevered) and 16.7% pa (levered), excl. transaction costs
DEXUS Property Group – 2016 Investor Day Slide 93
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– FUNDS MANAGEMENT Track record of investor support
-
Equity attracted through performance, strategic focus and corporate governance
-
Third party clients have invested over $7.0bn of new equity since 2010
-
DWPF attracted $3.5bn of equity since 2010 from domestic and offshore investors
-
New partnerships have invested $2.4bn of capital since 2010
-
Focus on investor liquidity evidenced by facilitation of redemptions and transfers in DWPF
THIRD PARTY FUNDS MANAGEMENT EQUITY MOVEMENTS
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3,000 8,000
2,500 7,000
6,000
2,000
5,000
1,500 4,000
1,000 3,000
2,000
500
1,000
- -
(500) (1,000)
Jun-10 Dec-10 Jun-11 Dec-11 Jun-12 Dec-12 Jun-13 Dec-13 Jun-14 Dec-14 Jun-15 Dec-15 Jun-16
Equity Raised (ex DRP, incl Transfers) Transfer/Redemption/ Return of Capital DRP
Cumulative Net Equity Raised (inc DRP) Cumulative Gross Equity Raised (inc DRP)
At 30 June 2016.
DEXUS Property Group – 2016 Investor Day Slide 94
Equity (per Quarter) $ million
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48 DEXUS PROPERTY GROUP - 2016 INVESTOR DAY
– FUNDS MANAGEMENT What’s next
-
Organic growth of existing funds/partners through
-
$3.0bn development pipeline[1]
-
Value-driven acquisitions and
-
Value-add through active asset management
-
Implement new business initiatives which
-
Complement the existing platform
-
Meet demand of existing clients or new investors
-
Leverage DEXUS’s property expertise and capabilities
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1. Third party funds’ or partners’ share of development spend and including DEXUS third party funds’ or partners’ share of Westfield redevelopments.
DEXUS Property Group – 2016 Investor Day Slide 95
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–
CLOSING REMARKS Darren Steinberg
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DEXUS Property Group – 2016 I[presentation title]vestor Day Slide 96
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DEXUS PROPERTY GROUP - 2016 INVESTOR DAY
49
CLOSING REMARKS
-
Demonstrated abilities to create value across the Group
-
Differentiated offering and product through customer orientation
-
Experienced capable and efficient team committed to driving performance
-
Identified opportunities to add future value
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DEXUS Property Group – 2016 Investor Day Slide 97
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Q&A PANEL SESSION
DEXUS Property Group – 2016 I[presentation title]vestor Day Slide 98
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50 DEXUS PROPERTY GROUP - 2016 INVESTOR DAY
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.
DEXUS Property Group – 2016 Investor Day Slide 99
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DEXUS PROPERTY GROUP
2016 INVESTOR DAY PRESENTATION – 25 OCTOBER 2016
DEXUS Funds Management Limited
ABN 24 060 920 783
AFSL 238163 as responsible entity for DEXUS Property Group DEXUS Property Group – [presentation title] Slide 100
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DEXUS PROPERTY GROUP - 2016 INVESTOR DAY 51
GATEWAY, 1 MACQUARIE PLACE, SYDNEY
Gateway forms part of Circular Quay’s new retail and dining precinct and offers 4,600 square metres of premium food and beverage opportunities over three levels. Gateway is set to become an iconic harbourside destination, both day and night. As part of Sydney’s iconic Gateway Tower, the retail complex will service the 3,000 office workers from the tower above as well as the 2.8 million visitors to the precinct per year.
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Serving breakfast, lunch and dinner plus everything in between, Gateway offers an array of over 25 quality food outlets and restaruants.
Located at Alfred Street in the heart of Circular Quay, Gateway is within easy walking distance of trains, ferries, buses and landmark Sydney icons.
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THE SHIP INN
QUAY & CO
CARPARK
LIFT
GOODS
LIFT
LEVEL FLIGHT
CENTRE
THE
G BEKYA URBAN ORCHARD SCHNITZ MAD MEX GOZLEMECO.
TOP
SEATING AREA SEATING JUICE OPORTO ZUMBO
AREA BREAD & FILL
Key Lift DIN TAI FUNG SPICEDBILU’SBY ROLLD SEATING AREA EXPRESSSUSHIHERO ESCAPESTAIRSFIRE AUSTRALIA THE GIFT
Escalator
Stairs
Male Toilets
Female Toilets
Disabled Toilets JESSIE STREETGARDENS PARAGON HOTEL MCDONALD’S
Parents Room
Shops
Seating Area
Void
LOFTUS ST
PITT STREET
FOUR FROGS
CRÊPERIE
JPQ’S
BARBERSINC.
REIBY PLACE
GELATO MESSINA
ESPRESSOWORKSHOP
ALFRED STREET
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52 DEXUS PROPERTY GROUP - 2016 INVESTOR DAY
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HERO
COMMERCIAL LIFT SUSHI TRAIN
CARPARK
LIFT
VOID
LEVEL
1 CONCIERGE
VOID
CHAT
TOKYO THAI
LAUNDRY SEATING
SEATING
ESPRESSO
ROOM
TOKYO LAUNDRY
Key VOID
WINTERGARDEN
Concierge
Lift
Escalator
Stairs
Male Toilets JESSIE STREET
Female Toilets GARDENS
Disabled Toilets
Shops
Seating Area
Void
FIRE ESCAPE STAIRS
NEPTUNE
PALACE
OFFICE
BURGER
PROJECT
CHAT THAI
PARAGON HOTEL
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DEXUS PROPERTY GROUP - 2016 INVESTOR DAY 53
NOTES
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 $22.2 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 1.8 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 31,000 investors from 20 countries. With more than 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)
54 DEXUS PROPERTY GROUP - 2016 INVESTOR DAY
DEXUS PROPERTY GROUP - 2016 INVESTOR DAY - 25 OCTOBER 2016
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DEXUS PROPERTY GROUP - 2016 INVESTOR DAY 55