DEXUS — Investor Presentation 2016

May 3, 2016

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DEXUS Property Group (ASX: DXS)
ASX release
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4 May 2016

Macquarie Australia Conference presentation

DEXUS Property Group (DEXUS) today releases the attached presentation to be presented at the 2016 Macquarie Australia Conference, which is being held at The 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 $21.5 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 1.8 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 32,000 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

MACQUARIE AUSTRALIA CONFERENCE PRESENTATION – 4 MAY 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 1

DEXUS TODAY

Australia’s largest prime office portfolio A significant and growing Third Party Funds Management business A deep pipeline of value enhancement opportunities 8.6% p.a. growth in distributions from FY12 to FY15 Underpinned by a strong balance sheet

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DEXUS Property Group – Macquarie Australia Conference Presentation

Slide 2

– DEXUS TODAY Key earnings drivers

All key areas of the business are in a strong position

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PROPERTY PORTFOLIO FUNDS MANAGEMENT & TRADING
PROPERTY SERVICES
Focus on increasing Organic growth supported by Pipeline enhanced
office occupancy >95% $2.1bn development pipeline [1 ] with priority projects to FY20
80-90% of FFO [2 ] 10-20% of FFO [2 ]
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1. Remaining spend on Third party funds management development pipeline is $1.5bn, including $718m of uncommitted projects.

2. Represents target contribution to FFO before Finance costs and Group Corporate costs. 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 – Macquarie Australia Conference Presentation

Slide 3

– PROPERTY PORTFOLIO Stable predictable income representing 80-90% of FFO

 Largest listed office portfolio in Australia

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PROPERTY
PORTFOLIO
$10.6bn portfolio [1 ]
Industrial
16%
Office
84%
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• 91% Prime grade (Premium and A-grade quality)

• Industrial portfolio focused on major industrial hubs and arterial roadways

• Properties generate a stable and predictable income stream

• Lease terms contain annual fixed increments of circa 3.0-4.0%

• Office portfolio weighted average lease term of 4.7 years[1 ]

• Largest asset exposure represents 8% of property portfolio by book value[2 ]

• Largest tenant exposure represents 4% of property income[3 ]

80-90% of FFO

1. As at 31 March 2016.

2. Based on 31 December 2015 book valuations.

3. 31 December 2015 fully leased DEXUS Portfolio passing income annualised.

DEXUS Property Group – Macquarie Australia Conference Presentation

Slide 4

PROPERTY PORTFOLIO – Concentrated exposure to the Sydney office market

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DEXUS office portfolio
geographic diversification
SA 1%
WA 8%
ACT 1%
QLD 17%
NSW 60%
VIC 13%
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DEXUS Property Group – Macquarie Australia Conference Presentation

Slide 5

– PROPERTY PORTFOLIO Strong track record of outperformance

 Proven track record of delivering returns for investors

• Above benchmark total returns at the asset level

• Execute and generate returns from portfolio acquisitions demonstrated by 300bps outperformance by DEXUS Office Partnership (former CPA portfolio) since inception

• 8.6% average distribution growth per DEXUS security per annum (from FY12-FY15)

DEXUS office portfolio outperformance[1 ]

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20%
16% 14.8% 14.6%
12% 11.5% 11.3%
8%
1 year 3 year
DEXUS balance sheet office IPD Office Benchmark
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DEXUS Office Partnership outperformance[1 ]

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20%
17.8%
16.0%
16% 14.6%
13.0%
12%
8%
12 month return Since inception 1 Apr 14
DEXUS Office Partnership IPD Office Benchmark
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DEXUS Wholesale Property Fund outperformance[2 ]

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20%
16% 14.8%
12.7%
12% 10.8%
10.2% 10.3%
9.6%
8%
1 year 3 years 5 years
DWPF Mercer IPD Index
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1. Based on performance to 31 December 2015. IPD office benchmark total return to 31 December 2015 published by IPD on 25 February 2016 and calculated as sum of capital growth and net income in a single period expressed as a percentage of capital employed, with income reinvested.

2. Mercer IPD Post Fee Net Asset Weighted Index (Net Return, Net Asset Weighed).

DEXUS Property Group – Macquarie Australia Conference Presentation

Slide 6

– PROPERTY PORTFOLIO Significant office leasing volumes in FY16

DEXUS office portfolio leasing activity

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sqm leased % portfolio leased
250,000 18%
211,071sqm 16%
206,059sqm
200,000 186,379sqm 14%
12%
154,321sqm
150,000
10%
8%
100,000
6%
4%
50,000
2%
0 0%
FY13 FY14 FY15 FY16 (Q1-3)
Percentage of portfolio leased
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DEXUS Property Group – Macquarie Australia Conference Presentation

Slide 7

– PROPERTY PORTFOLIO Actively managing future office leasing risks

DEXUS office portfolio lease expiry as at 31 March 2016

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22%
20.0% [1 ]
20%
18%
16%
12.7% [1 ]
14%
14.2%
12% 11.0%
9.7% [1 ] 10.4%
8.8% [1 ]
10%
8%
9.1%
6% 4.9%
6.5%
4%
1.9%
2%
0%
Available FY16 FY17 FY18 FY19 FY20 FY21
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• Adopted strategies, such as fitted suites, to reduce vacancy and maximise cash flow

• Reduced FY16 expiries from 8.8% at 30 June 2015 to 1.9% at 31 March 2016

• Reduced FY19 expiries from 20.0% at 30 June 2015 to 14.2% at 31 March 2016

• On track to achieve 95% occupancy[2] target at 30 June 2016

• As at 30 June 2015. 2. By income.

DEXUS Property Group – Macquarie Australia Conference Presentation

Slide 8

– PROPERTY PORTFOLIO Delivering superior office metrics

• Maintained office occupancy rates well above National average and 90%[1 ] since 2004

• Continue to achieve market-low incentives of 17.4% for the first three quarters of FY16

• FY15-16 has seen a period of significant churn across the office portfolio with like-for-like income growth expected to normalise from FY17

Historical DEXUS office outperformance vs. National occupancy rates

Historical DEXUS office average incentives

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100% Since FY12 20%
average
occupancy of 18%
95.4%
16%
95%
14%
Since FY12
12%
average
90% 10% incentives of
15.4%
8%
6%
85%
4%
2%
80% 0%
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 3Q16 Jun-12 Dec-12 Jun-13 Dec-13 Jun-14 Dec-14 Jun-15 Dec-15
DEXUS National DEXUS (Avg) DEXUS DEXUS (Avg)
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Source: DEXUS Research and Jones Lang LaSalle. 1. By income.

DEXUS Property Group – Macquarie Australia Conference Presentation

Slide 9

– PROPERTY PORTFOLIO Sydney CBD office market vacancy to tighten quickly

DEXUS expectations as at 31 December 2015

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428,000sqm of 299,000sqm of 215,000sqm of Flight to quality Vacancy to
supply withdrawals net absorption above average take increase in FY16
over the next 3 years over the next 3 years over the next 3 years up in prime space Barangaroo effect
‘000sqm
300 10% FY18
8.6%
Vacancy
7.8% rate
200
below
6.7% 6%
259
5.9% 6.0%
100
120
36 49
0 2%
-138 -64
-103
-132
-25
-100
-100
-2%
-90
-200
-300 -6%
FY15 FY16 FY17 FY18
Stock Withdrawal Net demand Total completions Vacancy (RHS) Vacancy forecast at Feb-15 (RHS)
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Source: DEXUS Research, JLL Research.

DEXUS Property Group – Macquarie Australia Conference Presentation

Slide 10

– PROPERTY PORTFOLIO Industrial portfolio has large exposure to NSW & VIC

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DEXUS industrial portfolio
geographic diversification
SA 1%
QLD 5%
VIC 36% NSW 58%
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DEXUS Property Group – Macquarie Australia Conference Presentation

Slide 11

– PROPERTY PORTFOLIO Enhanced quality and returns through development

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Why DEXUS develops office and industrial properties

• Improves portfolio quality and diversification

• Provides access to quality product at favourable rate per sqm and yield metrics when investment markets are tight

• Strong track record in delivering quality office and industrial developments

• Premium Grade office: 1 Bligh Street, Sydney; 123 Albert Street, Brisbane; 240 St Georges Terrace, Perth; 5 Martin Place, Sydney

• Fund-through office: 480 Queen Street, Brisbane and Kings Square, Perth

• Industrial: Quarry, Greystanes and DEXUS Industrial Estate, Laverton North

• Up to 15% of DEXUS’s portfolio is allocated to development/trading/ value-add opportunities

100 Mount Street, North Sydney[1 ]

• Commenced development of 41,163sqm premium office tower

• Forecast year-one yield on cost >7%

• Forecast unlevered Project IRR of circa 12-14%

• Staged completion in late 2018, an opportune time in the cycle

• Owned by DEXUS and DEXUS Wholesale Property Fund.

DEXUS Property Group – Macquarie Australia Conference Presentation

Slide 12

FUNDS MANAGEMENT – Strong outlook through development

• High quality wholesale partners

FUNDS MANAGEMENT & PROPERTY SERVICES

• Annuity-style revenue stream

• Alignment of interests via partnerships and DEXUS co-ownership in direct properties

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$10.9bn portfolio [1 ]
$10.9bn
+91%
$5.7bn
Jun-12 Mar-16
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• Recent partnerships and equity raisings reflect capital partner support of the Group’s capabilities and best-practice corporate governance principles

• Additional scale enables the Group to attract and retain top talent

• Management operations profit has increased by more than 150% since FY12 with an FY16 target of circa $45m

Funds Mgt & Trading combined 10-20% of FFO

1. As at 31 March 2016.

DEXUS Property Group – Macquarie Australia Conference Presentation

Slide 13

– TRADING Established track record and strong outlook

Six priority projects in progress to generate circa $110m trading profits[1 ]

TRADING Demonstrated strong track record $146.8m of trading profits[1] delivered across eight properties in four years at an average unlevered IRR of 23.5%[2 ] Funds Mgt & Trading combined 10-20% of FFO

• Capital deployed in trading is modest and relatively low risk

• Trading properties are generally income producing assets where DEXUS uses its development expertise to realise the value from a higher and better use

• Six priority trading projects identified to generate trading profits over the next four years

• Of the six priority projects, Erskine Park has already exchanged for $50 million, and will contribute $12 million[1] to FY17 trading profits

• Pre-tax.

• Calculated as an arithmetic average.

DEXUS Property Group – Macquarie Australia Conference Presentation

Slide 14

SUMMARY

• Well positioned property portfolio

• Stable predictable income stream representing 80-90% of FFO

• Concentrated exposure to the Sydney office market where vacancy will tighten quickly

• Strong track record of total return outperformance

• Significant office leasing volumes in FY16

• Actively managing future office leasing risks

• Delivering superior office metrics

• Enhanced quality and returns through development

• Guidance[1] for the 12 months ending 30 June 2016

• FFO per security growth of 5.5-6.0%, with Underlying FFO per security growth of 3.0-3.5%

• Payout in line with free cash flow to deliver in distribution growth per security of 5.5-6.0%

• Barring unforeseen circumstances guidance is supported by the following assumptions: circa 1% like-for-like income growth across the DEXUS Office portfolio and circa 7% decline in like-for like income across the DEXUS Industrial portfolio, weighted average cost of debt of circa. 4.9%, trading profits of $63m net of tax, Management Operations FFO of circa $45m (including third party development management fees), and excluding any further transactions.

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DEXUS Property Group – Macquarie Australia Conference Presentation

Slide 15

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 – Macquarie Australia Conference Presentation

Slide 16