DEXUS — Investor Presentation 2019

Aug 29, 2019

Dexus (ASX: DXS)

ASX release

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30 August 2019

London and US investor presentation

Dexus provides the attached presentation which will be used as a basis of discussion in London and the US.

For further information please contact:

Investor Relations Media Relations Rowena Causley Louise Murray +61 2 9017 1390 +61 2 9017 1446 +61 416 122 383 +61 403 260 754 rowena.causley@dexus.com louise.murray@dexus.com

About Dexus

Dexus is one of Australia’s leading real estate groups, proudly managing a high quality Australian property portfolio valued at $31.8 billion. We believe that the strength and quality of our relationships is central to our success, and are deeply committed to working with our customers to provide spaces that engage and inspire. We invest only in Australia, and directly own $15.6 billion of office and industrial properties. We manage a further $16.2 billion of office, retail, industrial and healthcare properties for third party clients. The group’s circa $9.3 billion development and concept pipeline provides the opportunity to grow both portfolios and enhance future returns. With 1.7 million square metres of office workspace across 53 properties, we are Australia’s preferred office partner. Dexus is a Top 50 entity by market capitalisation listed on the Australian Securities Exchange (trading code: DXS) and is supported by 26,000 investors from 19 countries. With 35 years of expertise in property investment, development and asset management, we have a proven track record in capital and risk management, providing service excellence to tenants and delivering superior riskadjusted returns for investors. www.dexus.com

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

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London and US investor meetings Overview presentation September 2019

Dexus Funds Management Limited ABN 24 060 920 783 AFSL 238163 as responsible entity for Dexus

Megatrends Dexus’s strategy is orientated around two key long-term growth thematics

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1 2
Urbanisation Growth in pension capital fund flows
Densification of land use in and around key Increased demand for real assets from
economic and transport hubs growing and ageing populations
30.2
41.4
+55.6%
“Australia’s
26.6
+13.7 major cities all
ranked in the
20%+
16.5 top 25 most
allocated to real
liveable cities
estate, infrastructure
globally” and private equity, up
from 4% in 1997
EIU Liveability
Rankings
2017 2060F 2007 2017
2
1
(USD trillion)
Pension funds total assets
Australian capital cities population (millions)
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We are in a climate of rapid change and the context in which we operate our business, both today and in the future, is informed by the disruption and opportunity created by global megatrends.

Other megatrends that could impact Dexus’s strategy and outlook include:

The rise of the millennial worker

Technological change Environmental sustainability

“re-creation of assets in high demand CBD locations to unlock change of use upside”

• “attraction of like minded, long dated, third party capital partners to invest alongside Dexus”

• Source: ABS

• Source: Willis Towers Watson, Global pension assets study 2018.

London and US investor meetings overview presentation

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Dexus overview $31.8 billion under management[1]

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Dexus distribution per security (cents) [2]
-
PROPERTY PORTFOLIO Proxy for Australian office property
$15.6 billion [1] • Overweight position to Sydney market 6.6% CAGR
since FY12
FUNDS MANAGEMENT - Outperforming and growing Funds Management cps
$16.2 billion [1] business 50.2
50 47.8
45.47
45 43.51
- $9.3 billion group development and concept 41.04
DEVELOPMENT
40
pipeline 37.56
36.00
35
32.10
-
TRADING Future trading pipeline of $210-300 million of 30
profits (pre-tax) from five trading projects
25
- 20
Strong balance sheet with gearing of 24.0%
CAPITAL MANAGEMENT FY12 FY13 FY14 FY15 FY16 FY17 FY18 FY19
-
Market cap of circa $14 billion
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1. Funds under management as at 30 June 2019.

2. Adjusted for the one-for-six security consolidation completed in FY15. Compound annual growth rate (CAGR) is calculated over seven years.

London and US investor meetings overview presentation

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FY19 highlights Creating sustained value for Security holders

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FY19 highlights

Financial		Office		Funds		People & Capabilities		2018 Environment
Delivering for Security holders +5% Distribution per security growth +5.5% AFFO1 per security growth 10.1% ROCE2	Office portfolio outperformed MSCI benchmark over 3 & 5years			Dexus Wholesale Property Fund outperformed benchmark over 1, 3, 5, 7 and 10years	Recognised as an Employer of Choice for Gender Equality 950,351sqm 2020 NABERS targets progressed 5 star NABERS Energy or above 4 star NABERS Water or above 757,422sqm
Total Assets Under Management (AUM) $27.2bn $31.8bn FY19 FY18 +$4.6bn in AUM		- 98% occupancy - 4.4 year WALE - 13.4% averages incentives6 - 24% Sydney CBD leasing spread6 242ksqm of leasing5 success	Dexus Australian Logistics Trust (DALT) New unlisted logistics fund established with GIC 37% Female gender representation in senior and executive management roles					Secured industry leading supply-linked offsite renewable Energy Supply Agreement7
Capital management activities 24.0% Gearing3 $425m Exchangeable notes $900m Institutional placement $63.9m Security Purchase Plan	93% 240 St Georges Terrace 96% 100 Mount Street 81% 180 Flinders Street Significant development commitments			$1bn+ new capital raised - Diversified - $340m - Healthcare - $100m - Logistics & Industrial Funds - $645m
One-year Total Security holder return4 39.4%		+46 Customer Net Promoter Score achieved up from +32 in FY18

1. Adjusted Funds From Operations.

2. Return on Contributed Equity.

3. Adjusted for cash and debt in equity accounted investments. 4. Source: UBS Australia 30 June 2019.

4. Including development leasing of 52,815 square metres.

5. Excluding development leasing.

6. Powering 50% of base building load across 40 NSW properties from January 2020.

7. FY15 base year.

London and US investor meetings overview presentation

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Active year of transaction activity Securing opportunities and recycling capital, alongside third party capital partners

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Replenishing industrial Acquisition of prime DWPF acquisition of Acquisition of remaining Acquisition of Acquisition of
development landbank development site in industrial property in 50% in MLC Centre, 80 Collins precinct, Pitt and Bridge precinct
$3.1 $188 million Melbourne CBD Banyo, QLD Sydney Melbourne
Three properties adjacent to
billion Ravenhall (DALT 50%, DWPF 50%), (60 & 52 Collins St) $34 million $800 million $1.48 billion 56 Pitt, Sydney (two exchanged to be
South Granville (DALT 100%), $230 million DWPF 100% interest DXS 25%, DWPF 25% DXS 75%, DWPF 25% acquired on deferred settlement basis)
Richlands (DALT 100%) DXS 100% interest $354 million
Acquisitions DXS 50%
Dexus Office Partner 50%
August September November March May June
2018 2018 2018 2019 2019 2019
Total transactions of July October December January
$3.9 billion 2018 2018 2018 2019
in FY19 August November February April
2018 2018 2019 2019
Divestments
DWPF sale of JV with GIC to establish Sale of Sale of
Sturt Mall, Wagga Wagga Dexus Australian Logistics Trust 11 Talavera Road, Finlay Crisp Centre,
(DALT) Macquarie Park Canberra
$0.8 $73 million
circa $2 billion logistics portfolio seeded $231 million $62 million
billion DWPF 100% interest
with Dexus industrial assets
DXS 100% interest DXS 50% Key
Initial 25% tranche Dexus Office Partner 50%
Dexus alongside third
$364 million party capital partner
Office Industrial Retail Sector
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London and US investor meetings overview presentation

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Balance sheet strength maintained Well positioned on cost, duration and diversification

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- Further diversified funding sources and maintained low gearing

• Issued A$425 million Exchangeable Notes to fund Dexus’s acquisition of an additional 25% interest in the MLC Centre, Sydney

• Completed an Institutional Placement and Security Purchase Plan raising $964 million to fund Dexus’s 75% interest in 80 Collins Street, Melbourne

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Maintain a strong balance sheet
FY20
focus
Further strengthen debt diversification
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Diversified sources of debt

Key metrics	30 June 2019	30 June 2018
Gearing (look-through)1	24.0%	24.1%
Cost of debt2	4.0%	4.2%
Duration of debt	6.7 years	7.0 years
Hedged debt (incl caps)3	74%	71%
S&P/Moody’s credit rating	A-/A3	A-/A3

1. Adjusted for cash and debt in equity accounted investments.

2. Weighted average for the year, inclusive of fees and margins on a drawn basis.

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Debt capital markets 64% Bank debt 36%
Bank Facilities
Exchangeable Notes 36%
9%
144A 7%
Commercial Paper
2%
USPP 34%
MTN 12%
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1. Average for the year. Hedged debt (excluding caps) was 58% for the 12 months to 30 June 2018 and 55% for the 12 months to 30 June 2019.

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Valuations and outlook Positive outlook for cap rate compression

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Sydney Office cap rate spread to 10-year Aus govt bonds
Total Dexus portfolio FY19 valuation uplift
June 1994 – July 2019 [3] , %
$773.1m 5.26% ↓ 26 bps 5%
Total portfolio Total portfolio
valuation uplift [1] cap rate [2 ] (FY18: 5.52%) 4%
+85 bps [5]
Dexus office portfolio uplift 3% 10yr avg.
+218 bps
39% 10-year average [4]
Office portfolio Office portfolio 2% 25yr avg.
valuation uplift cap rate [2] 61%
1% 25-year average
$594.6m 5.15% ↓ 22 bps
Rental growth
FY18: $1,054.0m FY18: 5.37% 0%
Cap rate compression
-1% Spread to bonds
Dexus industrial portfolio uplift 23% July 2019 spot 344 bps
-2% 10yr average [4] 259 bps
Industrial portfolio Industrial portfolio
valuation uplift cap rate [2] 25yr average [3] 126 bps
77% -3%
$170.3m 5.92% ↓ 48 bps
FY18: $141.9m FY18: 6.40% Rental growth -4%
Cap rate compression Jun-94 Jun-99 Jun-04 Jun-09 Jun-14 Jun-19
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12 month capitalisation rate outlook:

Potential 12.5-25 basis point firming for quality office property and at least 25 basis points firming for industrial, supported by spread to bonds and investor sentiment

1. Includes healthcare property revaluation gain of $8.2 million in 12 months to 30 June 2019. 2. Stabilised portfolio weighted average capitalisation rate.

2. Prime yield data released quarterly, June 2019 prime yield data carried forward for the purpose of updating 10-year government bond yield data.

3. Post GFC 10-year average taken from March 2009 quarter through to June 2019.

4. Melbourne spot prime yield spread to bonds is currently at a 55bp premium to 10-year average.

5. Source: JLL, RBA

London and US investor meetings overview presentation

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Office portfolio overview Improved portfolio quality and geographic diversification

Asset diversification

• Capitalising on buoyant Sydney and Melbourne office markets

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Premium Grade
31%
Development &
other 7%
Up from 4%
at FY18
A Grade 57%
B Grade 5%
Geographic diversification
Canberra CBD Melbourne CBD
1% 16%
Up from 8%
Perth CBD at FY18
5%
Sydney CBD
Brisbane CBD
56%
13%
Sydney Other
4%
North Sydney
5%
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• Increased exposure in Melbourne CBD

• Improving conditions in Perth and Brisbane

• Positioning to capture long-term value creation through development opportunities

• Divested non-core assets

London and US investor meetings overview presentation

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Office portfolio expiry profile Upside from diversified expiry profile

• Sydney accounts for 163,992 square metres of office expiries up to and including FY22, representing 23% of office portfolio income

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25%
20%
16.4%
15%
13.3%
12.8%
11.6%
10%
6.9%
5%
2.0%
0%
Available FY20 FY21 FY22 FY23 FY24
Sydney Total
FY20 Key expiries FY21 Key expiries FY22 Key expiries
Grosvenor Place (0.8%) 80 Collins Street North (1.7%) 123 Albert Street (3.9%)
Australia Square (0.7%) 45 Clarence Street (0.9%) 383-395 Kent St (1.3%)
30 The Bond (0.5%) Grosvenor Place (0.9%) 44 Market St (1.0%)
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9 London and US investor meetings overview presentation

c.$9.3 billion[1 ] group development and concept pipeline Diversified across sectors and locations

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$9.3 billion [1 ] group development and concept pipeline
Office Industrial City Retail/Retail/Other Healthcare Concept pipeline
0%
60% 40% 36%
55%
$5.1bn $0.8bn $0.6bn $0.6bn circa $2.2bn
($0.6bn committed) ($0.2bn committed) ($0.4bn committed) (committed) [3] (Concept)
including: including: including: including: including:
180 Flinders Street, Melbourne 2-8 South Street, Rydalmere MLC Centre, Sydney Calvary Adelaide Hospital Henry Deane Pl, Central, Sydney
80 Collins Street, Melbourne [2] Dexus Industrial Estate, Truganina 175 Pitt Street, Sydney North Shore Health Hub [4] Ward Street Precinct,
12 Creek Street, Brisbane 11-167 Palm Springs, Ravenhall 44 Market Street, Sydney North Sydney
240 St Georges Terrace, Perth 321 Kent Street, Sydney Axxess Corporate Park,
60 & 52 Collins Street, Melbourne 80 Collins Street, Melbourne [2] Mount Waverley
Pitt & Bridge precinct, Sydney
Waterfront precinct, Brisbane
Committed $1.8bn Uncommitted $5.3bn Concept circa $2.2bn
Circa 5.9% of balance sheet FUM is allocated to development [5 ] at 30 June 2019
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1. Group interest in development cost (including cost of land where purchased for development and excludes downtime and income earned through development).

2. 80 Collins Street, Melbourne was acquired as a fund-through development.

3. Calvary Adelaide Hospital and North Shore Health Hub estimated on-completion value. 4. Dexus has progressed the sale of the North Shore Health Hub to HWPF, which is subject to Responsible Entity and Advisory Committee approvals and securing debt financing.

4. Includes committed developments, trading and value-add opportunities.

Dexus Direct

Dexus Third Party Funds

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Core office development pipeline Progressing committed, uncommitted and concept projects across east coast CBDs

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60 & 52 Collins Street
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Uncommitted project
Dexus 100% interest
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180 Flinders Street Melbourne

Committed project

Dexus 100% interest 81% committed

Waterfront Precinct

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Uncommitted project Dexus 50%, DWPF 50%
Annex – 12 Creek Street
Committed project
Dexus 50%, DWPF 50%
Late 2019
completion
Pitt & Bridge Street
Uncommitted project
Dexus 50%,
Dexus Office Partner 50%
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Pitt & Bridge Street
Uncommitted project
Dexus 50%,
Dexus Office Partner 50%
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Henry Deane Place – Central precinct Concept project

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Dexus 25%, Dexus Office Partner 25%

Core industrial development pipeline Progressing committed projects for Dexus and third party capital partners

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Foundation at Truganina

54 Ferndell Street, South Granville

Dexus 100%

Dexus 51%, Dexus Australian Logistics Partner 49%

• Secured Coles Supermarkets Australia for a 7,300sqm warehouse facility

• Achieved planning approval for a circa 54,800sqm multi-unit development

• Development for Dunlop Flooring for a 9,100sqm distribution and office facility due for completion in September 2019

• Strong pre-commitment interest

• Secured Secon Freight Logistics for a 33,400sqm Build to Lease development, prior to completion in June 2019

425-479 Freeman Road, Richlands

Dexus 51%, Dexus Australian Logistics Partner 49%

• Secured HoA across 34,800sqm of industrial facilities with an e-commerce occupier and existing customer

• Planning approval received for a circa 53,500sqm multi-unit development

11-167 Palm Springs Road, Ravenhall

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Dexus 25.5%,

Dexus Australian Logistics Partner 24.5%, DWPF 50%

Quarry, Greystanes

• Stage 1 civil and infrastructure works underway delivering a circa 37 hectare industrial site

Dexus, Dexus Australian Logistics Partner, Dexus Industrial Partner and Australian Industrial Partner

• Secured Scalzo for a purpose-built facility across 35,300sqm including manufacturing, warehousing and corporate offices

• Estate completed early 2019, delivering >310,000sqm of premium warehouse space and 30,000sqm of office space

• 100% leased

• circa 34,300sqm Build to Lease development commencing August 2019

• Dexus achieved an annualised unlevered total property return of 12.3% from inception to 30 June 2019

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12 London and US investor meetings overview presentation

Trading business Strong track record and progressed pipeline

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Trading profit track record since FY12

• Delivered $34.7 million (net of tax) from the settlement of 32 Flinders Street, Melbourne in FY19

Trading properties 14 sold and settled

Trading profits $319m realised (pre-tax)

• Target $35-40 million trading profits[1] (net of tax) in FY20

• Total of five projects[1] , diversified across sectors, have been earmarked to deliver trading profits of $210-300 million (pre-tax)

Average unlevered 30% project IRR

Average unlevered project IRR 30%	Average unlevered project IRR 30%	Average unlevered project IRR 30%	Average unlevered project IRR 30%	Average unlevered project IRR 30%	Average unlevered project IRR 30%	Average unlevered project IRR 30%
Contracted trading profits Trading profits progressed Trading profits yet to be secured
Trading projects	Current use	Trading strategy	FY20	FY21	FY22	FY23+
201 Elizabeth Street, Sydney2 Office Rezoning and development North Shore Health Hub, 12 Frederick Street, St Leonards – Stage 13 Industrial Healthcare development Lakes Business Park South, Botany Industrial Development 436-484 Victoria Road, Gladesville Industrial Rezoning 12 Frederick Street, St Leonards – Stage 2 Industrial Healthcare development

1. Including contribution from 201 Elizabeth Street, Sydney and North Shore Health Hub, 12 Frederick Street, St Leonards – Stage 1.

2. 201 Elizabeth Street, Sydney transferred to trading book in May 2018. Post 30 June 2019, Dexus exchanged contracts to sell a 25% interest in 201 Elizabeth Street, Sydney for $157.5 million and entered into a put and call option to sell the remaining 25% interest in late 2020 for a further $157.5 million. Trading profits in FY21 are subject to the exercise of either option.

3. The sale of the North Shore Health Hub is subject to Responsible Entity and Advisory Committee approvals and securing debt financing.

London and US investor meetings overview presentation

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Funds Management Growth in unlisted investor base

Diversified Funds Management platform

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189% growth in FUM since FY12 AUM across 79
7 vehicles
investors
HWPF
$16.2bn DALT
$16 $0.1bn
$0.5bn
$14 Dexus DWPF Super/Pension
Industrial $10.4bn 73%
$12 Partner
Sovereign
$10 $0.2bn Fund 5%
$8 Dexus
Office
$5.6bn
$6 $4 Partner$2.5bn $16.2bn $16.2bn Multi-mgr
13%
$2 Australian
Industrial
$- Partner
FY12 FY19 $0.4bn Insurance 6%
Australian Mandate
Office Industrial Retail US Industrial Healthcare
$2.1bn Other 3%
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Attracted $9.2 billion of third party equity since FY12

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London and US investor meetings overview presentation

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Embedded value

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Across key earnings drivers and key areas of focus

PROPERTY Short term - Higher rents and lower incentives continuing to support asset values, PORTFOLIO particularly in Sydney and Melbourne $15.6 billion Medium to - Future portfolio value supported by ownership in CBDs and benefiting from the $10.48 NTA[1] long term urban density and cities megatrend per security + Short term - Built in organic growth in existing and new funds FUNDS - Demonstrated ability to attract new third party capital partners to invest MANAGEMENT alongside + FY19 FFO Medium to - Future growth supported by the growth in pension capital fund flows megatrend, $54.6 million long term populations in developed countries continue to age +

DEVELOPMENT (CORE)

Organic growth and embedded value in circa $9.3 billion group development and concept pipeline

TRADING Short term - FY20 and FY21 trading profits significantly de-risked[3] 5 key projects to deliver Medium to $210-300 million[2] of - Future projects are diversified across sectors long term trading profits + CAPITAL - Maintaining diverse debt sources and a strong balance sheet MANAGEMENT

1. Net tangible asset backing.

2. Pre-tax.

3. Post 30 June 2019, Dexus exchanged contracts to sell a 25% interest in 201 Elizabeth Street, Sydney for $157.5 million and entered into a put and call option to sell the remaining 25% interest in late 2020 for a further $157.5 million. Trading profits in FY21 are subject to the exercise of either option. The sale of the North Shore Health Hub is subject to Responsible Entity and Advisory Committee approvals and securing debt financing.

London and US investor meetings overview presentation

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Summary Securing opportunities. Adding value

• Successful year of securing new opportunities

• Well positioned for continued success despite increased economic uncertainty

• Embedded value within group development and concept pipeline

• Market guidance[1] for the 12 months ending 30 June 2020 for distribution per security growth of circa 5%

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1. Barring unforeseen circumstances, guidance is supported by the following assumptions: Impacts of announced divestments and acquisitions; FFO per security growth of circa 3%, underlying FFO per security growth of circa 3%, underpinned by Dexus office portfolio like-for-like income growth of 4.5-5.5%, Dexus industrial portfolio like-for-like income growth (excluding one-offs) of 3-4%, management operations FFO of $55-60 million, cost of debt of mid-3%; trading profits of $35-40 million net of tax; maintenance capex, cash incentives, leasing costs and rent free incentives of $170-185 million; and excluding any further transactions.

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Australian office capital markets

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Pricing in Australia remains attractive

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Relative pricing and rent growth for Australian office compare favourably to global cities

Global yield and rent growth comparison

Effective yield spread over local government bond (10yr)

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EU Asia US AU EU Asia US AU
Effective 5% 4.0%
Yield Chicago Spread to
local bonds
Melbourne Frankfurt
3.5%
4% Chicago London
Singapore Sydney Paris Melbourne
Brisbane 3.0%
Tokyo
London
New York
3% Tokyo Sydney
2.5%
San Franscisco
Perth Frankfurt Perth Brisbane
Paris
Hong Kong 2.0% New York Singapore
2%
1.5%
Hong Kong San Franscisco
1%
1.0%
-2% -1% 0% 1% 2% 3% 4% 5%
-2% -1% 0% 1% 2% 3% 4% 5%
Forecast rent growth Forecast rent growth
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Source: Savills, JLL, Trading Economics, Knight Frank, Dexus Research.

*Effective yields are based on A-grade office space – Australian, EU & Asian yields and bond rates June-19 based on JLL data. US yields are economic cap rates as per Green Street REA’s May 2019 Office Sector Snapshot Forecasts are based on JLL data (for Australian cities) and Knight Frank Global Outlook 2019 (for global cities) for average prime net face rents from end 2018 to end 2020 and are not Dexus Research forecasts.

London and US investor meetings overview presentation

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Investment demand for Australian office properties Where has direct demand come from?

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Here… Partly here… Not here…
Australian transaction volumes by type of buyer
Foreign A-REIT Largest cross border buyers of Big investors with a Big investors
Developers/Property Companies Institution
Other Privates Australian office - past 5 years small stake in globally, but not
Superannuation Funds Unlisted Property Trust Australia yet in Australia
$Bn
1 CPPIB AMER ADIA PGGM
20
2 OMERS AMER NPS Calpers
3 Blackstone AMER AXA NBIM
15
4 CIC APAC QIA Allianz
5 Suntec REIT APAC Prudential DekaBank
10
6 GIC APAC Gaw Capital NYSTRS
7 Morgan Stanley AMER PAG (ASIA) Swiss Life AM
5
8 Shanghai Sheng. APAC KKR APG
9 Prudential plc EMEA Keppel Capital China Life
0
10 Francis Choi APAC CDPQ CapitaLand
2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
Source RCA, past 5 years
46% of office
transactions were to cross
border buyers
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Australian transaction volumes by type of buyer

Source: Dexus Research, RCA.

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Australian office market trends and outlook

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Workspace trends – office space People gravitating to CBDs and occupiers increasing workspace density

NSW employment growth by region

Sydney CBD workspace ratio

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All office space Office work areas
Index State Greater City Inner City
17.4
150
140 14.2 18%
11.6
130
8.8
120
110
100
90
Mar-12 Sep-13 Mar-15 Sep-16 Mar-18 2012 2017
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Source ABS, Sydney City Council.

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Market outlook

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Dexus’s CBD office strategy leverages powerful urban growth trend

• Inner city areas and CBDs benefit from faster employment growth than other regions

• CBDs benefit from a virtuous cycle of employment and new infrastructure investment (e.g. light rail, metro rail)

• Trend to inner-city living and a ‘live/work/play’ ethos

• Businesses value CBD locations for attracting and retaining talented staff

• CBDs foster ideas, collaboration and productivity

NSW Employment growth by region

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Index State Greater City Inner City
150
140
130
120
110
100
90
Nov-08 Nov-10 Nov-12 Nov-14 Nov-16 Nov-18
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Source: ABS, Dexus Research.

22 London and US investor meetings overview presentation

Market outlook Sydney office rents in perspective

• Companies have steadily increased the density of workers per square metre of office space – so rent paid goes further now than in the past

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$/sqm Gross effective rents in Sydney CBD
1,050
Nominal rent
950
850
Rents adjusted for
750 workspace density
650
Adjusted for inflation and
workspace density
550
450
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
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Source: Dexus Research, CBRE, JLL Research City of Sydney, DAE.

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Market outlook Sydney office: well positioned given low vacancy

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Sydney CBD waterfall chart - FY19 to FY22

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Total completions only just
Moderate withdrawals
FY19 vacancy well below above average levels of Demand just above the Vacancy to rise to 6.4% in
the long term average of 105,400sqm pa average of 47,180sqm p.a. FY21 before falling to 5.4%
7.9% after a soft year in FY20 in FY22
‘000sqm
- 2.5%
600 +7.1%
-125,000sqm of
500
withdrawals - 3.1%
400 357,000sqm
158,000sqm
of supply
of net absorption =5.4%
300
4.1%
200
281,000sqm
100 208,000sqm of vacancy
of vacancy
0
Vacancy FY19 New supply FY19-FY22 Withdrawals FY19-FY22 Net absorption FY19-FY22 Vacancy FY22
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Source: Dexus Research, long-term average based on 20 year average as % of stock.

• Difference due to rounding.

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Market outlook

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Sydney CBD supply landscape for major office projects

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150
100
50
0
-50
-100
FY20 FY21 FY22 FY23 FY24 FY25 FY26
‘000sqm
10-14 Hunter 426-430 Kent 66 King Street 388 George Street Sixty Martin Place 1 Sussex Street 51-55 Pitt Street 320 Pitt Street Korean Air House 275 George Street Henry Davis York Building Sub Station No. 164 55 Market Street Wynyard Place 320 Pitt Street Quay Quarter Poly Centre Bligh House 233 Castlereagh Street 338 Pitt Street ANZAC House Fortuna House Vitalwork Building Sydney Cove AMP Building 4-6 York Street David Jones 284-292 Pitt Street Circular Quay Tower Sydney Cove AMP Building 256 Pitt (Metro Station North) 55 Pitt Street Martin Place Station Precinct One Shelley EVT Darling Park Tower 4 338 Pitt Street Central Barangaroo One Shelley
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Available
Withdrawal
Pre-committed
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Source: Dexus Research, Company reports, Agent reports.

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Market outlook

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Melbourne CBD supply landscape for major office projects

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80
Withdrawal
60
Available
40
20 Pre-committed
0
-20
-40
-60
FY20 FY21 FY22 FY23 FY24
‘000sqm
Collins Arch VIC Police HQ Wesley Place 477 Collins Street 85-91 Spring Street CBW Tower 2 405 Bourke Street 12 Riverside Quay CBW Tower 2 100 Queen Street 180 Flinders Street 383 La Trobe Street 500 Bourke Street 1000 LaTrobe German Club 55 King Street Melbourne Central 435 Bourke Street 500 Bourke Street
80 Collins Street South Tower Two Melbourne Quarter Wesley Place - Stage 2 Victoria University Precinct Charter Hall Collins St Development Stage 1 Melbourne Quarter Tower 371-383 La Trobe Street
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Source: Dexus Research, Company reports, Agent reports.

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Office portfolio resilience

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All sectors have provided attractive long-term returns Office demonstrates lower income volatility

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Total returns over various periods

Total returns, %, annualised

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Retail Office Industrial Capital return
Income return
6.2%
6.3% 2.7%
3.6% 3.0%
3.5%
8.1%
6.0% 6.8% 6.2% 6.9% 7.0%
5 yr 20 yr 5 yr 20 yr 5 yr 20 yr
Total
9.7% 10.7% 12.8% 10.1% 13.5% 11.0%
return
Income
1.0% 1.4% 1.3% 1.2% 1.7% 1.9%
volatility [1]
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Source: MSCI.

1. Measured by two standard deviations. Standard deviation based on the annual return on a quarterly basis. Two standard deviations of 1.2% over 20 years means that ~95% of the returns fall within 1.2% of the mean return for the 20 year period.

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Demand for space provides strong support for rental levels Correlation between net absorption and rent growth

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Where net absorption is
Sydney Office – Gross Effective Rental Growth vs. Net Absorption positive gross effective rental
FY94-FY18, % growth is positive [1]
European
Tech Wreck GFC
Debt crisis
40.0% 6.0%
30.0% 4.0%
20.0%
2.0%
10.0%
0.0%
0.0%
-2.0%
-10.0%
-4.0%
-20.0%
-30.0% -6.0%
-40.0% Gross Effective Rental Growth (LHS) Net Absorption % of total stock (RHS) -8.0%
FY94 FY96 FY98 FY00 FY02 FY04 FY06 FY08 FY10 FY12 FY14 FY16 FY18
Net absorption + + + + + + + + - - - + + + + - + + + - + + + + +
Gross effective
+ + + + + + + + - - - - + + + - + + + - + + + + +
rental growth
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Source: Dexus Research and JLL.

1. Only exception over the period since 1994 is in 2005 where absorption recovered ahead of gross effective rental growth.

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Providing investors with stable growth in the long term One-off shocks have less impact on a diversified portfolio

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Passing rent (one-off rental growth changes) Indexed, annual

Rental growth CAGR (one-off rental growth changes) % rental growth

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Upside
Downside
1.8 6.6%
+10% event -20% event
1.7
+20% event -30% event
1.6 5.6%
+30% event Base Case
1.5 -10% event
4.6%
1.4
4.0%
1.3
1.2
1.1
1.0
0.9
2.3%
0.8
1.0%
0.7
-0.4%
Yr 1 Yr 2 Yr 3 Yr 4 Yr 5 Yr 6 Yr 7 Yr 8 Yr 9 Yr 10
Base case +/- 10% event +/- 20% event +/- 30% event
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Note: Internal analysis using a mock asset and the following assumptions: Initial WALE of ~4.25, Initial occupancy of ~95%, 9 month downtime on space vacated, 50% retention, 20% incentives, 4% fixed reviews, one year shock of +/- 10 market rental growth for upside/downside, 2% CPI, $170 p/sqm outgoings, 1.5% capex allowance.

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Important information

• This presentation is issued by Dexus Funds Management Limited (DXFM) in its capacity as responsible entity of Dexus (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 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 security holder or potential investor may require in order to determine whether to deal in Dexus 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 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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