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DEXUS — Investor Presentation 2011
Oct 10, 2011
64807_rns_2011-10-10_5400c6a8-16e7-48d0-b839-8d3ebe8510de.pdf
Investor Presentation
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DEXUS Property Group - ASX release
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11 October 2011
DEXUS Property Group (ASX: DXS) Sydney Office Tour
DEXUS Funds Management Limited, as responsible entity for DEXUS Property Group (DXS), provides a copy of the 2011 Sydney Office Tour booklet and presentation.
For further information contact:
Media Relations Investor Relations Emma Parry T: (02) 9017 1133 Daniel Rubinstein T: (02) 9017 1336 M: 0421 000 329 M: 0466 016 725 E: [email protected] E: [email protected] Ben Leeson T: (02) 9017 1343 David Brewin T: (02) 9017 1256 M: 0403 260 754 M: 0411 162 457 E: [email protected] E: [email protected]
About DEXUS
DEXUS is one of Australia’s leading property groups specialising in world-class office, industrial and retail properties with total assets under management of $13.7bn. In Australia, DEXUS is the market leader in office and industrial and, on behalf of third party clients, a leading manager and developer of shopping centres. DEXUS is committed to being a market leader in Corporate Responsibility and Sustainability. www.dexus.com
DEXUS Funds Management Ltd ABN 24 060 920 783, AFSL 238163, as Responsible Entity for DEXUS Property Group (ASX: DXS)
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2011 DEXUS Property Group SYDNEY OFFICE TOUR 11 OCTOBER
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| CONTENTS | |
|---|---|
| ToUr aGEnDa | 1 |
| DXS PorTfolio ovErviEw | 2 |
| DXS SyDnEy CBD offiCE PorTfolio | 4 |
| 44 MarkET STrEET, SyDnEy | 6 |
| 383-395 kEnT STrEET, SyDnEy | 8 |
| 309-321 kEnT STrEET, SyDnEy | 10 |
| onE MarGarET STrEET, SyDnEy | 12 |
| 45 ClarEnCE STrEET, SyDnEy | 14 |
| aUSTralia SqUarE, 264-278 GEorGE STrEET, SyDnEy | 16 |
| 1 BliGh STrEET, SyDnEy | 18 |
| GovErnor PhilliP anD MaCqUariE TowEr, | |
| 1 farrEr PlaCE, SyDnEy | 20 |
| noTES | 22 |
Cover: 1 Bligh Street and Governor Phillip & Macquarie Tower Complex, 1 Farrer Place, Sydney, NSW This page: Sydney CBD including Governor Phillip Tower, 1 Bligh Street, Gateway and Australia Square All figures are as at 30 June 2011 unless otherwise stated.
TOUR AGENDA
| Time | agenda item |
|---|---|
| 8.30am | DEXUS Property Group presentation and light breakfast |
| Level 9, 343 George Street, Sydney | |
| 10.15am | 44 Market Street, Sydney |
| 10.45am | 383–395 Kent Street, Sydney |
| 11.15am | 309–321 Kent Street, Sydney |
| 11.35am | Morningtea |
| 12.00noon | One Margaret Street, Sydney |
| 12.25pm | 45 Clarence Street, Sydney |
| 1.00pm | Australia Square, 264-278 George Street, Sydney |
| 1.15pm | 1 Bligh Street, Sydney, lunch |
| Developmentpresentation | |
| 3.00pm | Governor Phillipand Macquarie Tower, 1 Farrer Place, Sydney |
| 3.30pm | Tour concludes |
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DXS PorTfolio ovErviEw
28 offiCE ProPErTiES 558,000 SQM ToTal valUE $4.5 Billion Brisbane Perth Sydney Canberra Melbourne aU/nZ offiCE PorTfolio[1] 65% 14% 10% 8% 1% 2% Sydney Melbourne Perth Brisbane Canberra Auckland
49% 39% 3% 4% 5% A-grade Premium B-grade Office and business parks Car parks and land
2 DEXUS ProPErTy GroUP View from Governor Phillip Tower, Sydney, looking west SYDNEY OFFICE TOUR
SUSTainaBiliTy hiGhliGhTS
avEraGE naBErS EnErGy raTinG: 3.6-star (2010: 3.2‑star) avEraGE naBErS waTEr raTinG: 3.1-star (2010: 2.6‑star)
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DXS office energy intensity DXS office GhG intensity DXS office water intensity
550 124 820
540530 538.3 122120 122.7 800 817.5 4.2% �
520510500 4.8% � 512.4 2.2% � 500.9 118116114112 3.7% � 118.1 4.1% � 113.3 780760740 783.4 3.5% � 755.9
490 110
480 108 720
FY09 FY10 FY11 FY09 FY10 FY11 FY09 FY10 FY11
-e/sqm2
Litres/sqm
Megajoules/sqm Kg CO
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auckland
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3
DEXUS ProPErTy GroUP SYDNEY OFFICE TOUR
DXS SyDnEy CBD offiCE PorTfolio
nla (sqm) 558,000
201 Elizabeth St 50% owned, externally managed
1 Bligh St 33% owned, 100% managed 1 Bligh St 33% owned by DWPF, 100% managed GMT/GPT 50% owned, 100% managed
oCCUPanCy By arEa
96.2%
Book valUE
$ 4.5bn
walE TEnanT rETEnTion raTE 5.3 53% yrs
44 Market St
100% owned, 100% managed
383–395 kent St
100% owned, 100% managed
309–321 kent St
50% owned, 100% managed
83 Clarence St
100% owned by STC, 100% managed
one Margaret St
100% owned, 100% managed
45 Clarence St
100% owned, 100% managed
australia Square Complex
50% owned, externally managed
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30 The Bond
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100% owned, 100% managed
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Gateway
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100% owned by DWPF, 100% managed
44 MarkET STrEET SyDnEy
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44 Market Street is a landmark western corridor building on the prominent corner of York, Market and Clarence Streets. This A‑grade office tower enjoys 360 degree city views from the upper levels.
44 Market Street provides fully refurbished floors, an expansive foyer with meeting areas and lobby café, upgraded lifts and operating systems, and on‑site management and security. Loading dock facilities and secure basement parking are also available.
44 Market Street is positioned in a location easily accessible via Sydney Harbour Bridge, the Western Distributor, the Cross City Tunnel and the Eastern Distributor. 44 Market Street is also conveniently located close to Wynyard and Town Hall train stations, the CBD retail precinct, King Street Wharf and Darling Harbour.
Tenants are attracted to 44 Market Street because of its first class amenities, access to public transport and affordable rents.
PROPERTY DETAILS
| PROPERTY DETAILS | |
|---|---|
| Building type | A‑grade – office |
| Metro area | Sydney |
| Zoning | City Centre |
| Title | Freehold |
| Site area (ha) | 0.3 |
| Lettable area (‘000 m2) | 30.2 |
| Typical floor area (m2) | 1,000 |
| Number of buildings | 1 |
| Car parking spaces | 138 |
| NABERS Energy rating (with green power) |
2.5 |
| NABERS Energy rating (without green power) |
2.0 |
| NABERS Water rating | 2.5 |
| Year built | 1978 |
| Major tenant | Commonwealth of Australia |
| Ownership(%) | 100 |
PROPERTY STATISTICS AT 30 JUNE 2011
| Acquisition date | Sep 1987 |
|---|---|
| Acquisition price plus additions (AU $m) | $189.3 |
| Book value (AU $m) | $207.0 |
| Independent valuation date | Jun 2010 |
| Independent valuation (AU $m) | $192.7 |
| Market cap rate (%) | 7.25 |
| Initial yield (%) | 7.76 |
| Discount rate (%) | 9.00 |
| Leased by area (%) | 97 |
| Weighted lease term by income (years) | 5.7 |
LEASE MATURITY BY INCOME (%)
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Available FY12 FY13 FY14 FY15 FY16 FY17 FY18 FY19 FY20 FY21+
24%
13%
12% 12%
10% 10%
5%
4% 4%
3% 3%
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6 DEXUS ProPErTy GroUP SYDNEY OFFICE TOUR
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MARKET STREET
KING STREET
CLARENCE STREET
SUSSEX STREET PITT STREET MALL
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NOTES
7
DEXUS ProPErTy GroUP SYDNEY OFFICE TOUR
383-395 kEnT STrEET SyDnEy
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offiCE DETailS
PROPERTY DETAILS
| PROPERTY DETAILS | |
|---|---|
| Building type | A‑grade – office |
| Metro area | Sydney |
| Zoning | City Centre |
| Title | Freehold |
| Site area (ha) | 0.4 |
| Lettable area (‘000 m2) | 18.1 |
| Typical floor area (m2) | 1,577 |
| Number of buildings | 1 |
| Car parking spaces | 55 |
| NABERS Energy rating (with green power) |
4.0 |
| NABERS Energy rating (without green power) |
3.5 |
| NABERS Water rating | 3.5 |
| Year built | 2002 |
| Major tenant | Grant Thornton |
| Ownership(%) | 100 |
PROPERTY STATISTICS AT 30 JUNE 2011
An A‑grade office tower offering 12 floors of office accommodation and a 10 level car park, with dual street frontage to Kent and Sussex Streets.
The office tower provides 18,100 square metres of office space, a mezzanine and ground floor retail. 383 Kent Street is one of a limited number of buildings in the western corridor to offer large flexible floor plates of approximately 1,500 square metres. The office levels are accentuated by floor to ceiling windows providing extensive natural light and excellent views. The lobby includes unique double height ceilings providing natural light for tenants and visitors to the building.
383 Kent Street enjoys the benefits of dual street frontage and is a short walk from Town Hall station and QVB bus links. Together with the car park this provides easy access for those visiting and working in the building.
| Acquisition date | Sep 1987 |
|---|---|
| Acquisition price plus additions (AU $m) | $112.8 |
| Book value (AU $m) | $127.2 |
| Independent valuation date | Jun 2010 |
| Independent valuation (AU $m) | $122.0 |
| Market cap rate (%) | 7.38 |
| Initial yield (%) | 7.97 |
| Discount rate (%) | 9.00 |
| Leased by area (%) | 100 |
| Weighted lease term by income (years) | 4.2 |
OFFICE LEASE MATURITY BY INCOME (%)
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Available FY12 FY13 FY14 FY15 FY16 FY17 FY18 FY19 FY20 FY21+
28% 28%
18% 18%
5%
1% 1% 1% 0% 0% 0%
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8 DEXUS ProPErTy GroUP SYDNEY OFFICE TOUR
Car Park DETailS
PROPERTY DETAILS
| PROPERTY DETAILS | |
|---|---|
| Building type | Car park |
| Metro area | Sydney |
| Zoning | City Centre |
| Title | Freehold |
| Car parking spaces | 785 |
| Year built | 1977 |
| Major tenant | S&K Parking |
| Ownership(%) | 100 |
| PROPERTY STATISTICS AT 30 JUNE 2011 | |
| Acquisition date | Sep 1987 |
| Acquisition price plus additions (AU $m) | $30.8 |
| Book value (AU $m) | $60.0 |
| Independent valuation date | Jun 2010 |
| Independent valuation (AU $m) | $60.0 |
| Market cap rate (%) | 7.75 |
| Initial yield (%) | 7.67 |
| Discount rate (%) | 9.13 |
| Leased by area (%) | 100 |
| Weighted lease term by income (years) | 10 |
CAR PARK LEASE MATURITY BY INCOME (%)
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100%
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MARKET STREET
KING STREET
DRUITT STREET
KENT STREET CLARENCE STREET
SUSSEX STREET
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NOTES
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Available FY12 FY13 FY14 FY15 FY16 FY17 FY18 FY19 FY20 FY21+
0% 0% 0% 0% 0% 0% 0% 0% 0% 0%
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DEXUS ProPErTy GroUP SYDNEY OFFICE TOUR 9
309-321 kEnT STrEET SyDnEy
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The complex comprises two office towers with 19 levels of A‑grade space in 321 Kent Street and 17 levels of B‑grade space in 309 Kent Street. A ground level retail plaza and child care centre, as well as five levels of parking, provide amenities to both office towers.
Office floor plates range from 1,000 square metres in 309 Kent Street to 1,500 square metres in 321 Kent Street. 321 is a premier A‑grade property with a prestigious reputation in the western corridor, while 309, a high level B‑grade office building, benefits from the A‑grade amenities of its neighbour.
The property was awarded $1 million from the Commonwealth Green Building Fund program which will be used to upgrade low load chillers, control systems, lighting and other mechanical services to deliver greater efficiency and improved tenant comfort.
The properties offer easy vehicular access to the Sydney Harbour Bridge and the Western Distributor. 309‑321 Kent Street is conveniently located close to Wynyard train and bus stations, Town Hall station and the King Street Wharf ferry services.
PROPERTY DETAILS
| Building type | 321 A‑grade / 309 B‑grade – office |
|---|---|
| Metro area | Sydney |
| Zoning | City Centre |
| Title | Freehold |
| Site area (ha) | 0.6 |
| Lettable area (‘000 m2) | 47.0 |
| Typical floor area (m2) | 1,060 |
| Number of buildings | 2 |
| Car parking spaces | 497 |
| NABERS Energy rating (with green power) |
309 – 4.0 / 321 – 4.0 |
| NABERS Energy rating (without green power) |
309 – 3.5 / 321 – 3.5 |
| NABERS Water rating | 309 – 3.5 / 321 – 3.5 |
| Year built | 1976 |
| Major tenant | Promina/Asteron Limited |
| Ownership (%) | 50 |
| Co‑owner | AMP |
PROPERTY STATISTICS AT 30 JUNE 2011
| Acquisition date | Dec 1998 |
|---|---|
| Acquisition price plus additions (AU $m) | $349.5 |
| Book value (AU $m) | $368.6 |
| Independent valuation date | Dec 2010 |
| Independent valuation (AU $m) | $365.0 |
| Market cap rate (%) | 7.24 |
| Initial yield (%) | 7.89 |
| Discount rate (%) | 9.04 |
| Leased by area (%) | 100 |
| Weighted lease term by income (years) | 4.7 |
LEASE MATURITY BY INCOME (%)
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Available FY12 FY13 FY14 FY15 FY16 FY17 FY18 FY19 FY20 FY21+
29%
23%
21%
11%
8%
4%
2%
1% 1%
0% 0%
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10 DEXUS ProPErTy GroUP SYDNEY OFFICE TOUR
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MARGARET STREET
ERSKINE STREET
KING STREET
WESTERN DISTRIBUTOR
YORK STREET
KENT STREET
SUSSEX STREET CLARENCE STREET
Wynyard Park
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NOTES
11
DEXUS ProPErTy GroUP SYDNEY OFFICE TOUR
onE MarGarET STrEET SyDnEy
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One Margaret is a high quality A‑grade office tower located in a prime position in the western corridor and provides easy access to public transport via the Wynyard underpass and the Wynyard Park bus station.
The building offers over 20,000 square metres of space with 18 levels of A‑grade office accommodation and three levels of car parking for 103 vehicles. One Margaret underwent a $28 million refurbishment in 2002 where the façade, foyer and floors were upgraded. The office space provides typical floor plates of 1,000 square metres with excellent natural light and westerly views for tenants.
PROPERTY DETAILS
| PROPERTY DETAILS | |
|---|---|
| Building type | A‑grade – office |
| Metro area | Sydney |
| Zoning | City Centre |
| Title | Freehold |
| Site area (ha) | 0.2 |
| Lettable area (‘000 m2) | 20.8 |
| Typical floor area (m2) | 1,000 |
| Number of buildings | 1 |
| Car parking spaces | 103 |
| NABERS Energy rating (with green power) |
3.5 |
| NABERS Energy rating (without green power) |
3.0 |
| NABERS Water rating | 2.0 |
| Year built | 1984 |
| Major tenant | PKF Services |
| Ownership(%) | 100 |
PROPERTY STATISTICS AT 30 JUNE 2011
| Acquisition date | Dec 1998 |
|---|---|
| Acquisition price plus additions (AU $m) | $141.6 |
| Book value (AU $m) | $170.9 |
| Independent valuation date | Dec 2009 |
| Independent valuation (AU $m) | $162.5 |
| Market cap rate (%) | 7.13 |
| Initial yield (%) | 7.65 |
| Discount rate (%) | 9.00 |
| Leased by area (%) | 100 |
| Weighted lease term by income (years) | 3.3 |
LEASE MATURITY BY INCOME (%)
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Available FY12 FY13 FY14 FY15 FY16 FY17 FY18 FY19 FY20 FY21+
38%
24% 25%
10%
3%
0% 0% 0% 0% 0% 0%
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12 DEXUS ProPErTy GroUP SYDNEY OFFICE TOUR
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MARGARET STREET
ERSKINE STREET
WESTERN DISTRIBUTOR
YORK STREET
KENT STREET
CLARENCE STREET
Wynyard Park
GEORGE STREET
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NOTES
13
DEXUS ProPErTy GroUP SYDNEY OFFICE TOUR
45 ClarEnCE STrEET SyDnEy
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45 Clarence Street offers modern A‑grade office facilities located in the western corridor of the Sydney CBD.
This office tower offers a revitalised and technology driven office environment with large and efficient floor plates averaging 1,250 square metres. The foyer offers three distinct spaces – a corporate entry, a spacious and comfortable lounge area and a café. Tenants and visitors have access to five levels of basement parking for 162 cars.
45 Clarence Street is in a prime location and is a short walk from Wynyard train and bus stations. The address provides excellent vehicular access to the Sydney Harbour Bridge, the Western Distributor and the eastern suburbs.
As part of our 4.5‑star NABERS Energy rating program, 45 Clarence Street recently underwent an energy efficiency upgrade. The first three months of consumption achieved a 33% savings in electricity and a 64% savings in gas usage.
PROPERTY DETAILS
| Building type | A‑grade – office |
|---|---|
| Metro area | Sydney |
| Zoning | City Centre |
| Title | Freehold |
| Site area (ha) | 0.4 |
| Lettable area (‘000 m2) | 32.2 |
| Typical floor area (m2) | 1,250 |
| Number of buildings | 1 |
| Car parking spaces | 162 |
| NABERS Energy rating (with green power) |
3.5 |
| NABERS Energy rating (without green power) |
3.0 |
| NABERS Water rating | 3.0 |
| Year built | 1990 |
| Major tenant | Lloyds International |
| Ownership(%) | 100 |
PROPERTY STATISTICS AT 30 JUNE 2011
| Acquisition date | Dec 1998 |
|---|---|
| Acquisition price plus additions (AU $m) | $231.1 |
| Book value (AU $m) Independent valuation date |
$247.5 Jun 2011 |
| Independent valuation (AU $m) | $247.5 |
| Market cap rate (%) | 7.13 |
| Initial yield (%) | 7.56 |
| Discount rate (%) | 9.00 |
| Leased by area (%) | 96 |
| Weighted lease term by income (years) | 2.7 |
LEASE MATURITY BY INCOME (%)
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Available FY12 FY13 FY14 FY15 FY16 FY17 FY18 FY19 FY20 FY21+
37%
19%
13%
11%
8% 8%
4%
0% 0% 0% 0%
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14 DEXUS ProPErTy GroUP SYDNEY OFFICE TOUR
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MARGARET STREET
ERSKINE STREET
WESTERN DISTRIBUTOR
YORK STREET
CLARENCE STREET
KENT STREET
Wynyard Park
GEORGE STREET
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NOTES
15
DEXUS ProPErTy GroUP SYDNEY OFFICE TOUR
aUSTralia SqUarE 264-278 GEorGE STrEET SyDnEy
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Australia Square is an iconic Sulman Award‑winning building designed by Harry Seidler. It was constructed in 1967 and occupies a prime city block in the CBD.
The complex comprises the A‑grade office tower and the B‑grade Plaza building. The Tower offers 41 levels of office accommodation, a revolving restaurant and ground floor retail and food court amenities. The Tower fronts onto George Street while the Plaza building fronts Pitt Street.
The Tower underwent a major $110 million refurbishment in 1996. A $10 million refurbishment of the external ground areas was completed in 2004.
The Tower has strong historical leasing demand due to its iconic status and location. It currently provides a highly sustainable workspace for tenants with a 4.5‑star NABERS rating upgrade program already developed. The Plaza building leverages from the Tower’s reputation and amenities at affordable rental levels.
PROPERTY DETAILS
| PROPERTY DETAILS | |
|---|---|
| Building type | A‑grade – office |
| Metro area | Sydney |
| Zoning | City Centre |
| Title | Freehold |
| Site area (ha) | 0.6 |
| Lettable area (‘000 m2) | 52.6 |
| Typical floor area (m2) | 1,020 |
| Number of buildings | 2 |
| Car parking spaces | 400 |
| NABERS Energy rating (with green power) |
Tower – 5.0 / Plaza – 5.0 |
| NABERS Energy rating (without green power) |
Tower – 4.0 / Plaza – 4.5 |
| NABERS Water rating | Tower – 3.5 / Plaza – 4.0 |
| Year built | 1967 |
| Major tenant | Origin Energy Limited |
| Ownership (%) | 50 |
| Co‑owner | General PropertyTrust |
PROPERTY STATISTICS AT 30 JUNE 2011
| Acquisition date | Aug 2000 |
|---|---|
| Acquisition price plus additions (AU $m) | $430.7 |
| Book value (AU $m) | $542.9 |
| Independent valuation date | Dec 2009 |
| Independent valuation (AU $m) | $528.5 |
| Market cap rate (%) | 7.04 |
| Initial yield (%) | 6.83 |
| Discount rate (%) | 9.00 |
| Leased by area (%) | 95 |
| Weighted lease term by income (years) | 4.1 |
LEASE MATURITY BY INCOME (%)
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Available FY12 FY13 FY14 FY15 FY16 FY17 FY18 FY19 FY20 FY21+
20%
19%
12%
11%
10%
9%
5% 5%
4%
3%
2%
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16 DEXUS ProPErTy GroUP SYDNEY OFFICE TOUR
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MARGARET STREET
BRIDGE STREET
O’CONNELL STREET
PITT STREET
YORK STREET
Wynyard Park
GEORGE STREET
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NOTES
17
DEXUS ProPErTy GroUP SYDNEY OFFICE TOUR
1 BliGh STrEET SyDnEy
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1 Bligh Street – the next generation in high performing sustainable office space.
1 Bligh Street combines leading edge design, technology and sustainability. This flagship development was completed on 7 July 2011 and was officially opened on 30 August 2011 by the Australian Prime Minister, The Hon. Julia Gillard.
The building, one of only seven premium buildings in the core Sydney CBD, provides 27 levels of premium office space and features a double‑skin, glass façade with a naturally ventilated full height atrium. The building offers first class amenities including a premium concierge service, foyer café, childcare centre, shower facilities, bicycle racks, DEXUS on‑site management and parking for 91 cars.
1 Bligh has been awarded a 6 Star Green Star Office Design v2 Certified rating and is designed to achieve a 5‑star NABERS Energy rating.
PROPERTY DETAILS
| PROPERTY DETAILS | |
|---|---|
| Building type | Premium grade office |
| Metro area | Sydney |
| Zoning | City Centre |
| Title | Freehold |
| Site area (ha) | 0.3 |
| Lettable area (‘000 m2) | 43.2 |
| Typical floor area (m2) | 1,600 |
| Number of buildings | 1 |
| Cap parking spaces | 91 |
| Green Star rating | 6 |
| Year built | 2011 |
| Major tenant | Clayton Utz |
| Ownership (%) | 33 |
| Co‑owner | DWPF and Cbus |
| PROPERTY STATISTICS AT 30 JUNE 2011 | |
| Acquisition date | Aug 2000 |
| Acquisition price plus additions (AU $m) | $599.4 |
| Book value (AU $m) | $629.0 |
| Independent valuation date | Jun 2011 |
| Independent valuation (AU $m) | $629.0 |
| Market cap rate (%) | 6.50 |
| Initial yield (%) | 3.20 |
| Discount rate (%) | 9.00 |
| Leased by area (%) | 56 |
| Weighted lease term by income (years) | 9.9 |
LEASE MATURITY BY INCOME (%)
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Available FY12 FY13 FY14 FY15 FY16 FY17 FY18 FY19 FY20 FY21+
51%
49%
0% 0% 0% 0% 0% 0% 0% 0% 0%
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18 DEXUS ProPErTy GroUP SYDNEY OFFICE TOUR
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BRIDGE STREET
HUNTER STREET
O’CONNELL STREET
BLIGH STREET
PHILLIP STREET
MACQUARIE STREET
PITT STREET
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NOTES
19
DEXUS ProPErTy GroUP SYDNEY OFFICE TOUR
GovErnor PhilliP TowEr & GovErnor MaCqUariE TowEr 1 farrEr PlaCE, SyDnEy
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One of Sydney’s most prestigious office buildings, 1 Farrer Place is an exceptional landmark offering superior finishes and services.
The towers are supported by premium building services including DEXUS on‑site management and emergency back‑up power sources for essential services and tenant requirements. The property is located in a highly accessible area of Sydney’s financial business district with numerous transport modes available at Circular Quay.
PROPERTY DETAILS
| PROPERTY DETAILS | |
|---|---|
| Building type | Premium grade – office |
| Metro area | Sydney |
| Zoning | City Centre |
| Title | Freehold |
| Site area (ha) | 0.6 |
| Lettable area (‘000 m2) | 87.2 |
| Typical floor area (m2) | 1,460 |
| Number of buildings | 3 |
| Car parking spaces | 654 |
| NABERS Energy rating (with green power) |
GPT – 4.0 / GMT – 4.5 |
| NABERS Energy rating (without green power) |
GPT – 3.0 / GMT – 3.5 |
| NABERS Water rating | GPT – 3.0 / GMT – 4.0 |
| Year built | 1993 |
| Major tenant | State of NSW |
| Ownership (%) | 50 |
| Co‑owner | General Property Trust and Australian Prime PropertyFund |
PROPERTY STATISTICS AT 30 JUNE 2011
The complex was designed by international architects Denton Corker Marshall and completed in 1993.
Offering a total net lettable area of approximately 87,200 square metres, and with GPT reaching a height of 243 metres, the complex provides panoramic views over the Royal Botanic Gardens and Sydney Harbour. The Towers offer column free office floors averaging 1,460 square metres.
The complex includes 38 levels of premium office space in Governor Phillip Tower and 26 levels in Governor Macquarie Tower, the Phillip Street Terraces (five restored historic terraces) and nine levels of basement parking for 654 vehicles.
| Acquisition date | Dec 1998 |
|---|---|
| Acquisition price plus additions (AU $m) | $996.0 |
| Book value (AU $m) | $1,290.9 |
| Independent valuation date | Dec 2010 |
| Independent valuation (AU $m) | $1,286.0 |
| Market cap rate (%) | 6.45 |
| Initial yield (%) | 6.34 |
| Discount rate (%) | 8.63 |
| Leased by area (%) | 99 |
| Weighted lease term by income (years) | 4.8 |
The site was selected over 200 years ago by Governor Phillip to accommodate Australia’s First Government House. In the 1790s it was the administrative and social centre of the nation. Today it continues to be a prestigious and influential address in the core of the CBD.
The foyer features Australian works of art in a spacious, light filled atrium furnished with granite floors and high walls of Sydney sandstone.
20 DEXUS ProPErTy GroUP SYDNEY OFFICE TOUR
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LEASE MATURITY BY INCOME (%)
BRIDGE STREET
HUNTER STREET
O’CONNELL STREET
BLIGH STREET
Available FY12 FY13 FY14 FY15 FY16 FY17 FY18 FY19 FY20 FY21+
PHILLIP STREET
MACQUARIE STREET
24% PITT STREET
19%
15% 15%
13%
6%
4%
3%
1%
0% 0%
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LEASE MATURITY BY INCOME (%)
NOTES
DEXUS ProPErTy GroUP SYDNEY OFFICE TOUR 21
NOTES
22 DEXUS ProPErTy GroUP SYDNEY OFFICE TOUR
NOTES
ABOUT DEXUS
DEXUS is one of Australia’s leading property groups specialising in world‑class office, industrial and retail properties with total assets under management of $13.7 billion. In Australia, DEXUS is the market leader in office and industrial and, on behalf of third party clients, a leading manager and developer of shopping centres. DEXUS is committed to being a market leader in Corporate Responsibility and Sustainability.
DEXUS Funds Management Ltd ABN 24 060 920 783, AFSL 238163, as Responsible Entity for DEXUS Property Group (ASX: DXS)
www.dexus.com
23
DEXUS ProPErTy GroUP SYDNEY OFFICE TOUR
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www.dexus.com
TITLE SLIDE HEADER DEXUS PROPERTY GROUP Sub title (Trebuchet 18 pt) 2011 Sydney Office Tour
Paul Say Chief Investment Officer & Head of Office Victor Hoog Antink Chief Executive Officer
DEXUS Funds Management Limited ABN 24 060 920 783 DXS 2009 Annual Results — Slide 1 AFSL 238163 as responsible entity for DEXUS Property Group
RUN OF THE DAY
Our approach
Research perspective
-
Tour starts
-
Western corridor
-
Lunch
-
CBD core
Conclusion
DEXUS Property Group 2011 Sydney Office Tour — Slide 2
OFFICE OBJECTIVES
Our vision is to be the market leader in office through a superior approach to owning, managing and developing office property in Australia. Our office portfolio valued at $6.1 billion, is one of the largest in Australia, comprising the country’s most iconic premium office towers.
-
Market leadership is a combination of both real performance and perception
-
Dominant and sustainable institutional property groups in Australia and around the world tend position themselves in the core/core plus level of the risk spectrum
-
Long term total return target for a core/core plus office investor is a 3-5 year IRR of 9% (300-400bp over the long term bond rate)
-
Top quartile to exceed average returns by 50-100bps without changing the risk profile
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TOTAL RETURN
(TR)
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Out Performance
25%
Market Returns
DXS Target
Under Performance
Zone
9.5%
9%
5%
RISK
Risk Free Core Developer
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DEXUS Property Group 2011 Sydney Office Tour — Slide 3
OFFICE PHILOSOPHY
STRATEGIC
OPERATIONAL
The four DEXUS value drivers
High performance management
-
I. Disciplined investment in CBD markets with high barriers to entry
-
Robust and meaningful performance metrics and measurement
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II. Leverage scale and expertise in selected markets
-
III. Tactically time sales and leasing transactions
-
Service excellence
-
Efficient systems and processes
-
Sustainability
-
IV.Engage in disciplined value-add/development
Expected core returns + Management premium
Top quartile performance
9.0%—9.5%
- 0.5%—1.00%
9.5%—10.5%
DEXUS Property Group 2011 Sydney Office Tour — Slide 4
TITLE SLIDE HEADER Sub title (Trebuchet 18 pt) DEXUS OFFICE PHILOSOPHY
Victor Hoog Antink Chief Executive Officer
DXS 2009 Annual Results — Slide 5 EXUS Property Group 2011 Sydney Office Tour — Slide 5
DRIVER I: INVEST IN MARKETS WITH HIGH BARRIERS TO ENTRY
Targeting a tactical mix of Australian office key markets
-
Invest in markets with high barriers to entry where tenants want/have to be located
-
Primarily the CBD’s of Sydney and Melbourne (also Brisbane and Perth) based on liquidity, long term demand growth, barriers to new supply and large diverse tenant base
Hold a target mix of premium, A grade, and development grade assets
-
Focusing on prime grades allows us to attract large tenants, extend time to obsolescence and reduce competition from lower capitalised competitors
-
Larger and higher grade assets are more efficient and less management intensive
Target ratio of asset grade (risk/return)
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15%
30%
55%
Premium (DXS actual ~ 41%)
A-grade (DXS actual ~ 47%)
Active/development (DXS actual ~ 6%)
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- 10-15% of active/development increases returns while keeping risk at an acceptable level for a core portfolio
Source: DEXUS Research.
DEXUS Property Group 2011 Sydney Office Tour — Slide 6
DRIVER II: LEVERAGE SCALE & EXPERTISE IN SELECTED MARKETS
Create and leverage local scale to build and maintain local relationships
Hold sufficient properties in each market to:
-
Maximise market knowledge
-
Leverage local relationships
-
Attract and support a high performance local team with superior intellectual property, skill and execution capabilities
-
Scale achieved through combination of direct holdings (DXS) and third party relationships with like-minded investors
[Sydney CBD view from Gateway rooftop, including 1 Bligh, GPT/GMT and Australia Square ]
Source: DEXUS Research.
DEXUS Property Group 2011 Sydney Office Tour — Slide 7
DRIVER II: LEVERAGE SCALE & EXPERTISE IN SELECTED MARKETS
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DEXUS Property Group 2011 Sydney Office Tour — Slide 8
DRIVER III: TACTICALLY TIME SALES AND PROPERTY TRANSACTIONS
Time investment and leasing activities to the market cycle
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Location Sydney CBD
Nth Sydney
Brisbane Macquarie Park
Canberra Perth
Auckland Melbourne
Fixed reviews – long
Leases with market reviews
Stage Contraction Recovery Growth Post- growth
Land banking
Activity Development – pre com.
Develop – spec
Investment
Divestment
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Investing and divesting according to the market cycle adds approx. 20-30bps to total return
Index
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Over 10 Years:
190
- IPD Benchmark - 8.9%
170 - Random buying/selling -0.25% Buy 20%
- Sell 20% at peak buy at bottom
150 +0.60% Sell
130 Buy
110
Sell 20%
90
70
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Timing the market cycle successfully requires accurate, research-driven, estimation of cycle timing and management discipline
-
Matching lease expiry according to the market cycle can increase retention and reduce exposure to increased incentives, adding significant value over time
-
Analysis of past cycles indicate that additional value can be created through implementing a disciplined approach to buy/sell and leasing activities
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50
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Dec-84 Dec-86 Dec-88 Dec-90 Dec-92 Dec-94 Dec-96 Dec-98 Dec-00 Dec-02 Dec-04 Dec-06 Dec-08
Source: IPD, JLL, DEXUS Research, Cycle includes transaction costs (approx. 30 bps impact).
DEXUS Property Group 2011 Sydney Office Tour — Slide 9
DRIVER IV: ENGAGE IN DISCIPLINED VALUE-ADD/DEVELOPMENT
Develop to enhance returns and improve portfolio quality
Market positioning
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12.0%
11.0% Target DXS Development
position
Mixed
development
10.0% & investor
Core investor
& some
9.0% development
Core investor
8.0%
7.0%
6.0%
100% 90% 80% 70% Risk 60% 50% 40% 30%
IRR
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-
Acquire sites and land banks at attractive pricing
-
Develop to enhance portfolio yield and improve portfolio quality
-
Develop to create ‘active earnings’
Acquire properties for repositioning to enhance returns and improve portfolio quality
-
Acquire lower grade properties at attractive pricing
-
Reposition to enhance portfolio yield and improve portfolio quality
-
Reposition and sell to create ‘active earnings’
Source: IPD, DEXUS Research.
DEXUS Property Group 2011 Sydney Office Tour — Slide 10
TITLE SLIDE HEADER OPERATIONAL EXCELLENCE Sub title (Trebuchet 18 pt)
Victor Hoog Antink Chief Executive Officer
DXS 2009 Annual Results — Slide 11 EXUS Property Group 2011 Sydney Office Tour — Slide 11
OPERATIONAL EXCELLENCE SUPPORTS SUSTAINABLE COMPETITIVE ADVANTAGE (SCA)
Management alpha delivers top quartile performance through adherence to:
-
Robust and meaningful performance metrics and measurement
-
Service excellence
-
Efficient systems and processes
-
Sustainability
DEXUS Property Group 2011 Sydney Office Tour — Slide 12
OUR GOAL
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Our ultimate goal is to create Sustainable Competitive Advantage (SCA) over our competitors as the market leader in owning, managing and developing Australian office property
DEXUS Property Group 2011 Sydney Office Tour — Slide 13
DEXUS PROPERTY GROUP Office market overview
Peter Studley Head of Research
DEXUS Property Group 2011 Sydney Office Tour — Slide 14
INTRODUCTION
-
Australian office markets are not oversupplied and are positioned for long term growth
-
CBD office demand has been above average in the past year
-
Vacancy has fallen in eight out of the ten major markets
-
While there is a degree of uncertainty about the global outlook, Australia has one of the strongest economic outlooks in the developed world
44 Market Street, Sydney NSW
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DEXUS Property Group 2011 Sydney Office Tour — Slide 15
AUSTRALIA WELL-PLACED AMID UNCERTAINTY
Australia’s fortunes linked to strong growth in Asia
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% per annum (real)
China (RHS) Australia US
6% 16%
4% 12%
2% 8%
0% 4%
-2% 0%
-4% -4%
-6% -8%
Jun-01 Jun-02 Jun-03 Jun-04 Jun-05 Jun-06 Jun-07 Jun-08 Jun-09 Jun-10 Jun-11
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Forecast growth to 2016
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Source: IMF, DEXUS Research.
DEXUS Property Group 2011 Sydney Office Tour — Slide 16
OFFICE DEMAND DRIVEN BY EMPLOYMENT GROWTH
Demand down on last year, but expected to be positive medium term
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Source: Access Economics, DEXUS Research.
DEXUS Property Group 2011 Sydney Office Tour — Slide 17
SUPPLY PRESSURE – MARKETS NOT OVERSUPPLIED
Modest CBD completions are a major factor mitigating risk
Total supply as % of stock
| Modest CBD completions are a major factor mitigating risk | Total supply as % of stock | Total supply as % of stock | Total supply as % of stock |
|---|---|---|---|
| 2012-14 forecast supply |
Past 10 year average |
||
| Sydney | 1.4 | 2.0 | |
| Melbourne CBD | 2.6 | 2.9 | |
| Brisbane | 2.4 | 3.2 | |
| Perth 2.7 2.7 |
|||
Source: Jones Lang LaSalle, DEXUS Research.
DEXUS Property Group 2011 Sydney Office Tour — Slide 18
BARANGAROO SUPPLY MANAGEABLE
Sydney forecast supply including Barangaroo is similar to past cycles
Barangaroo
- Will further improve amenity of western and northern precincts of CBD
Any lengthening of the development period will moderate the market impact
Source: Jones Lang LaSalle, DEXUS Research.
DEXUS Property Group 2011 Sydney Office Tour — Slide 19
MELBOURNE OUTLOOK STABLE
Melbourne supply, demand and vacancy
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Source: Jones Lang LaSalle, DEXUS Research.
DEXUS Property Group 2011 Sydney Office Tour — Slide 20
MARKETS ARE IN THE ZONE WHERE GROWTH OCCURS
Real effective rent growth vs vacancy
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% pa real effective
rent growth
30%
20%
10%
0%
-10%
-20%
-30%
-40%
30% 25% 20% 15% 10% 5% 0%
% vacancy rate Sydney Perth
Melbourne
Brisbane
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Source: DEXUS Property Group from Jones Lang LaSalle data, North Sydney, Sydney & Melbourne.
DEXUS Property Group 2011 Sydney Office Tour — Slide 21
SCOPE FOR INCENTIVES TO FALL
Incentives on relocations tend to move with vacancy rates
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Source: Jones Lang LaSalle, DEXUS Research, includes incentives on relocations, excludes renewals.
DEXUS Property Group 2011 Sydney Office Tour — Slide 22
MANAGING UNCERTAINTY - POSSIBLE DOWNSIDE SCENARIOS
Demand and vacancy for the major 4 CBD markets 2012-14
| Scenario | Description | Demand 2012-14 | Forecast | Impact |
|---|---|---|---|---|
| (sqm/pa) | vacancy in | |||
| 2014 | ||||
| Base case | Period of slow global growth | 218,000 | 7.2% | Effective growth in the range |
| Most likely | 5%-10% pa | |||
| Office demand about average | ||||
| Scenario 1 | Double dip in both Europe and US | 140,000 | 9.0% | Growth about a third to a half of |
| Less likely | base case | |||
| Demand at similar levels to GFC | ||||
| Scenario 2 | “Hard landing” in China | 45,000 | 11.0% | Nil growth with some decline in |
| Least likely | rents possible | |||
| Demand worse than during GFC |
Either downside scenario would have relatively moderate effects on vacancy due to the absence of overbuilding
DEXUS Property Group 2011 Sydney Office Tour — Slide 23
OUTLOOK FOR VALUES POSITIVE
There is a wide spread over the real 10yr bond rate (Sydney prime office)
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Source: Jones Lang LaSalle, Reserve Bank of Australia, DEXUS Research.
DEXUS Property Group 2011 Sydney Office Tour — Slide 24
OFFICE CYCLE IN 2011
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Sydney CBD
Nth Sydney
Location Macquarie Park
Brisbane
Perth
Canberra
Melbourne
Auckland
Fixed reviews – long
Leases with market reviews
Stage Contraction Recovery Growth Post- growth
Land banking
Activity –
Development pre com.
–
Develop spec
Investment
Divestment
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Source: DEXUS Research.
DEXUS Property Group 2011 Sydney Office Tour — Slide 25
DEXUS PROPERTY GROUP Sustainability
Tony Gulliver Head of Development & Trading
DEXUS Property Group 2011 Sydney Office Tour — Slide 26
OFFICE 4.5 STAR NABERS ENERGY PROGRAM
September 2009 program approved:
-
Average NABERS Energy rating increase to 4.5 Stars
-
June 2012 programmed completion
-
Projects in 30 properties (DXS 22 buildings, Third Party Funds 8 buildings)
-
Capital works program of $41 million for DXS
DEXUS Property Group 2011 Sydney Office Tour — Slide 27
COMPONENTS OF ENERGY CONSUMPTION
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DEXUS Property Group 2011 Sydney Office Tour — Slide 28
45 CLARENCE STREET, SYDNEY NABERS tracking post project
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DEXUS Property Group 2011 Sydney Office Tour — Slide 29
4.5 STAR PROJECT
Performance statistics
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Garema Court, Canberra ACT
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Zenith Centre, Chatswood
DEXUS Property Group 2011 Sydney Office Tour — Slide 30
4.5 STAR PROJECT
Performance statistics
321 Kent Street, Sydney
1 Margaret Street, Sydney
DEXUS Property Group 2011 Sydney Office Tour — Slide 31
DISCLAIMER
-
This presentation is issued by DEXUS Funds Management Limited (DXFM) in its capacity as responsible entity of DEXUS Property Group (ASX: DXS). It is not an offer of securities for subscription or sale and is not financial product advice.
-
Information in this presentation including, without limitation, any forward looking statements or opinions (the Information) may be subject to change without notice. To the extent permitted by law, DXFM and DXS, 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 DXS security holder or potential investor may require in order to determine whether to deal in DXS 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 DXS is not guaranteed by DXFM or 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 2011 Sydney Office Tour — Slide 32
TITLE SLIDE HEADER DEXUS PROPERTY GROUP Sub title (Trebuchet 18 pt) 2011 Sydney Office Tour
Paul Say Chief Investment Officer & Head of Office Victor Hoog Antink Chief Executive Officer
DEXUS Funds Management Limited ABN 24 060 920 783 DXS 2009 Annual Results — Slide 33 AFSL 238163 as responsible entity for DEXUS Property Group