DEXUS Dexus (ASX: DXS)
ASX release
30 April 2019
2019 Macquarie Australia Conference
Dexus today releases the attached presentation to be presented at the 2019 Macquarie Australia Conference, which is being held at the Sheraton Grand Sydney, 161 Elizabeth Street, Sydney.
For further information please contact: | Media Relations |
Investor 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 $28.9 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 $13.9 billion of office and industrial properties. We manage a further $15.0 billion of office, retail, industrial and healthcare properties for third party clients. The group's $5.0 billion development 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 27,000 investors from 19 countries. With more than 30 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 risk-adjusted 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)
Macquarie Australia
Conference
Ross Du Vernet, CIO
30 April 2019
Dexus Funds Management Limited
ABN 24 060 920 783
1
AFSL 238163 as responsible entity for Dexus
Agenda
-Dexus overview
-Portfolio update to 31 March 2019
-Australian office sector dynamics
•Australian office capital markets
•Australian office market trends
•Office portfolio resilience
-Outlook
MLC Centre, 19 Martin Place, Sydney NSW.
2 | Macquarie Australia Conference 2019 |
Dexus overview
$28.9 billion1 under management
PROPERTY | - | Proxy for Australian office property | ||
PORTFOLIO | ||||
• Overweight to Sydney market | ||||
$13.9 billion1 | ||||
FUNDS | - | Outperforming and growing Funds | ||
MANAGEMENT | ||||
Management business | ||||
$15.0 billion1 | ||||
DEVELOPMENT | - $5.0 billion group pipeline + circa $1 billion | |||
potential concept opportunities | ||||
TRADING | - Future trading pipeline of $210-270 million of | |||
profits (pre-tax) from five trading projects | ||||
CAPITAL | - | Strong balance sheet with gearing of 24.6%2 | ||
MANAGEMENT | - | Market cap of circa $13 billion | ||
1.Funds under management as at 31 December 2018.
2.Pro forma 31 December 2018 look-through gearing including the acquisition of remaining interest in the MLC Centre, Sydney announced on 12 March 2019 and the divestment of 11 Talavera Road, Macquarie Park for $231.2 million (net sale proceeds before transaction costs).
3.Adjusted for the one-for-six security consolidation completed in FY15. Compound annual growth rate (CAGR) is calculated over six years.
3 | Macquarie Australia Conference 2019 |
Dexus distribution per security (cents)3
6.9% | |||
CAGR | |||
cps | since FY12 | ||
50 | 47.8 | ||
45.47 | |||
45 | 43.51 | ||
41.04 | |||
40 | 36.00 | 37.56 | |
3532.10
25
20
FY12 | FY13 | FY14 | FY15 | FY16 | FY17 | FY18 |
Portfolio update at 31 March 2019
Office: Robust enquiry converts to leasing in Sydney and Perth
61,099sqm | 13.5% |
Office space leased1 | Average incentives2 |
HY19: 11.9% | |
97.5% | 4.4 years |
Occupancy | WALE3 |
HY19: 97.3% | HY19: 4.5 years |
Office lease expiry profile at 31 March 2019
Vacancy rates and net supply forecasts4
25% | Net supply (RHS) | Vacancy | Long-term average | % of stock | |||||||||||||||||||||||||
15% | |||||||||||||||||||||||||||||
20% | 12% | ||||||||||||||||||||||||||||
15% | 9% | ||||||||||||||||||||||||||||
10% | 6% | ||||||||||||||||||||||||||||
5% | 3% | ||||||||||||||||||||||||||||
0% | 0% | ||||||||||||||||||||||||||||
-5% | -3% | ||||||||||||||||||||||||||||
FY18 | FY19 | FY20 | FY21 | FY22 | FY23 | FY18 | FY19 | FY20 | FY21 | FY22 | FY23 | FY18 | FY19 | FY20 | FY21 | FY22 | FY23 | FY18 | FY19 | FY20 | FY21 | FY22 | FY23 | ||||||
Syd | Melb | Bris | Perth | ||||||||||||||||||||||||||
Prime net effective rents ($/sqm) 4 | |||||||||||||||||||||||||||||
$/sqm |
30%
25%
20%
15%
10%
5%
0%
By Income
Syd CBD | Melb CBD | Bris CBD | Perth CBD |
$1,000 | +5.3% y/y | ||
$800 | |||
$600 | |||
+3.6% y/y | |||
$400 | |||
$200 |
Available | FY19 | FY20 | FY21 | FY22 | FY23 |
1.Including Heads of Agreement and development leasing of 19,225 square metres.
2.Excluding development leasing.
3.Weighted average lease expiry by income.
4.Source: JLL Research to March 2019, Dexus Research.
FY09 | FY10 | FY11 | FY12 | FY13 | FY14 | FY15 | FY16 | FY17 | FY18 | FY19 |
4 | Macquarie Australia Conference 2019 |
Portfolio update at 31 March 2019
Industrial: Western Sydney driving leasing volumes
46,193sqm 8.2%
Industrial take-up (key markets)3
000sqm
500 OWS W Mel S Bris E Per 10 Yr Hist.
Industrial space leased1 | Average incentives |
HY19: 7.7% |
96.9% | 5.0 years |
Occupancy | WALE2 |
HY19: 96.8% | HY19: 5.0 years |
Industrial lease expiry profile at 31 March 2019
400
300
200
100
0
2014 | 2015 | 2016 | 2017 | 2018 | 2014 | 2015 | 2016 | 2017 | 2018 | 2014 | 2015 | 2016 | 2017 | 2018 | 2014 | 2015 | 2016 | 2017 | 2018 |
OWS | W Mel | S Bris | E Per |
30%
By Income
25%
20%
15%
10%
5%
0%
Industrial rent growth in key markets (net face)3
$/sqm
Outer West Sydney
220West Melbourne
180 | South Sydney |
160 | |
140 | |
120 | |
100 | |
80 | |
60 |
Rents and land values rising in Sydney and Melbourne
202
122
79
Available | FY19 | FY20 | FY21 | FY22 | FY23 |
1.Includes Heads of Agreement.
2.Weighted average lease expiry by income.
3.Source: JLL Research to March 2019, Dexus Research.
5 | Macquarie Australia Conference 2019 |
FY09 | FY10 | FY11 | FY12 | FY13 | FY14 | FY15 | FY16 | FY17 | FY18 | FY19 |
Australian office capital markets
6 | Macquarie Australia Conference 2019 |
Comparison of pricing metrics across investment locations
Relative pricing and rental outlook favourable for Australian office markets
Global yield and rent growth comparison | Effective yield spread over local 10 year government bond1 | |||||||||||||||||||
Effective | Spread to | |||||||||||||||||||
Yield | EU | Asia | US | AU | local bonds | EU | Asia | US | AU | |||||||||||
5% | 4% | |||||||||||||||||||
Chicago | Sydney | 3% | Tokyo | Frankfurt | Sydney | |||||||||||||||
4% | Singapore | |||||||||||||||||||
Paris | London | |||||||||||||||||||
New York | Melbourne | 2% | Singapore | |||||||||||||||||
Chicago | Melbourne | |||||||||||||||||||
London | San Franscisco | |||||||||||||||||||
3% | Brisbane | 1% | New York | Brisbane | ||||||||||||||||
Frankfurt | Perth | San Franscisco | ||||||||||||||||||
Tokyo | ||||||||||||||||||||
Paris | Perth | 0% | Hong Kong | |||||||||||||||||
2% | Hong Kong | |||||||||||||||||||
-1% | ||||||||||||||||||||
1% | -2% | |||||||||||||||||||
-2%-1% | 0% | 1% | 2% | 3% | 4% | 5% | 6% | 7% | ||||||||||||
-2% | -1% | 0% | 1% | 2% | 3% | 4% | 5% | 6% | 7% | |||||||||||
Forecast rent growth2 | ||||||||||||||||||||
Forecast rent growth2 |
Source: Savills, JLL, Trading Economics, Dexus Research.
1.Effective yields are based on A-grade office space as at H2 2018.
2.Forecasts are based on JLL data for average prime net face rents for 2019 and 2020 and are not Dexus Research forecasts.
7Macquarie Australia Conference 2019
Investment demand for Australian office properties
Where has direct demand come from?
Australian transaction volumes by type of buyer | Here… | Partly here… | Not here… | ||||||||||||||||||||||||||
Foreign | A-REIT | ||||||||||||||||||||||||||||
Largest cross border buyers of | Big investors with a | Big investors | |||||||||||||||||||||||||||
Developers/Property Companies | Institution | Australian office - past 5 years | small stake in | globally, but not | |||||||||||||||||||||||||
Other | Privates | ||||||||||||||||||||||||||||
Superannuation Funds | Unlisted Property Trust | Australia | yet in Australia | ||||||||||||||||||||||||||
$Bn | |||||||||||||||||||||||||||||
1 | CPPIB | AMER | ADIA | PGGM | |||||||||||||||||||||||||
20 | |||||||||||||||||||||||||||||
2 | OMERS | AMER | NPS | Calpers | |||||||||||||||||||||||||
15 | 3 | Blackstone | AMER | AXA | NBIM | ||||||||||||||||||||||||
4 | CIC | APAC | QIA | Allianz | |||||||||||||||||||||||||
10 | 5 | Suntec REIT | APAC | Prudential | DekaBank | ||||||||||||||||||||||||
6 | GIC | APAC | Gaw Capital | NYSTRS | |||||||||||||||||||||||||
5 | 7 | Morgan Stanley | AMER | PAG (ASIA) | Swiss Life AM | ||||||||||||||||||||||||
8 | Shanghai Sheng. | APAC | KKR | APG | |||||||||||||||||||||||||
0 | 9 | Prudential plc | EMEA | Keppel Capital | China Life | ||||||||||||||||||||||||
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
Source: Dexus Research, RCA.
8 | Macquarie Australia Conference 2019 |
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DEXUS Property Group published this content on 30 April 2019 and is solely responsible for the information contained herein. Distributed by Public, unedited and unaltered, on 29 April 2019 23:52:09 UTC
