11% premium to book value at 30 June 2020 and highlighting the resilience of prime grade office values. 
Dexus and HWPF acquired (in 50/50 co-ownership) the Australian Bragg Centre in Adelaide, which is currently under 
development. The Australian Bragg Centre is a state-of-the-art clinical and research facility housing Australia's first 
proton therapy unit specialising in next generation cancer treatment. This transaction is consistent with Dexus's 
priority to accelerate opportunities to expand the funds management business and provides greater exposure to a growing 
asset class. On completion, this transaction will increase the group's exposure to healthcare assets to over USD1 
billion. 
Environmental, Social and Governance (ESG) update 
From an environmental perspective, during the period Dexus continued to manage its properties for emissions reductions 
supporting the group's net zero by 2030 commitment and progressed its healthy buildings initiative. This initiative is 
focused on adopting proven technologies to enhance the air quality in our buildings and provide a touchless experience. 
Dexus also leveraged its partnership with Taronga Ventures to identify new technologies that can assist in reducing 
carbon emissions and became a founding member of the Australian Climate Leaders Coalition. 
Dexus was again acknowledged as a global ESG leader, retaining its position on a several ESG benchmarks, including: 
  . Being recognised in the 2020 Principles of Responsible Investment (PRI) Leaders' Group. Dexus achieved the maximum 
    score available, effectively demonstrating how it integrates ESG across its management platform to manage risks and 
    create long-term value for its investors 
  . For the second consecutive year, retaining the number 1 position globally in the real estate industry for the Dow 
    Jones Sustainability Index 
  . Retaining a position on the 2020 CDP Climate A List 
  . Being recognised by sustainability benchmark GRESB, with the Dexus Office Trust named as the Global Sector Leader 
    for Listed Office, DWPF named as the Regional Sector Leader for Diversified Office/Retail (Oceania) and HWPF, which 
    participated for the first time, named as a Global Development Sector Leader for healthcare entities 
Darren Steinberg said: "This recognition is testament to our people and the way ESG is embedded and integrated across 
our business - it is part of our DNA." 
Property portfolio 
Dexus Office Portfolio 
Dexus manages a high-quality USD22.5 billion group office portfolio, USD13.8 billion of which sits in the Dexus portfolio. 
Key metrics                               31 December 2020 30 June 2020 
Occupancy by income                                  96.0%        96.5% 
Weighted average lease expiry (by income)        4.2 years    4.2 years 
Average incentives^[7]                               22.0%        17.1% 
Weighted average cap rate                            4.95%        4.97%

During the six months to 31 December 2020, Dexus leased 93,691 square metres^[8] of office space across 135 transactions, in addition to 7,179 square metres^8 of space across 16 transactions at office developments.

Executive General Manager, Office, Kevin George said: "In an environment where global economies are still in lockdown, we are seeing activity levels increasing in Australian cities with people returning to CBDs and our buildings. The commentary on working from home versus the office continues, but the impact on both near term and longer-term leasing demand is still not clear. Increased flexibility for employees was a pre-pandemic trend that has now accelerated. We've however had a busy six-month period of leasing and our experience across those deals completed shows the office footprint is substantially unchanged.

"The portfolio has performed well in the six months with occupancy at 96.0% (up from 95.4% at 30 September 2020), following the completion of 151 deals representing 6.2% of the portfolio by area.

"The uncertainty created by COVID-19 delayed some decision making, particularly in Melbourne, where inspections of commercial premises have only until recently been prohibited under the extended lockdown. As a result, we expect that the Melbourne office market will be challenging over the short term.

"We have been working on the evolution of office for more than six years - well before the onset of COVID-19. We identified the future of office involved more flexibility and we've been evolving our platform offering to increase the relevance to our customers. We are well positioned to expand our flexible products and services to meet the needs of our customers in a post-pandemic world."

Face rents remain largely unchanged in the core CBD markets; however effective rents are under pressure as incentives continue to increase. Given the better than expected market occupancy levels and strength of key leading indicators, Dexus expects incentives to moderate in some markets over the next 12 months.

Office portfolio like-for-like income growth was +1.5% (FY20: +4.7%), excluding the impact of rent relief measures and provisions for expected credit losses (including these impacts: HY21 -4.6% and FY20 +2.4%). The Dexus office portfolio delivered a one-year return of 3.6% at 31 December 2020 and outperformed its benchmark over the one, three and five-year time periods to 30 September 2020.

After an uncertain year for office markets, an improvement in many of the key leading indicators signals a period of strengthening demand ahead. The indicators include: . Business conditions were at their highest level since 2018 in the December 2020 NAB Business Survey . Professional job advertisements, an indicator of corporate hiring intentions, are up 31% since June 2020 . Employment in white collar industries has grown by 2.5% over the past 12 months.

Dexus Industrial Portfolio

Dexus manages a growing, high-quality USD5.5 billion group industrial portfolio, USD2.4 billion of which sits in the Dexus portfolio. 


Key metrics                               31 December 2020 30 June 2020 
Occupancy by income                                  95.5%        95.6% 
Weighted average lease expiry (by income)        4.3 years    4.1 years 
Average incentives                                   19.7%        13.4% 
Weighted average cap rate                            5.36%        5.66%

During the six months to 31 December 2020, Dexus leased 168,749 square metres^8 of industrial space across 46 transactions. Portfolio occupancy remains high at 95.5%.

Executive General Manager, Industrial, Retail and Healthcare Stewart Hutcheon said: "Tenant demand for high quality logistics facilities in precincts that are well located near major transport hubs, continues to drive leasing success across our industrial portfolio. We are working closely with our industrial customers to support their growth across Australia."

Industrial portfolio like-for-like income growth was +1.0% (FY20: +0.1%) excluding the impact of rent relief measures and provisions for expected credit losses (including these impacts: HY21 -1.0% and FY20 +2.1%). The Dexus industrial portfolio delivered a one-year return of 12.8% to 31 December 2020 and outperformed its benchmark over the three and five-year time periods to 30 September 2020.

Developments

Dexus's group development pipeline now stands at a cost of USD11.4 billion, of which USD5.8 billion sits within the Dexus portfolio and USD5.6 billion within third party funds. Dexus group has circa USD200 million remaining to spend on its committed development projects to FY22, including the Australian Bragg Centre.

Chief Investment Officer, Ross Du Vernet said: "During the period, USD536 million of projects were added to our group committed development pipeline including the acquisition of the Australian Bragg Centre and the Ford Facility at Merrifield Business Park, and increasing the scale of existing industrial development projects underway, including the Amazon facility at the Horizon 3023 Estate at Ravenhall. We also made further progress across our city shaping developments, receiving DA approval for Waterfront Brisbane and progressing through Stage 3 of the USP at Central Place Sydney. We have the flexibility to activate these projects at the right time, subject to a level of tenant pre-commitment."

During the period, development projects at 180 Flinders Street and the 80 Collins Street (hotel component) in Melbourne were completed, in addition to 9 Custom Place at Truganina in Victoria.

Construction continues across 227,000 square metres of industrial development projects at Ravenhall, Richlands and South Granville owned by Dexus and its third party capital partners, where 90,427 square metres of leasing was secured during the period.

In the current environment, Dexus has reduced risk relating to the uncommitted city shaping developments because the existing assets on these sites are currently income producing and the majority are owned in partnership with third party capital partners, enabling Dexus to progress planning and enhance the optionality of these projects.

Transactions and trading

Dexus had an active start to FY21, announcing USD2.8 billion of contracted transactions across the group, including acquisitions and divestments in the six months to 31 December 2020.

In December 2020, Dexus settled on the sale of its 100% interest in 45 Clarence Street, Sydney realising USD530 million^6, progressing the optimisation of the portfolio composition through asset recycling.

Dexus also conditionally entered into sale agreements (subject to FIRB approval) to sell a 100% interest in 60 Miller Street, North Sydney and a 50% interest in Grosvenor Place, Sydney in which Dexus holds a 37.5% interest (including Dexus's 25% direct interest and the Dexus Office Partnership 12.5% interest).

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February 08, 2021 18:06 ET (23:06 GMT)