DGAP-Ad-hoc: Dexus Finance Pty Limited / Key word(s): Real Estate/Quarter Results Dexus Finance Pty Limited: September 2021 quarter update - Platform expansion in line with strategy 19-Oct-2021 / 01:28 CET/CEST Disclosure of an inside information acc. to Article 17 MAR of the Regulation (EU) No 596/2014, transmitted by DGAP - a service of EQS Group AG. The issuer is solely responsible for the content of this announcement.
Dexus (ASX: DXS)
19 October 2021
September 2021 quarter update - Platform expansion in line with strategy
Dexus today announced an update for the quarter ended 30 September 2021 which saw the continuation of COVID-19 lockdowns in Sydney and Melbourne and acceleration of the COVID-19 vaccine roll out, with restrictions easing recently.
Darren Steinberg, Dexus CEO said: "It's been an active start to the financial year, in which we have continued growth in our funds management business. We finalised the acquisition of APN Property Group and helped to deliver significant initiatives for both listed REITs through acquisitions and equity raisings.
"Despite the disruption caused by the lockdowns in Sydney and Melbourne, leasing activity has continued across our portfolio and occupancy remains above 95%. Continued evidence of a flight to quality within our leasing results highlights the demand for quality workspace in well-located CBD assets."
Consistent with Dexus's strategic focus to expand and diversify the funds management business, Dexus undertook several initiatives in an active first quarter, including acquisitions and equity raisings for DXC and Industria mentioned above. The funds business now has 20 vehicles across $25.7 billion.
Dexus Healthcare Property Fund (DHPF) recently acquired Arcadia Pittwater Private Hospital and day rehabilitation facility located in Warriewood on the Northern Beaches of Sydney, growing DHPF's funds under management to over $1.3 billion across nine assets. Dexus now has $1.8 billion3 of healthcare property and investments across the group.
Dexus Real Estate Partnership 1 has received first capital commitments, with multiple closes anticipated over the next 12 months. The fund is in the process of executing its first two investments and is actively pursuing further opportunities.
In April 2021 when unitholders in both Dexus Wholesale Property Fund (DWPF) and AMP Capital Diversified Property Fund (ADPF) approved the merger of the two funds, ADPF was subject to a meaningful volume of redemption requests from existing ADPF Unitholders, which Dexus expects to satisfy on a pro rata basis over an approximate 18-month period through the divestment of a number of assets. During the quarter DWPF completed two asset sales from the portfolio of Dexus ADPF Identified Assets. This will enable the first partial settlement of redemptions of approximately $620 million to be paid to Dexus ADPF Unitholders in the coming quarter.
Environmental, Social and Governance (ESG) update
Dexus has once again been recognised as a global leader in sustainability by Global Real Estate Sustainability Benchmark (GRESB) in its 2021 Real Estate Assessment, with Dexus and Dexus Office Trust (DOT) ranking 1st in Public Disclosure for Australian Office entities, and DWPF was named Overall Regional Sector Leader for Diversified Office and Retail entities. DHPF also ranked 1st in Healthcare Centres and 2nd in Developments for Non-Listed Healthcare entities. In addition, DXS, DWPF and DOT each retained a 5 Star GRESB rating, placing their portfolios in the top 20% of all GRESB participants globally.
Dexus Office Portfolio
Over the quarter to 30 September 2021, a total of 45,138 square metres of office space was leased across 73 transactions. In addition, 323 square metres4 was leased across one transaction at an office development. Dexus office portfolio occupancy reduced marginally to 95.1%.
Key leasing activity included:
The lockdowns have extended for longer than anticipated back in early August, however enquiry volumes have remained buoyant, predominantly driven by the finance, government, IT and business services sectors. The path to recovery is clearer, with the return to work expected to gain momentum from early CY22. In addition, during the quarter a number of customers were secured from lower quality buildings, a continuation of the trend observed in FY21. While companies will continue to experiment with different workplace models, the majority see the office as a very important part of their organisational strategy.
Average incentives in the quarter were elevated compared to FY21, driven by larger deals secured in lockdown-affected markets. As the return to work takes hold from early 2022, we expect incentives to moderate once again and continue to see the potential for incentives to decline in Sydney and Premium grade Melbourne assets, albeit the latest lockdowns could slow the rate of improvement. Dexus Industrial Portfolio
Over the quarter to 30 September 2021, 53,326 square metres4 of industrial space was leased across 15 transactions. In addition, 30,257 square metres4 was leased across 6 transactions at industrial developments.
Dexus industrial portfolio occupancy reduced slightly to 97.2% following the completion of the development at 425-479 Freeman Road, Richlands. WALE increased slightly to 4.6 years due to development completions and acquisitions.
Key leasing activity included:
Development and Trading
Dexus's group development pipeline increased to $15.4 billion, of which $9.0 billion sits within the Dexus portfolio and $6.4 billion within third party funds.
During the quarter, Dexus completed a 51,600 square metre industrial development at Lot 401 Innovation Drive, Mickleham in Victoria and progressed five other industrial projects, all in Victoria.
Continuing an active year of transactions, $1.6 billion of acquisitions were undertaken across the group in the industrial, healthcare and convenience retail sectors. The recently announced industrial portfolio acquisition including Jandakot Airport in Perth provides a meaningful industrial footprint in Western Australia and new Sydney product to service our growing customer base, with scope to enhance returns through development and the introduction of additional third party capital.
Post 30 September, the Dexus Industrial Partnership completed the circa $123 million acquisition of 113-153 Aldington Road in Kemps Creek, NSW.
Summary and outlook
Darren Steinberg said: "Strong momentum has continued across our diversified property platform in the first quarter of FY22. Moving forward, we will continue to deliver superior risk-adjusted returns for investors by executing on our strategic objectives of increasing the resilience of portfolio income streams, while expanding and diversifying the funds management business.
"It is encouraging that with high vaccination rates there is a roadmap out of the intermittent lockdowns that Australia has experienced over the past 18 months, and with the Australian economy in a good position we expect office markets to strengthen from early next year."
Dexus maintains its guidance of delivering distribution per security growth of not less than 2% for the 12 months ended 30 June 2022 based on current expectations relating to COVID-19 and barring unforeseen circumstances.
Authorised by Brett Cameron, General Counsel and Company Secretary of Dexus Funds Management Limited.
For further information please contact:
 Excludes development leasing. FY21 industrial incentives were previously stated including development leasing at 19.1%. Including development leasing, industrial incentives were 15.3% for the quarter to 30 September 2021.
Information and Explanation of the Issuer to this News:
Dexus (ASX: DXS) is one of Australia's leading fully integrated real estate groups, managing a high-quality Australian property portfolio valued at $42.5 billion. We believe that the strength and quality of our relationships will always be 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 $17.5 billion of office, industrial and healthcare properties, and investments. We manage a further $25.0 billion of office, retail, industrial and healthcare properties for third party clients. The group's $15.4 billion development pipeline provides the opportunity to grow both portfolios and enhance future returns. Sustainability is integrated across our business, and our sustainability approach is the lens we use to manage emerging ESG risks and opportunities for all our stakeholders. Dexus is a Top 50 entity by market capitalisation listed on the Australian Securities Exchange and is supported by more than 30,000 investors from 23 countries. With over 35 years of expertise in property investment, funds management, asset management and development, we have a proven track record in capital and risk management and delivering superior risk-adjusted returns for investors. www.dexus.com
Dexus Funds Management Ltd ABN 24 060 920 783, AFSL 238163, as Responsible Entity for Dexus (ASX: DXS) Level 25, 264 George Street, Sydney NSW 2000
19-Oct-2021 CET/CEST The DGAP Distribution Services include Regulatory Announcements, Financial/Corporate News and Press Releases. Archive at www.dgap.de
|Company:||Dexus Finance Pty Limited|
|264 George Street|
|Phone:||+61 2 9017 1100|
|Fax:||+61 2 9017 1101|
|Listed:||Regulated Unofficial Market in Frankfurt|
|EQS News ID:||1241643|
|End of Announcement||DGAP News Service|
1241643 19-Oct-2021 CET/CEST