14 February 2018

2018 Half year results – Positive momentum

Dexus today announced a strong result for the first six months of FY18 and upgraded its guidance for distribution per security growth for FY18.

Darren Steinberg, Dexus Chief Executive Officer said: “Our core office markets across the country are all showing positive leasing activity and the latest record employment numbers support our view of continued positive momentum over the next few years.

"We have seen more evidence of strong take up in Sydney and Melbourne and have converted significant levels of enquiry to leasing commitments at 240 St Georges Terrace in Perth.

“Our focus on enhancing returns through the activation of office development projects in Melbourne, Brisbane and Perth enables us to leverage our leasing and development expertise and is an efficient use of capital at this point in the cycle.

“Our funds continue to deliver strong performance and we completed the first equity raise for the new Healthcare Wholesale Property Fund, generating interest in the sector from global and domestic investors, and adding three new clients onto our platform.

“We advanced opportunities that will contribute to future trading profits and are confident of securing our FY18 target.

“From an employee perspective, we achieved an engagement score of 87% in our latest Willis Towers Watson employee engagement survey, which is eight percentage points higher than the Australian National Norm and two percentage points above the Global Property and Asset Management Norm.”

FINANCIAL HIGHLIGHTS

  • Net profit after tax of $997.1 million, up 39.3% on the previous corresponding period
  • Funds from Operations1 (FFO) of $321.8 million, up 8.7% on the previous corresponding period
  • Underlying FFO per security (FFO excluding trading profits) of 30.2 cents, up 1.7% on the previous corresponding period
  • Distribution per security of 23.7 cents, up 9.2% on the previous corresponding period
  • Reduced the Group Management Expense Ratio to 33 basis points
  • Completed Dexus’s largest ever debt raising of $653 million, achieving Dexus’s longest average duration for a debt issue of 13.5 years and extending Dexus’s total debt duration to 7.0 years
  • Gearing (look-through)2 of 26.5%

OPERATIONAL HIGHLIGHTS

Property portfolio

  • One-year unlevered total return of 15.8% in the Dexus office portfolio and 15.4% in the Dexus industrial portfolio
  • High office portfolio occupancy3 of 96.5% with Sydney office leasing spreads4 of +16%
  • Continued industrial leasing activity, increasing industrial portfolio occupancy3 to 97.5%
  • Activation of three office projects in Dexus’s $2.1 billion development pipeline

Funds Management

  • Top quartile performance for Dexus Wholesale Property Fund (DWPF) over one, three, five, seven and ten years, and completed a $300 million equity offer, following DWPF’s acquisition of a 25% interest in the MLC Centre
  • One-year unlevered total property return of 16.5% for the Dexus Office Partnership, and an annualised unlevered property return of 15.3% since inception
  • Completed the first equity raise for the Healthcare Wholesale Property Fund
  • Acquired 56 Berry Street, North Sydney and exchanged contracts to sell 11 Waymouth Street, Adelaide for the Dexus Office Partnership5
    Trading
  •  $14.3 million of trading profits net of tax
  • Advanced the trading pipeline through progressing development proposals to contribute to profits in future years