Our response to COVID-19
The COVID-19 pandemic has had a profound impact on the economy and the real estate sector, and we acknowledge that no business, including Dexus, will be immune from the impacts of this crisis.
Fortunately, as at 31 March 2020 our property portfolio is in strong shape and we’ve entered this crisis in a robust position with high portfolio occupancy, limited new supply in our key CBD office markets and a strong balance sheet.
We know this is a challenging time for many of our valued customers (tenants) and appreciate we are in this together. We are committed to helping our customers and consistent with the government’s Code of Conduct, our focus is on prioritising assistance to support the viability of our small business customers.
In April 2020, the Australian Government introduced a commercial Code of Conduct and set of principles which applies to commercial tenancies (including retail, office and industrial) for small and medium enterprise customers (SMEs) with turnover of less than $50 million experiencing financial stress or hardship as a result of the COVID-19 pandemic.
Dexus is currently working with its customers to respond to the immediate and longer-term consequences of the COVID-19 crisis. While there is no one size fits all approach, Dexus’s immediate priority is to support SMEs, including the city retailers that support the office community, who have been significantly impacted by the coronavirus pandemic, and is progressing discussions with these customers on various forms of rental relief.
From those customers who have requested rental relief, Dexus estimates SMEs (office, retailers and industrial) with turnover of less than $50 million to comprise approximately 8% of total property portfolio income and is working through if they qualify for relief. Dexus also acknowledges the significant business interruptions and impacts to its larger customers and thanks them for supporting the approach to prioritise assistance to small businesses.
Our response to COVID-19
As a priority we remain focused on the health, safety and wellbeing of our employees and the people in our buildings.
We have adopted internal business continuity measures to minimise the disruption to our business and have implemented government guidelines to reduce the spread of COVID-19 at our properties.
In response to the current environment brought on by COVID-19, we have implemented a broad range of cost reduction measures that are prudent for our business.
Unfortunately, a number of roles will be impacted, largely as a result of the loss of the Australian Mandate portfolio managed on behalf of the NSW State Treasury Corporation, which will result in some redundancies.
Dexus has also implemented annual leave initiatives, a freeze on recruitment and non-essential consultancy spend and temporary reductions in remuneration.
The temporary reductions in remuneration affect director and executive level roles and have been approved by the Board for an initial three month period effective 1 April 2020 which will be reviewed at the end of June 2020. These include a:
− 15% reduction in base fees for Non-Executive Directors
− 15% reduction in base salary for the CEO
− 10% reduction in base salary across all other executive level roles
On 26 March 2020, Dexus withdrew its FY20 full year guidance for distribution per security growth and the detailed assumptions associated with this guidance. At this time, Dexus continues to assess the impact of COVID-19 on its operating environment including the assistance that it may need to provide to its tenant base to ensure the portfolio is well placed to perform when this event passes.
Dexus Research has prepared a COVID-19 Australian real estate market update. The purpose of this report is to provide an update on the impacts of the evolving situation relating to COVID-19 on real estate markets in Australia. To download the report, please click on the button below.
For enquiries about our response to COVID-19 or to contact our media team, please use the forms provided and we will respond shortly.