COVID-19 and FY20 guidance update

26 March 2020

COVID-19 and FY20 guidance update

Dexus provides the following update due to the increasing uncertainty in relation to COVID-19.

Darren Steinberg, Dexus CEO said: “We are in unprecedented and challenging times. As custodians of many buildings across Australia’s major cities, it is incumbent on us to protect our tenant base, particularly the SMEs and retailers who support our office towers and shopping precincts and are bearing the brunt of this evolving global situation.

“SMEs are the lifeblood of the country and we need to ensure we look after them, so that when we inevitably emerge from this event, they can return to normal operations as soon as possible.

“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.”

Financial position

From a balance sheet perspective, Dexus is well positioned with gearing (look-through) of 25.5%. Debt is well diversified and comprises 35% from bank debt and 65% from debt capital markets, with a debt duration of 7.4 years at 31 December 2019.

Over the past 12 months Dexus has accessed both equity and debt capital markets to provide additional funding capacity and flexibility. Dexus has $1.3 billion¹ of cash and committed undrawn bank facilities available and has limited debt refinancing requirements, with circa $400 million of debt maturing in late FY21.
All debt is senior and unsecured and no individual asset is encumbered by debt. Dexus’s principal debt covenants relate to gearing and interest cover levels. Dexus remains within all of its debt covenant limits and is below its target gearing range of 30-40%.

Dexus continues to retain its strong credit ratings of A-/A3 from S&P and Moody’s respectively.

FY20 guidance
Dexus announced its FY20 half year results on 6 February 2020. In this announcement Dexus provided FY20 full year guidance for distribution per security growth and the detailed assumptions associated with this guidance.

In the early part of the second half of FY20, Dexus’s operations have performed consistent with expectations. However, in consideration of the evolving COVID-19 situation and the uncertainty that lies ahead, the Board of Directors of Dexus Funds Management Limited have withdrawn FY20 guidance and its associated assumptions. At this time, Dexus is assessing 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 is supported by its strong financial position, a high quality property portfolio across prime CBD locations, a diversified tenant base, and an experienced management team.

A further update on business conditions will be provided when appropriate.

Authorised by the Board of Dexus Funds Management Limited.

^{1 Including settlement proceeds from the sale of the second tranche rights for GIC to acquire a further 24% interest in the Dexus Australian Logistics Trust (DALT) portfolio which are expected to be received on 1 April 2020.}