Dexus Finance Pty Limited
Dexus Finance Pty Limited: March 2019 quarter portfolio update
Dexus Finance Pty Limited / Key word(s): Quarter Results/Quarter Results Dexus (ASX: DXS) ASX release 30 April 2019 March 2019 quarter portfolio update Dexus today announced its property portfolio operational update for the quarter ended 31 March 2019. Darren Steinberg, Dexus Chief Executive Officer said: “This quarter, we have achieved milestones across leasing, development, funds management, transactions and capital management. “We also announced the sale out of a non-core market and increased investment into a core market with the acquisition of the MLC Centre in Sydney, consistent with our commitment to drive investment performance for Dexus investors and our capital partners.” Highlights
Dexus office portfolio
Executive General Manager, Office, Kevin George said: “Leasing enquiry remained robust over the quarter despite uncertainty as a result of external factors, including the NSW State election and upcoming Federal election. Enquiry over the past quarter has converted to significant leasing activity in Sydney and Perth, including our key office developments at 100 Mount Street in North Sydney and 240 St Georges Terrace in Perth. “Our portfolio occupancy remains very high however we have the opportunity to reset more than 115,000 square metres of vacant or expiring space across our Sydney properties up to the end of FY21. This represents approximately 17% of our total office income.” Over the quarter to 31 March 2019, a total of 61,099 square metres1 of office space was leased across 93 transactions in the core portfolio and in the development projects that are underway. Notable activity during the quarter included:
While FY19 distribution guidance remains unchanged, Dexus notes that its target for FY19 office like-for-like growth may be affected by a tenant dispute in Queensland. While Dexus expects receipt of proceeds from this tenant, it notes that timing is uncertain. This space has already been leased to a new tenant that is now in occupation. Dexus’s revised target for FY19 office like-for-like income growth is now circa 3%. Dexus industrial portfolio
Over the quarter to 31 March 2019, 46,193 square metres1 of industrial space was leased across 19 transactions, with notable activity including:
Occupancy and WALE (by income) have been maintained at 96.9% and 5.0 years respectively, while forward leasing has mitigated future expiry risk with minimal downtime resulting in FY20 expiries reducing from 14.2% at 30 June 2018 to 7.7% at 31 March 2019. Transactions In March 2019, Dexus and DWPF entered into an agreement to jointly acquire the remaining 50% interest in the MLC Centre, 19 Martin Place, Sydney for a total price of $800 million[4], with the acquisition settling on 1 April 2019. The acquisition provides opportunities to:
Dexus funded its share of the MLC Centre acquisition through the issue of A$425 million of Guaranteed Exchangeable Notes, further diversifying the Group’s funding sources through accessing an attractively priced new source of capital. Dexus and Dexus Australian Logistics Trust settled on the acquisition of the 9-hectare brownfield site at 425 Freeman Road, Richlands, QLD previously announced to the Australian Securities Exchange (ASX) in August 2018. In addition, Dexus exchanged contracts to sell 11 Talavera Road, Macquarie Park for $231.2 million2 and in April exchanged contracts to sell Finlay Crisp Centre[5], Canberra for $62 million. The sale of these properties is consistent with our strategy of divesting properties from non-core markets and reinvesting proceeds in development and acquisition opportunities in core markets. Development Dexus progressed its $5.0 billion group development pipeline of which $2.6 billion sits within the Dexus portfolio and $2.4 billion within the Funds Management business. Notable activity during the quarter included:
Corporate Responsibility and Sustainability Dexus was named by WGEA as an Employer of Choice for Gender Equality recognising Dexus’s active commitment and progress towards achieving gender equality in its workplace through embedding organisation-wide flexible work practices, tailored parental leave policies to support women and men, and robust analysis and correction of gender pay gaps. Dexus was also awarded a Gold Class Sustainability Award in the RobecoSAM 2019 Sustainability Yearbook, recognising leadership in environmental performance and reflecting Dexus’s commitment to addressing climate change impacts including the goal to achieve net zero emissions by 2030. Funds management DWPF undertook an equity raising to fund its acquisition of an additional 25% interest in the MLC Centre acquisition. The offer raised approximately $340 million of equity, attracting six new investors and further diversifying DWPF’s unitholder base. HWPF has made significant progress in its capital raising efforts. Post quarter end, HWPF secured a major equity commitment of $100 million which is subject to FIRB approval. The commitment will enable HWPF to acquire[6] the North Shore Health Hub – Stage 1 of the development at 12 Frederick Street, St Leonards currently held in Dexus’s Trading portfolio. On 5 October 2018 Dexus announced to the ASX that it had entered into conditional agreement to acquire an interest in Heathley Limited and the Heathley Healthcare REIT, a new stapled vehicle proposed to list on the ASX. The agreement was subject to a successful Initial Public Offering, and following discussions with Heathley management, Dexus confirms that it will no longer be progressing with this investment. FY19 guidance Darren Steinberg said: “Having achieved a solid third quarter result for FY19, we are well positioned to continue to deliver distribution growth for our investors, with our portfolio benefiting from high portfolio occupancy and continued demand for quality workspace.” Dexus reaffirms its market guidance[7] for the 12 months ending 30 June 2019 for distribution per security growth of circa 5%, with the distribution payout ratio remaining in line with free cash flow. [2] Net sale proceeds are before transaction costs. [3] Excluding development leasing. [4] Reflects acquisition price for remaining 50% interest and excludes acquisition costs. [5] The property is owned by the Dexus Office Partnership (“Partnership”), in which Dexus holds a 50% interest. Settlement is expected in July 2020. [6] Subject to HWPF Board and Advisory Committee approvals. [7] Barring unforeseen circumstances, guidance is supported by the following assumptions: Impacts of announced divestments and acquisitions; FFO per security growth of circa 3%, underlying FFO per security growth of circa 3% underpinned by Dexus office portfolio like-for-like growth of circa 3%, Dexus industrial portfolio like-for-like income growth of circa 8%, management operations FFO broadly in line with FY18; cost of debt of circa 4%; trading profits of circa $35 million net of tax; maintenance capex, cash incentives, leasing costs and rent free incentives of $155-165 million; and excluding any further transactions. For further information please contact: Investor Relations Media Relations
Information and Explanation of the Issuer to this News: About Dexus Dexus is one of Australia’s leading real estate groups, proudly managing a high quality Australian property portfolio valued at $28.9 billion. We believe that the strength and quality of our relationships is 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 $13.9 billion of office and industrial properties. We manage a further $15.0 billion of office, retail, industrial and healthcare properties for third party clients. The group’s $5.0 billion development pipeline provides the opportunity to grow both portfolios and enhance future returns. With 1.7 million square metres of office workspace across 53 properties, we are Australia’s preferred office partner. Dexus is a Top 50 entity by market capitalisation listed on the Australian Securities Exchange (trading code: DXS) and is supported by 27,000 investors from 19 countries. With more than 30 years of expertise in property investment, development and asset management, we have a proven track record in capital and risk management, providing service excellence to tenants and delivering superior risk-adjusted returns for investors. www.dexus.com Download the Dexus IR app
30-Apr-2019 CET/CEST The DGAP Distribution Services include Regulatory Announcements, Financial/Corporate News and Press Releases. |
Language: | English |
Company: | Dexus Finance Pty Limited |
264 George Street | |
2193 Sydney | |
Australia | |
Phone: | +61 2 9017 1100 |
Fax: | +61 2 9017 1101 |
E-mail: | ir@dexus.com |
Internet: | www.dexus.com |
ISIN: | XS1961891220 |
WKN: | A2RZHG |
Listed: | Regulated Unofficial Market in Frankfurt |
EQS News ID: | 805119 |
End of Announcement | DGAP News Service |