DGAP-Ad-hoc: Dexus Finance Pty Limited / Key word(s): AGM/EGM/Real Estate Dexus Finance Pty Limited: 2021 AGM Chair and CEO address 19-Oct-2021 / 05:27 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
2021 AGM Chair and CEO Address
Dexus releases the attached Chair and CEO address for the Dexus Annual General Meeting (AGM) which is being held today at 2.00pm (AEDT).
The meeting will be webcast and can be viewed by using the following link: https://agmlive.link/DXS21
To view the full ASX release and presentation, download the PDF available at https://www.dexus.com/investor-centre/ results-and-reporting/asx-announcements
Authorised by the Board of Dexus Funds Management Limited
For further information please contact:
Rowena Causley Louise Murray
Senior Manager, Investor Relations Senior Manager, Corporate Communications
+61 2 9017 1390 +61 2 9017 1446
+61 416 122 383 +61 403 260 754
Dexus 2021 Annual General Meeting
Good afternoon everyone and welcome to our 2021 Annual General Meeting. I'm Richard Sheppard, Chair of the Board of Directors of Dexus Funds Management Limited.
On behalf of the Dexus Board, I appreciate your understanding of the changes we have made to the meeting format. It is encouraging to see the increased vaccination rates across the country and that restrictions have recently started to ease for vaccinated people in New South Wales, with a further easing in the coming months. We hope that next year we will be able to hold this meeting in person at one of our Dexus Place facilities, which is our preferred format.
I'll table my appointment as Chair of today's meeting and open the meeting.
I would like to acknowledge the Traditional Custodians of the land on which we are presenting from today, and pay our respects to their Elders past, present and emerging. I would also like to extend that respect to, and welcome, any First Nations people who are joining our meeting today. This acknowledgement is important to us as we are starting our journey to implement the first stage of our Reconciliation Action Plan which is focused on initiatives that enhance our connection with First Nations peoples and promote reconciliation across our operations and communities.
I will start today's presentation by looking at our business. Dexus is one of Australia's leading real estate groups, managing a high-quality Australian property portfolio valued at USD42.5 billion - up from USD32 billion last year.
This includes our USD17.5 billion investment property portfolio and our USD25.0 billion funds management business. In addition, we have a USD15.4 billion group development pipeline that will create future value. We have built significant scale across the office, industrial, healthcare and retail property sectors and believe our capabilities across these asset classes, along with our engaged workforce, enables us to stay connected to our purpose which is to create spaces where people thrive.
We released our 2021 Annual Report and Sustainability Report in August which reinforce our focus on creating long-term value from a financial and non-financial perspective and covers our key ESG achievements. Both reports are available on our website.
Each year, our strategy review process looks at our existing strategy and how we can better position Dexus to capitalise on new opportunities and be prepared for challenges. The pandemic has reinforced the importance of having a diversified business model, a high-quality property portfolio and a strategy that can deliver through the cycle.
Throughout the year, we maintained our focus on the strategic initiatives of increasing the resilience of portfolio income streams, expanding and diversifying the funds management business, and progressing the group development pipeline.
These initiatives have now been incorporated into revised strategic objectives that will guide the next stage of our business evolution. They include investing in sustainable income streams that provide resilience through the cycle, and being identified as the real estate investment partner of choice by expanding and diversifying our funds management business.
The strength of Dexus's balance sheet, our access to pools of capital and an agile, solution-based culture all enable us to deliver our strategy, along with our prudent approach to capital management and commitment to sustainability. The delivery of our strategy also requires us to maintain and develop a strong and experienced Executive team, which I will have more to talk about shortly.
As I just mentioned, one of our key areas of focus has been to grow and diversify the funds management business.
During the year we implemented some major strategic initiatives which grew the funds management business and positioned it for future growth including securing the merger of AMP Capital Diversified Property Fund with Dexus Wholesale Property Fund, simplifying the Dexus corporate structure (which you as Security holders approved earlier in the year), and acquiring APN Property Group.
Our funds management business provides a capital efficient way to increase our exposure to growth sectors. Our focus on growing and diversifying this business has resulted in funds under management increasing to USD25 billion dollars across diversified capital sources incorporating wholesale pooled funds, listed REITs, joint ventures and real estate securities. Over the past nine years our funds business has achieved an 18% compound annual growth rate.
Notably, our healthcare fund now stands at more than USD1.3 billion, and during the year we attracted a new capital partner to form a partnership to invest in an interest of 1 Bligh Street in Sydney. We are now integrating the APN Property Group business onto our platform and leveraging our expertise to support the strategies of those funds.
Dexus's activity during the year drove a solid financial result. From a challenging starting position during the pandemic, we provided guidance in October 2020 for a distribution per security amount that was consistent with last year. The expectation was that the operating environment would remain subdued, that our financial performance would be impacted by asset sales to maintain our balance sheet strength, and we were in the middle of the pandemic and its associated challenges and uncertainties.
A combination of better-than-expected outcomes across the property portfolio, as well as delayed settlements of asset sales and other initiatives, enabled us to announce in May this year an upgrade in our guidance to 3% growth in distribution per security. We delivered this guidance, with a full year distribution of 51.8 cents per security - resulting in a 5.5% compound annual growth rate since FY12 - or to put a bit differently, distributions have grown from 32.1 cents per security in FY12.
This result was achieved despite the ongoing impacts of the pandemic on our customer base and the extension of the government mandated National Commercial Code of Conduct, which saw rent relief provided to small and medium sized customers impacted by COVID-19.
We delivered a Return on Contributed Equity of 8.3% driven largely by Adjusted Funds From Operations and revaluation gains from completed developments at 180 Flinders Street, Melbourne and our industrial estate at Ravenhall, Victoria.
Our strong balance sheet was maintained with gearing well below our target range of 30-40%.
On behalf of the Board, I would like to acknowledge the efforts of Management and our employees in achieving these financial outcomes in what has been a very difficult operating environment.
Our properties demonstrated their resilience against the background of the pandemic and the associated lockdowns. Significant leasing was achieved over the year which resulted in office and industrial portfolio occupancy levels remaining high - and Mr Steinberg will discuss our current position on this shortly.
Obviously, the question that people are asking about office is: "what does the future hold?". Our experience based on leasing activity over the past year has shown that offices are still in demand, with a number of companies centralising into quality assets in the CBD from suburban markets.
The feedback we are getting from our customers is that workplace flexibility is here to stay, but to different degrees depending on the company. Many are adopting a blended or hybrid model that allows greater flexibility for employees to work from home but where offices continue to play an important role. The office will retain its role as a hub for collaboration, social interaction, career development and culture. This trend has some time to play out as our customers explore how to create the optimal blend of the physical and virtual workplace.
And with Prime grade assets making up 94% of our office portfolio, we have seen asset values supported through transactions, and in challenging markets tenants choosing to upgrade to better quality buildings.
We moved early in the pandemic, bringing forward some planned asset sales to enhance our financial strength at a time of heightened risk. This also ensured that we could fund the significant pipeline of growth opportunities in the development and funds business.
As you can see from this slide, we have been active in redeploying capital into opportunities across a range of sectors and into strategic transactions, all of which we believe offer attractive risk adjusted returns.
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