26 September 2008
The Manager
Australian Stock Exchange Limited
20 Bridge Street
Sydney NSW 2000
Dear Sir/Madam
DEXUS Funds Management Limited
ABN 24 060 920 783
AFSL: 238163
Level 9, 343 George Street
Sydney NSW 2000
PO Box R1822
Royal Exchange NSW 1225
Telephone 02 9017 1100
03 8611 2930
Direct
03 8611 2910
Facsimile
Email: karol.oreilly@dexus.com
DEXUS Property Group (ASX: DXS)
Annual Report for the period ending 30 June 2008
DEXUS Funds Management Limited, as responsible entity for DEXUS Property Group (DXS),
provides a copy of the DEXUS Property Group 2008 Annual Report. We also provide a copy of the
letter to DEXUS security holders who have not elected to receive the 2008 Annual Report
advising them that this is available on our web site at www.dexus.com
For further information, please contact:
Investor Relations:
Media Relations:
Karol O’Reilly
(03) 8611 2930
Emma Parry
(02) 9017 1133
Yours sincerely
Tanya Cox
Company Secretary
26 September 2008
DEXUS Funds Management Limited
ABN 24 060 920 783
AFSL: 238163
Level 9, 343 George Street
Sydney NSW 2000
PO Box R1822
Royal Exchange NSW 1225
Telephone 61 2 9017 1100
61 2 9017 1132
Facsimile
Dear Investor
We are pleased to advise you that the 2008 Annual Report for DEXUS Property Group is now available on
our website at www.dexus.com
The quality of our portfolio combined with our focus on active portfolio management and our prudent and
conservative financial management approach, has delivered solid results during the year ending June 2008
and has contributed to the further strengthening of our balance sheet.
During the year, our portfolio continued to deliver strong results with operating income of $498 million,
occupancy levels remaining strong at 93.7% and average lease durations at 4.8 years overall. Throughout
the year we independently re-valued 75% of the portfolio which saw an increase in book value of
$185 million to total $8.9 billion.
Across the Group, assets under management grew by 12.5% to $15.3 billion. DEXUS is one of the largest
listed property trusts, the market leader in office space and the third largest provider of industrial space
in Australia.
Earnings from operating activities of $498 million resulted in a distribution of 11.9 cents per stapled
security, a 5.3% increase on last year’s distribution. Transactions in the year and continued proactive debt
management resulted in a reduction in gearing to 33.2% down from 35.6% at 30 June 2007.
DEXUS acquired $762 million of industrial properties in Australia, the United States and Canada during the
year to 30 June 2008. In addition, we have continued to grow the development pipeline in Australia and
North America with more than 700,000 square metres of new space currently planned for development or
under construction, providing substantial new lettable area for future growth.
We have commenced the development of two major office towers at 123 Albert Street, Brisbane, QLD and
1 Bligh Street, Sydney NSW and have a number of key industrial developments underway in Australia, at
Laverton North and Greystanes, and in the US.
In 2009, our strategic focus will be to continue to deliver solid performance from our world-class portfolio
and build on our leadership positions in office and industrial. While economic conditions will continue to
be difficult, DEXUS is well positioned with a clear strategy, proven management team and quality
portfolio, to take advantage of opportunities this cycle creates to add value for investors.
Page 2
We will continue to look at opportunities to leverage our core competencies and operate across more of
the value chain, while delivering service excellence to our customers and sustainable outcomes for our
investors, the community and our people.
Barring any unforseen circumstances, we expect that distributions in 2009 will increase by approximately
1.7% from 11.9 cents to 12.1 cents per security, inclusive of 0.2 to 0.3 cents reflecting gains realised
through our development processes.
If you wish to download a copy of the 2008 DEXUS Property Group Annual Report please go to our website
at www.dexus.com
Follow the links to the Investor Centre, DEXUS Property Group and then to Reports, or alternatively the
direct address is: http://www.dexus.com/Investor-Centre/DXS/Reports.aspx
If you have any questions or queries about DEXUS Property Group, please contact Investor Relations on
02 9017 1134.
For queries regarding your holding, please contact Link Market Services on 1800 819 675 or access your
holding details via our Investor Centre at http://www.dexus.com/Investor-Centre/DXS.aspx
I would like to thank you for your support during the year. We look forward to a continued strong
performance in next year.
Yours sincerely
Victor P. Hoog Antink
Chief Executive Officer
DEXUS Property Group
DEXUS Property Group
Annual Report 2008
CONTENTS
REDEFINING THE PROPERTY SKYLINE
DELIVERING ON STRATEGY
SELECT MARKETS – STRATEGIC LOCATIONS
FINANCIAL HIGHLIGHTS
LETTER FROM THE CHAIR
CHIEF EXECUTIVE OFFICER’S REPORT
OUR PORTFOLIO
FUNDS MANAGEMENT REPORT
ABOUT DEXUS
BOARD OF DIRECTORS
CORPORATE RESPONSIBILITY AND
SUSTAINABILITY REPORT
CORPORATE GOVERNANCE STATEMENT
FINANCIAL REPORTS
INVESTOR INFORMATION
DIRECTORY
2
4
6
8
10
12
18
30
32
34
36
56
64
142
148
DEXUS Property Group (formerly DB RREEF Trust)
DXFM means DEXUS Funds Management Limited.
DEXUS Property Group, the Group, DEXUS or DXS means a stapled security comprising one unit in
DEXUS Diversified Trust, DEXUS Industrial Trust, DEXUS Office Trust and DEXUS Operations Trust.
DEXUS Holdings means DEXUS Holdings Pty Limited.
Front cover: Artist’s impression of 1 Bligh Street, Sydney
Inside cover: 30 The Bond, Hickson Road, Sydney
OUR VISION IS TO BE A LEADING, DIVERSIFIED PROPERTY
OWNER, MANAGER, DEVELOPER IN AUSTRALIA AND
SELECTED INTERNATIONAL MARKETS, PROVIDING
WORLD-CLASS PROPERTY SOLUTIONS AND ACHIEVING
OPTIMAL OUTCOMES FOR OUR STAKEHOLDERS.
REDEFINING THE PROPERTY SKYLINE
Chief executive officer’s report (continued)
Artist’s impression of 1 Bligh Street, Sydney
2 DEXUS PROPERTY GROUP ANNUAL REPORT 2008
OUR STRATEGY IS TO:
OWN
› A WORLD-CLASS QUALITY PORTFOLIO
› STRATEGIC LOCATIONS IN AUSTRALIA
AND SELECT INTERNATIONAL MARKETS
› BUILD ON OUR LEADERSHIP POSITIONS
IN OFFICE AND INDUSTRIAL
MANAGE
› BE A LEADER IN PROPERTY MANAGEMENT,
DELIVERING SERVICE EXCELLENCE
› TAKING A PROACTIVE MANAGEMENT APPROACH
› MAXIMISING INVESTOR RETURNS
DEVELOP
› TAILORING PROPERTIES TO TENANT NEEDS
› WORLD-CLASS DESIGN
› SUSTAINABLE PERFORMANCE
› HIGH QUALITY DEVELOPMENT PIPELINE
DEXUS PROPERTY GROUP ANNUAL REPORT 2008 3
DELIVERING ON STRATEGY
WE CONTINUED TO
DELIVER ON OUR
STRATEGY VIA KEY
INITIATIVES AND
ACHIEVEMENTS
IN 2007/2008
2007
2008
View from Southgate Complex, Melbourne
4 DEXUS PROPERTY GROUP ANNUAL REPORT 2008
OCTOBER
› Disposal of five
retail assets to
third party funds
platform for
$950 million
› Acquired residual
20% interest in
CalPERS US
portfolio
DECEMBER
› Acquired strategic
industrial estate in
Greystanes, NSW
› Acquired Whirlpool
distribution centre
in Toronto, Canada
› Sold 50% of Coles
distribution facility
to mandate client
JANUARY
› Listed on the
Australian SAM
Sustainability Index
› Achieved first
listing on the
Goldman Sachs
JBWere Climate
Disclosure
Leadership Index
FEBRUARY
› Fully internalised
management platform
› Re-branded to
DEXUS Property Group
› Secured Rio Tinto as
major tenant for 123
Albert Street, Brisbane
and construction
commenced
MARCH
› 1 Bligh Street,
Sydney construction
commenced
› Office portfolio
supported Earth Hour
with 100% building
participation
MAY
› Signed innovative
water harvesting
agreement at
Greystanes
development
DEXUS PROPERTY GROUP ANNUAL REPORT 2008 5
SELECT MARKETS – STRATEGIC LOCATIONS
FRANCE AND GERMANY
AUSTRALIA
NEW ZEALAND
INDUSTRIAL PROPERTIES
OFFICE PROPERTIES
RETAIL PROPERTIES
2008
2007
176
29
1
162
30
6
6 DEXUS PROPERTY GROUP ANNUAL REPORT 2008
6 COUNTRIES
3 CONTINENTS
UNITED STATES OF AMERICA AND CANADA
2008
2007
206
$8.9b
93.7%
198
$9.0b
96.7%
818,000 1,152,000
4,992
5,180
DEXUS PROPERTY GROUP ANNUAL REPORT 2008 7
PORTFOLIO HIGHLIGHTS
PROPERTIES
PORTFOLIO VALUE
PORTFOLIO OCCUPANCY
SQM LEASED PER YEAR
TENANTS
$9.5b
$9.3b
$8.3b
$7b
2005
2006
2007
2008
FINANCIAL HIGHLIGHTS
Chief executive officer’s report (continued)
$9.3b
TOTAL ASSETS
$498m
OPERATING EARNINGS
Members of the DEXUS Executive team at 321 Kent Street, Sydney
8 DEXUS PROPERTY GROUP ANNUAL REPORT 2008
$15.3b
FUNDS UNDER MANAGEMENT
11.0c
11.3c
10.5c
11.9c
2005
2006
2007
2008
11.9C
DISTRIBUTIONS PER SECURITY
DEXUS PROPERTY GROUP ANNUAL REPORT 2008 9
Chief executive officer’s report (continued)
LETTER FROM
THE CHAIR
L to R: CEO Victor Hoog Antink and Chair Christopher Beare at 343 George Street, Sydney
10 DEXUS PROPERTY GROUP ANNUAL REPORT 2008
DEXUS PROPERTY GROUP CONTINUES TO BE ONE OF AUSTRALIA’S LARGEST, DIVERSIFIED
PROPERTY GROUPS WITH TOTAL FUNDS UNDER MANAGEMENT OF APPROXIMATELY
$15.3 BILLION AS AT 30 JUNE 2008, AN INCREASE OF 12.5% DURING THE YEAR.
DEXUS continues to be one of Australia’s largest, diversified
property groups with total funds under management of
approximately $15.3 billion as at 30 June 2008, an increase
of 12.5% during the year.
The Group comprises approximately $8.9 billion of direct
property in Australia, New Zealand, the United States,
Canada and Europe and a third party funds management
business with approximately $6.4 billion of assets in
Australia and New Zealand.
The market outlook is for continued volatility and challenging
times ahead. DEXUS however, is well positioned to face these
tough operating conditions and we will continue to focus on
managing the fundamentals, extracting value from our current
portfolio and positioning DEXUS for growth.
On behalf of the Board, I would like to thank you for your
support over the past 12 months and look forward to
reporting back to you next year on the continuing growth
and development of DEXUS Property Group.
Yours sincerely
Christopher T Beare
Chair
25 September 2008
Dear Investor
I am pleased to present this, my fourth, annual report for
DEXUS Property Group since stapling and the first as a fully
internalised property group. This financial year has seen a
significant downturn in the local and international economy
and the property sector has in turn been impacted with
considerable market pressure and volatility on all listed stock
prices. DEXUS Property Group has not been immune from
this downturn. However, it is important to note that our share
price performance relative to our peers is favourable, which is
a reflection of our high quality portfolio, strong financials and
our approach to prudent management.
I am also very pleased to report that against these tough
market conditions, DEXUS has continued to deliver
strong results, creating future income streams and
extracting value across the portfolio.
Highlights for the year included:
(cid:132)
Continued active management of the portfolio leading
to strong results in operating income, occupancy,
lease durations and revaluations
(cid:132)
Further expansion of the portfolio with strategic
acquisitions and commitments in Australia and
North America totalling $1.1 billion
(cid:132)
Creation of significant development opportunities in
Australia and internationally with $1.2 billion in the
development pipeline
(cid:132)
Solid growth in third party funds under management,
up $1.8 billion or 39% during the year
We have also been successful in achieving a number of key
strategic milestones including the disposal of five retail assets
and the acquisition of CalWest’s 20% joint venture interest in
our US portfolio. In February 2008, we fully internalised
the management structure with the acquisition of Deutsche
Bank’s remaining 50% interest in DB RREEF Holdings and
rebranded to DEXUS Property Group. This restructure fully
aligns interests with our investors, ensuring 100% investment
return and better positions DEXUS to take advantage
of opportunities that arise.
DEXUS PROPERTY GROUP ANNUAL REPORT 2008 11
CHIEF EXECUTIVE
OFFICER’S REPORT
Artist’s impression of 1 Bligh Street’s atrium, Sydney
12 DEXUS PROPERTY GROUP ANNUAL REPORT 2008
AT DEXUS, OUR VISION IS TO BE A LEADING DIVERSIFIED PROPERTY OWNER, MANAGER,
DEVELOPER IN AUSTRALIA AND SELECTED INTERNATIONAL MARKETS, PROVIDING
WORLD-CLASS PROPERTY SOLUTIONS TO ACHIEVE OPTIMAL OUTCOMES FOR OUR
TENANTS, INVESTORS, EMPLOYEES AND THE WIDER COMMUNITY.
Strong performance in tough climate
The quality of our portfolio combined with our focus on active
portfolio management and our prudent and conservative
financial management approach, have delivered solid results
during the year ending June 2008 and has contributed to the
further strengthening of our balance sheet.
During the year we have made considerable progress in
the realisation of the Group’s strategic direction:
(cid:132)
We concluded the disposal of five retail assets to DEXUS
Wholesale Property Fund, releasing $950 million of capital
which significantly strengthened our balance sheet and
reduced gearing
The economic environment
The past year has seen considerable financial market volatility
that arose firstly from the US sub-prime mortgage crisis and
continues to impact sentiment in the property market both
in Australia and internationally. Key issues arising from this
include rising interest rates, tighter availability and increased
cost of debt finance, along with an economic slowdown both
in the US and Australia.
DEXUS investors will be fully aware of the impact this is
having on your investments, particularly in the property
sector. It is important to note however that the price of
DEXUS securities have not been as heavily impacted as
many of our peers and that the fall in share prices does
not reflect underlying asset values.
Vision, strategy and implementation
The Group has two core activities: the management of a
direct domestic and international property portfolio and a
third party funds management business.
The strategy for the direct property portfolio is to build on
our leadership positions in office – where we are the largest
owner/manager of the highest quality office portfolio in
Australia; and industrial, where we are one of the top three
providers of premium industrial facilities in strategic locations.
Our international portfolio strategy is to concentrate on the
office and industrial market sectors in select, established
markets where DEXUS can achieve scale, deliver sustainable
returns and implement our property management model.
The strategy for the third party funds management business
is to leverage our business model to provide third party
investors with superior total returns over the medium to
long-term in the office, industrial and retail sectors.
(cid:132)
(cid:132)
In October 2007, we acquired CalWest’s 20% minority
interest in our US property portfolio. This acquisition will
enable us to restructure the US portfolio to focus on
geographically concentrated areas and achieve greater
economies of scale
In February 2008, we acquired Deutsche Bank’s
remaining 50% interest in our management company
therefore fully internalising the management of the Group
and aligning interests fully with investors. This also
provides us with greater flexibility to capitalise on
opportunities that arise including fully implementing
our property management model domestically and
internationally in the future
(cid:132)
In March 2008, we announced a management restructure
to further expand our executive team and provide additional
integration and focus in our property sector teams
Looking forward domestically, we will be enhancing our
service delivery in Australia by bringing in-house those
property management activities, which are currently
outsourced. This will give DEXUS direct management
control over all aspects of our direct property portfolio
through a fully integrated property management service.
Internationally, our focus will continue to be in the United
States and Western Europe. Consistent with our strategy to
date, our long-term objective is to expand our international
platform to provide our tenants with an integrated property
service in international locations. Timing will be dependent
on opportunities meeting our strategic requirements to
expand our local expertise, achieve scale, long-term growth
and value in the prevailing market conditions.
DEXUS PROPERTY GROUP ANNUAL REPORT 2008 13
CHIEF EXECUTIVE OFFICER’S REPORT (CONTINUED)
DEXUS PROPERTY GROUP PORTFOLIO AT A GLANCE
Direct property portfolio ($b)
Area leased during the year (’000 sqm)
Occupancy %
Developments underway and pipeline ($b)
JUNE 2008
JUNE 2007
JUNE 2006
JUNE 2005
8.9
818
93.7
2.0
9.0
1,152
96.7
2.2
8.0
730
96.1
1.3
6.6
470
93.1
0.9
Portfolio results
During the year, our portfolio continued to deliver strong
results with operating income of $498 million, occupancy levels
remaining strong at 93.7% and average lease durations at
4.8 years overall. Throughout the year we independently
re-valued 75% of the portfolio which saw an increase in book
value of $185 million to total $8.9 billion.
Across the Group, assets under management grew by 12.5%
to $15.3 billion. DEXUS is the fifth largest listed property trust,
the market leader in office space, and the third largest provider
of industrial space in Australia.
Financial results
Earnings from operating activities of $498 million resulted
in a distribution of 11.9 cents per stapled security, a 5.3%
increase on last year’s distribution. Transactions in the year
and continued proactive debt management resulted in a
reduction in gearing to 33.2% down from 35.6% at
30 June 2007.
Acquisitions
DEXUS acquired $762 million of industrial properties
in Australia, the United States and Canada during the
year to 30 June 2008.
In addition, we have continued to grow the development
pipeline in Australia and North America with more than
700,000 square metres of new space currently planned for
development or under construction, providing substantial
new lettable area for future growth.
In December 2007, we expanded our western Sydney
development pipeline through the acquisition of the
strategically located 47.4 hectare Greystanes estate, which
will be delivered progressively over the next three years.
As part of the Whirlpool investment program we acquired
two properties costing approximately $225 million. Under
this program we have acquired three properties to date and
a further three properties will be acquired once developed
over the next 12 to 18 months taking the total program to its
target value of US$450 (A$496) million. Further acquisitions
under the program will be evaluated on an individual basis.
Artist’s impression: Aerial view of 1 Bligh Street, Sydney showing full height atrium and roof terrace
14 DEXUS PROPERTY GROUP ANNUAL REPORT 2008
Internationally, we further strengthened our portfolio
through the acquisition of the remaining 20% interest in our
industrial joint venture with CalWest. This acquisition gives
DEXUS greater flexibility to actively manage our US property
interests, to focus on geographically concentrated areas and
achieve greater economies of scale.
Disposals
In October 2007, DEXUS completed the sale of five retail
centres to the DEXUS Wholesale Property Fund, enabling
DEXUS to concentrate on the industrial and office sectors,
both in Australia and internationally and improving balance
sheet strength by recycling capital to retire debt and increase
the flexibility to capitalise on future opportunities.
In our Australian industrial portfolio, we completed the sale
of a 50% share of the Coles Distribution facility located in
our estate at Laverton North for $58 million.
Developments
We have commenced the development of two major
office towers at 123 Albert Street, Brisbane, QLD and
1 Bligh Street, Sydney NSW and have a number of key
industrial developments underway in Australia, at Laverton
North and Greystanes, and in the US. Developments
underway will add an estimated 147,600 square metres of
lettable area to the portfolio over the next three years, at an
estimated cost of $834 million. Looking forward, DEXUS
has a development pipeline of approximately $1.2 billion
anticipated to be completed over the next three to
seven years.
Our strategy is to deliver our current development pipeline
and we will be looking to proactively source prudent
additions, ensuring the supply of high quality, strategically
located product for future years to come.
KEY FINANCIAL RESULTS
Total income ($m)1
Operating income ($m)
EBIT ($m)1
Profit after tax ($m)1
Net profit attributable to security holders ($m)1
Direct property portfolio ($m)
NTA per security ($)
Gearing ratio (%)
Distribution ($m)
Distribution (cents/security)
JUNE 2008
JUNE 2007
JUNE 2006
JUNE 2005
890
498
588
445
438
8,862
1.77
33.2
355.4
11.9
1,597
513
1,420
1,211
1,169
9,027
1.82
35.6
324.6
11.3
1,463
456
1,253
1,066
1,010
7,995
1.53
38.3
306.3
11.0
810
433
605
467
396
6,597
1.29
39.0
281.3
10.5
1 Change from 2007 to 2008 was due to property revaluations of $185 million vs $865 million in 2007.
DEXUS PROPERTY GROUP ANNUAL REPORT 2008 15
CHIEF EXECUTIVE OFFICER’S REPORT (CONTINUED)
IN 2009, OUR STRATEGIC FOCUS WILL BE TO
CONTINUE TO DELIVER SOLID PERFORMANCE FROM
OUR WORLD-CLASS PORTFOLIO AND BUILD ON OUR
LEADERSHIP POSITIONS IN OFFICE AND INDUSTRIAL.
30 The Bond, Hickson Road, Sydney
Third party funds management
As at 30 June 2008, the third party funds management
business had more than $6.4 billion of assets under
management, an increase of $1.8 billion or 39% since
30 June 2007. Third party funds management continued
to deliver a strong investment performance, with a
combined total return over five years of 14.3%.
Pro-active debt management
DEXUS continues to benefit from our active management
approach to our debt profile. Debt maturities are spread
over nine years and debt sources are well diversified.
This is supported by a Standard & Poor’s (S&P) long-term
corporate credit rating of BBB+, which DEXUS has
maintained since stapling.
DEXUS’s overall level of debt is $3 billion, which represents
gearing of 33.2%. This continues to be below our long-term
targeted gearing range of 40 to 45%, providing us with
substantial capacity to fund future opportunities, including
developments.
During the 12 month period, we refinanced our bank
debt obligations well before their maturity dates:
(cid:132)
In December 2007, we successfully refinanced
$500 million of debt due to mature in September
and December 2008, increasing the term of
refinanced facilities to an average of 5.5 years.
(cid:132)
In May 2008, we refinanced a $300 million tranche of
our syndicated line of credit which was due to mature
in September 2008. This refinancing was committed
for an average term of 3.8 years.
(cid:132)
We have already secured 50% or $250 million of
commitments to refinance the $500 million CMBS
due for repayment in April 2009.
16 DEXUS PROPERTY GROUP ANNUAL REPORT 2008
These commitments reflect our strong credit fundamentals
and excellent financier relationships. In addition, we have
circa $500 million of undrawn facilities that further support
upcoming maturing debt.
At DEXUS we continue to maintain a prudent financial risk
management profile. A high proportion of forecast interest
bearing exposure is hedged (86% at the 2008 financial year
end) and the weighted average duration of these hedges is
approximately 6.2 years. Foreign earnings are conservatively
hedged for periods up to 5 years. In addition, where practical,
we continue to match the currency of our debt with the
currency of our investments. This policy minimises foreign
currency exposure and provides substantial protection to
security holders from adverse movements in net tangible
assets due to currency fluctuations.
Corporate responsibility and sustainability
During the year we continued to deliver on our commitment
to sustainability – both in progressing our new, highly
sustainable developments and rolling out initiatives to
future-proof our existing portfolio such as minimising
resource consumption and maximising operating efficiencies.
We continued our support of industry best practice, using
and trialling both the NABERS/ABGR and Green Star rating
tools. We were also pleased to receive further external
recognition of our achievements, with our second year listing
on FTSE4Good, our inaugural listing on the Australian SAM
Sustainability Index, and recognition of our response to
climate change in the Citigroup Climate Change Winners
report and Goldman Sachs JBWere’s Climate Change
Disclosure Leadership Index.
We also focused on further embedding our CR&S
commitment into our operating platform and established our
new CR&S Committee. This group is responsible for guiding
and managing our group-wide sustainability programs,
ensuring they are aligned with our broader corporate strategy.
An important part of our CR&S strategy is our commitment to
operating to the highest standards of corporate governance,
ethics and corporate social responsibility – ensuring we have
a positive impact on the communities in which we operate.
In this regard, we established a Community Engagement
Working Group, with representation from across the business
to guide and coordinate increased community activity. It is
pleasing to report that we have collectively contributed over
$300,000 to the community in Australia. Further information
is provided in our CR&S summary report on pages 36 to 55.
We also aligned our CR&S reporting to the globally recognised
GRI Guidelines in our 2007 CR&S report, which is available
on our website at www.dexus.com
The 2008 CR&S report will be released at our Annual
General Meeting on 29 October 2008.
2009 strategic focus
In 2009, our strategic focus will be to continue to deliver solid
performance from our world-class portfolio and build on our
leadership positions in office and industrial.
While economic conditions will continue to be difficult,
DEXUS is well positioned with a clear strategy, proven
management team and quality portfolio, to take advantage
of opportunities this cycle creates to add value for investors.
We have a high quality, well diversified portfolio of properties
heavily weighted to key locations with strong outlooks,
for example 31% of the portfolio is located in Sydney. We
continue to deliver stable earnings from a diverse range of
tenants and industries and we have a strong balance sheet
with low levels of gearing to support sustained growth.
We will continue to look at opportunities to leverage our core
competencies and operate across more of the value chain,
whilst delivering service excellence to our customers and
sustainable outcomes for our investors, the community
and our people.
Barring any unforseen circumstances, we expect that
distributions in 2009 will increase by approximately
1.7% from 11.9 cents to 12.1 cents per security, inclusive
of 0.2 to 0.3 cents reflecting gains realised through our
development processes.
Victor P Hoog Antink
Chief Executive Officer
25 September 2008
DEXUS PROPERTY GROUP ANNUAL REPORT 2008 17
OUR PORTFOLIO
Chief executive officer’s report (continued)
Members of our Office team at Governor Phillip Tower, Sydney
18 DEXUS PROPERTY GROUP ANNUAL REPORT 2008
OUR CONTINUED FOCUS ON ACTIVE MANAGEMENT OF THE PORTFOLIO, COMBINED
WITH THE HIGH QUALITY OF OUR ASSETS IN STRATEGIC LOCATIONS HAS DELIVERED
CONSISTENT INCOME GROWTH IN OUR OFFICE AND INDUSTRIAL BUSINESSES.
Portfolio overview
During the past year, our continued focus on active
management of the portfolio, combined with the high quality
of our assets in strategic locations has delivered consistent
income growth in our office and industrial businesses.
This, combined with the significant progress of our
development pipelines in Australia and overseas, further
advances in our sustainability programs and service
excellence focus, positions DEXUS Property Group
strongly for future growth.
OPERATING INCOME AS AT 30 JUNE 2008
DIRECT PROPERTY PORTFOLIO AS AT 30 JUNE 2008
$498m
Australian NPI
International NPI
Funds Management
Development
71%
25%
3%
1%
$8.9b
Office AUS/NZ
Industrial AUS
Industrial N.Am
Retail AUS
Industrial Europe
Cash/Other
52%
19%
22%
3%
3%
1%
DIRECT PROPERTY PORTFOLIO AT 30 JUNE 2008
PROPERTY TYPE
Office/car parks – AUS/NZ
Retail – AUS
Industrial – AUS
Industrial – N.Am
Industrial – EUR
Total
1 Excludes cash and other assets.
PROPERTY VALUE
30 JUNE 20081
($M)
PROPERTY VALUE
30 JUNE 20071
($M)
AREA OCCUPIED
(%)
AVERAGE LEASE
TERM (YEARS)
4,601
280
1,636
1,904
314
8,735
4,046
1,205
1,761
1,453
344
8,809
97.7
99.9
98.6
91.8
85.1
93.7
5.7
4.5
4.0
3.9
3.6
4.8
DEXUS PROPERTY GROUP ANNUAL REPORT 2008 19
OUR PORTFOLIO (CONTINUED)
LETTABLE AREA
SQM
ESTIMATED COST
A$M
ESTIMATED
COMPLETION DATE
4,500
38,600
42,000
3,400
59,100
147,600
25
350
410
4
45
834
Jun HY 2009
Dec HY 2010
Jun HY 2011
Oct 2008
Jun HY 2010
We will continue to focus on delivering service excellence
to our customers and being the partner of choice to
our tenants.
In the coming financial year, we will bring property
management in-house in our Australian office portfolio. In
addition to forging closer relationships with our tenants, these
operational changes will enable DEXUS to maximise synergies
and drive further efficiencies across the platform.
Our superior quality portfolio, experienced management
team and focused strategy means we are well positioned to
weather the current market conditions and deliver sustainable
returns for our investors.
DEVELOPMENTS UNDERWAY
OFFICE – AUSTRALIA
60 Miller Street, North Sydney, NSW
123 Albert Street, Brisbane, QLD
1 Bligh Street, Sydney, NSW
INDUSTRIAL – AUSTRALIA
Redwood Gardens, Dingley, VIC
INDUSTRIAL – NORTH AMERICA
San Antonio, Texas US – Stage 1
Total underway
* All numbers represent DEXUS Property Group’s interest and AUD/USD = 0.9626
Developments
Our development focus is squarely on the delivery of our
current pipeline. In addition, we will be looking to source
prudent additions to the pipeline, ensuring the supply of
high quality, strategically located properties for future
years to come.
Looking forward
We are working proactively to deliver further growth
through our continued focus on active portfolio
management, development management and prudent
financial management to build on our leadership position
in the office and industrial sectors in Australia.
Internationally, we are reviewing our US and European assets
to recycle non-core and non-performing properties and
reposition the location of our assets to maximise portfolio
performance and achieve scale in fewer, select markets.
Development underway at 123 Albert Street, Brisbane
20 DEXUS PROPERTY GROUP ANNUAL REPORT 2008
OFFICE PORTFOLIO AUSTRALIA AND NEW ZEALAND
AS THE MARKET LEADER IN HIGH QUALITY OFFICES IN AUSTRALIA, WITH OVER 95%
OF THE PORTFOLIO BEING PRIME OR A-GRADE PROPERTIES, OUR CUSTOMERS ARE
PREDOMINANTLY MAJOR AUSTRALIAN AND INTERNATIONAL COMPANIES AND
GOVERNMENT BODIES.
The Australian office portfolio has delivered another solid
performance in 2008. The high quality of the portfolio and
our active management approach has maintained strong like
for like net property income growth, a high level of occupancy
and good tenant retention.
The office portfolio contributed $242.6 million (2007:
$254.5 million) of net property income. On a like for like
basis, comparable net property income increased by 4.4%.
This contribution represents 48% (2007: 48%) of total net
property income for the year.
All office portfolio fundamentals are tracking well with
occupancy by area remaining high at 97.7% and weighted
lease durations of 5.7 years.
The office portfolio comprises over 547,000 square metres
of lettable area (adjusted for ownership) with 570 tenants in
24 office properties and five car parks. As the market leader
in high quality offices in Australia, with over 95% of the
portfolio being Prime or A-Grade properties, our customers
are predominantly major Australian and international
companies and government bodies.
Developments
The office portfolio has three developments underway with
an estimated cost on completion of more than $785 million.
These developments are consistent with our strategy to own,
manage and develop quality office buildings across Australia,
designed to meet the needs of our major corporate and
government tenants.
We made significant progress with our major office
developments during the year. These include:
(cid:132)
– Construction has commenced
1 Bligh Street, Sydney
on this state of the art office tower of approximately 42,000
square metres. Designed to achieve a 6 star Green Star
and 5 star NABERS energy rating, 1 Bligh Street represents
the next generation of office design. The project is
estimated to have a total cost of $410 million (68.2%
interest) with a yield on cost of 7.3% and is anticipated to
be completed in mid 2011.
1 (cid:132) 23 Albert Street, Brisbane – Demolition of the existing
carpark has been completed and foundation work is
underway on this new office tower of approximately 38,600
square metres. Designed to achieve a 6 star Green Star
and 5 star NABERS energy rating, Rio Tinto Limited have
leased 26,000 square metres or 68% of the building and
have an option to lease further space. The project is
estimated to have a total cost of $350 million with a yield
of 6.8% and is anticipated to be completed in late 2010.
(cid:132)
– This project comprises
60 Miller Street, North Sydney
the construction of 4,500 square metres of A grade office
space adjoining our existing building. The development will
expand the first five floors to over 2,000 square metres.
Completion is due in early 2009 and marketing to
prospective tenants is well progressed. The project is
estimated to have a total cost of $25 million and produce
a yield on cost of 8.3%.
GEOGRAPHICAL SPREAD
PROPERTY TYPE SPREAD
$4.6b
Sydney
Auckland
Brisbane
Melbourne
Perth
Canberra
71%
3%
1%
13%
10%
2%
$4.6b
Office
Office Park
Car Parks
87%
4%
9%
DEXUS PROPERTY GROUP ANNUAL REPORT 2008 21
OFFICE PORTFOLIO AUSTRALIA AND NEW ZEALAND (CONTINUED)
INDUSTRIAL PROPERTIES
OFFICE PROPERTIES
RETAIL PROPERTIES
38
29
1
Office pipeline
Two developments are in planning:
(cid:132)
– This project is estimated
105 Phillip Street, Parramatta
to have a total cost of $100 million and an estimated yield
on cost of 8%. While all planning approvals have been
obtained, construction of this 20,400 square metre office
tower will not commence until a satisfactory level of
leasing pre-commitment has been obtained. Marketing to
prospective tenants to achieve this level of pre-commitment
is under way.
(cid:132)
– A master plan concept
144 Wicks Road, North Ryde
for an office business park has been made to the City of
Ryde Council, with a development application lodged for
the first stage in August 2008. The development has an
estimated development cost of $187 million with a targeted
yield on cost of 7.25%. A marketing campaign to target
prospective pre-committing tenants is underway.
Revaluations
The office portfolio is valued at $4.6 billion (2007: $4.0 billion),
an increase of $268 million or 13.4%.
The weighted average capitalisation rate of the office portfolio
now stands at 6.4% (2007: 6.1%).
Leasing
New leases and renewals including heads of agreement were
negotiated on more than 93,000 square metres, or 16% of
the total office portfolio in the year. As a result, the office
portfolio occupancy remained strong at 97.7% (2007: 99%),
with an average lease duration by income of 5.7 years
(2007: 6.2 years), excluding 1 Bligh Street, Sydney. Tenant
retention was strong at 72% and the office lease expiry profile
is well diversified. Our strategy of extending lease duration
without concentration of expiries in any given year is being
successfully implemented.
22 DEXUS PROPERTY GROUP ANNUAL REPORT 2008
AUSTRALIA
NEW ZEALAND
SYDNEY
MELBOURNE
BRISBANE
PERTH
ADELAIDE
AUCKLAND
OFFICE
487,900m2
25.7% portfolio area
$3,260m value
50.0% portfolio value
18 properties
OFFICE
118,000m2
6.2% portfolio area
$603m value
9.3% portfolio value
6 properties
INDUSTRIAL
458,200m2
24.2% portfolio area
$893m value
13.7% portfolio value
24 properties
INDUSTRIAL
556,300m2
29.3% portfolio area
$641m value
9.8% portfolio value
10 properties
OFFICE
0.0m2
0.0% portfolio area
$63m value
1.0% portfolio value
1 property
INDUSTRIAL
29,100 m2
1.5% portfolio area
$59m value
0.9% portfolio value
2 properties
OFFICE
19,800m2
1.0% portfolio area
$123m value
1.9% portfolio value
1 property
INDUSTRIAL
72,000m2
3.8% portfolio area
$26m value
0.4% portfolio value
1 property
CANBERRA
OFFICE
22,500 m2
1.2% portfolio area
$107m value
1.6% portfolio value
2 properties
OFFICE
47,200m2
2.5% portfolio area
$447m value
6.9% portfolio value
1 property
INDUSTRIAL
4,700m2
0.2% portfolio area
$18m value
0.3% portfolio value
1 property
RETAIL
79,900m2
4.2% portfolio area
$280m value
4.3% portfolio value
1 property
Note: These numbers exclude developments underway
L to R: Australia Square, Sydney; Governor Phillip Tower, Sydney; 83 Clarence Street, Sydney
Rent reviews
Market reviews covering 10% of the office portfolio’s property
income were subject to rent reviews and achieved an average
rental increase of 6.4%. A further 14% of expiring leases
which were renewed during the year, achieved an average
rental increase of 6.9%. In the coming year to 30 June 2009,
approximately 20% of the office portfolio’s income will be
exposed to the market and another 69% will be subject to
defined increases.
AUSTRALIAN/NEW ZEALAND OFFICE LEASE EXPIRY PROFILE AS AT 30 JUNE 2008
%
1
.
0
1
%
5
.
8
%
9
.
8
%
9
.
7
%
5
.
8
%
3
.
7
%
0
.
7
%
6
.
6
%
5
.
5
1
%
4
.
3
1
%
3
.
1
1
%
7
.
9
%
6
.
8
%
8
.
7
%
3
.
8
%
2
.
8
%
5
.
5
1
%
3
.
9
%
5
.
7
%
3
.
7
%
6
.
4
%
6
.
3
18.0%
16.0%
14.0%
12.0%
10.0%
8.0%
6.0%
4.0%
2.0%
0.0%
%
3
.
2
%
1
.
2
Vacant
< 1 year
< 2 years
< 3 years
< 4 years
< 5 years
< 6 years
< 7 years
< 8 years
< 9 years
< 10 years
> 10 years
Area
Income
DEXUS PROPERTY GROUP ANNUAL REPORT 2008 23
INDUSTRIAL PORTFOLIO AUSTRALIA
letter from the chair
OUR ACTIVE MANAGEMENT APPROACH HAS ENABLED THE PORTFOLIO TO DELIVER
STRONG RESULTS IN THE YEAR ENDING 30 JUNE 2008
The Australian industrial portfolio is the third largest in Australia
and comprises high quality institutional grade properties,
diversified by location and property type in strategic locations.
Our active management approach has enabled the portfolio to
deliver strong results in the year ending 30 June 2008 through
the successful delivery of developments and leasing activity.
The Australian industrial portfolio is valued at approximately
$1.64 billion following revaluations through the year of
$21 million and contributed $105.7 million (2007: $101.4
million) to total net property income. As a result of significant
leasing activity, occupancy remains strong at 98.6% (2007:
98.3%) with the average lease duration at 4.4 years by income
(2007: 4.7 years).
Acquisitions and disposals
During the year the portfolio was enhanced with the
acquisition of an industrial property in western Sydney
at Greystanes, NSW in December 2007.
This site known as Southern Employment Lands (SEL),
Greystanes, NSW, is a 47.4 hectare industrial estate purchased
from Boral Ltd for $73.2 million. In addition to acquiring the land
we entered into a contract with Boral Recycling Pty Ltd to
undertake landform and infrastructure works to deliver the land
in preparation for development in four stages over two years.
The site has a total estimated development cost of $325 million
and an estimated yield on cost of 7.5%. The master planning for
the estate will see approximately 100,000 square metres of large
scale distribution facilities, approximately 72,500 square metres
of multi-tenanted industrial buildings typically ranging between
5,000 and 15,000 square metres, and a further stage of
approximately 20 hectares where we will seek to sub-divide and
sell small land parcels or develop smaller industrial buildings.
The development includes a number of innovative sustainability
initiatives. For example, in partnership with Boral, the adjoining
owner, it is anticipated that approximately 150 mega litres of
stormwater and ground water from the combined 70 hectare
site will be collected each year and provided to the adjacent
Golf Club, local school and parks.
During the year, DEXUS sold a 50% interest in the Coles
chilled distribution facility, Laverton North, Victoria to one of our
mandate clients in our third party funds management platform
for $58 million, realising $5.9 million of distributable gains.
Developments
During the year, the industrial development portfolio
has continued to contribute to our diversification and earnings.
DEXUS’s key strategic development locations are at Laverton
North, VIC and the recently acquired property in Greystanes,
NSW. Developments either completed or underway include:
(cid:132)
DEXUS Industrial Estate, Laverton North, VIC
for Best Bar comprising 12,950 square metres with an
estimated end cost of $12 million was completed in
August 2008
– A facility
(cid:132) Redwood Gardens, Dingley, VIC – A 3,400 square metre
facility is being built for Sperian Protection Australia with
an estimated end value of $4 million, which is due for
completion in the October 2008
(cid:132)
– In April 2008, we
Pound Road West, Dandenong, VIC
completed the development of the purpose built powder
coating facility for Orica Australia. The facility is 4,965
square metres and has an estimated value of $10 million
Members of our Industrial team at Pound Road West, Dandenong, VIC
24 DEXUS PROPERTY GROUP ANNUAL REPORT 2008
L to R: Redwood Garden Industrial Estate, Dingley, VIC; Laverton North Industrial Park, VIC
We have three Australian industrial pipeline developments
scheduled over the next six years with an estimated
development cost of approximately $540 million:
(cid:132)
3 Brookhollow Avenue, Baulkham Hills, NSW
developments providing approximately 23,000 square
metres of lettable area
– two
(cid:132) Laverton North, VIC – Stage 1-3 – adding more than
369,000 square metres of lettable area over the next
six years
(cid:132)
Axxess Corporate Park, Mt Waverley, VIC
of more then 16,000 square metres of lettable area
– planned site
Leasing
The Australian industrial portfolio has 1,098,000 square
metres of net lettable area. New leases and renewals,
including heads of agreements, were negotiated over more
than 289,000 square metres of the portfolio in the year to
30 June 2008 with an average increase of 4.2%. As a result,
the industrial portfolio’s occupancy remained high at 98.6%
(2007: 98.3%) with an average lease duration by income of
4.4 years (2007: 4.7 years) and strong retention rates of 78%.
Rent reviews
Leases covering 4% of the Australian industrial portfolio’s
property income were subject to market rent reviews in the
period, achieving an average rental increase of 4.2%. Defined
rent reviews accounted for 93.7% of the portfolio’s property
income with an average rental increase of 3.8%. In the coming
year to 30 June 2009, approximately 14.7% of the portfolio’s
income will be exposed to the market and another 85.3% will
be subject to defined increases.
Revaluations
Revaluations resulted in an increase in asset value of
$21 million or 1.5% over book value. Contributors to the
uplift were:
(cid:132)
25 Donkin Street, West End Brisbane, QLD
to $35.8 million
– up 26.2%
(cid:132)
Axxess Corporate Park, Mt Waverley, VIC
$192.6 million
– up 3.6% to
(cid:132)
68 Hasler Road, Herdsman, WA
– up 61.8% to $17.5 million
The weighted average capitalisation rate of the Australian
industrial portfolio now stands at 7.5% (2007: 7.2%).
AUSTRALIAN INDUSTRIAL LEASE EXPIRY PROFILE AS AT 30 JUNE 2008
%
9
.
0
2
%
6
.
7
1
%
3
.
4
1
%
9
.
3
1
%
8
.
4
1
%
4
.
2
1
%
4
.
2
1
%
5
.
9
25.0%
20.0%
15.0%
10.0%
5.0%
0.0%
%
4
.
1
%
5
.
1
%
2
.
8
%
1
.
6
%
6
.
8
%
1
.
6
%
5
.
3
%
2
.
3
%
5
.
2
%
1
.
1
%
8
.
3
%
6
.
2
%
1
.
5
%
1
.
3
%
4
.
7
1
%
9
.
9
Area
Income
Vacant
< 1 year
< 2 years
< 3 years
< 4 years
< 5 years
< 6 years
< 7 years
< 8 years
< 9 years
< 10 years
> 10 years
DEXUS PROPERTY GROUP ANNUAL REPORT 2008 25
INDUSTRIAL PORTFOLIO NORTH AMERICA
THE AUSTRALIAN OFFICE PORTFOLIO HAS EXPERIENCED ANOTHER YEAR OF SOLID
PERFORMANCE IN 2008.
INDUSTRIAL PROPERTIES
118
Overview
Overall the North American industrial portfolio is performing
well, contributing $110 million (2007: $106.8 million) of net
property income representing 22% of total net property
income for the year to 30 June 2008. Comparable growth
on a like for like basis was 7.2%.
The North American industrial portfolio is valued at
A$1.9 billion (2007: $1.45 billion), the increase from 2007
is mainly due to 15 acquisitions including two Whirlpool
assets, four assets and eight land parcels in San Antonio and
a warehouse in Chicago. Leases were agreed for 17% of the
North American industrial portfolio and occupancy remains
strong at 91.8% (2007: 95.2%).
At 30 June 2008, the portfolio covered more than
24,748,000 square feet (2,299,000 square metres)
of net lettable area in 118 properties throughout 21
metropolitan areas providing space for 530 tenants.
The North American industrial portfolio consists of
approximately 18% business parks, 46% warehouse/
distribution centres, 31% industrial estates, 4% office
parks, and 1% land, by market value.
Acquisitions
During the year we acquired 15 properties and CalWest’s
20% interest in the US portfolio costing in total approximately
$689 million. The 15 properties provide more than
340,000 square metres of lettable area in the US and
Canada as follows:
(cid:132)
Two properties forming part of the Whirlpool Investment
program located in Toronto, Canada and Perris, California.
These properties were acquired following their development
in December 2007 and January 2008 for approximately
$225 million
(cid:132)
An industrial property in Bensenville, Chicago on
19 December 2007 for a cost of approximately $34.5 million
(cid:132)
12 properties forming part of the San Antonio
developments platform costing approximately $71.2 million
Developments
During the year we have been actively progressing three
developments in Sterling, Virginia, Santa Clarita, California
and San Antonio, Texas. These have a combined estimated
cost of $142 million on completion, and will provide more
than 92,000 square metres of lettable area.
26 DEXUS PROPERTY GROUP ANNUAL REPORT 2008
UNITED STATES
ATLANTA
CINCINNATI
MEMPHIS
RIVERSIDE
CANADA
TORONTO
775,900sf
3.2% portfolio area
US$42m value
2.4% portfolio value
5 properties
2,706,300sf
11.3% portfolio area
US$99m value
5.6% portfolio value
10 properties
336,100sf
1.4% portfolio area
US$6m value
0.4% portfolio value
1 property
3,230,000sf
13.5% portfolio area
US$258m value
14.6% portfolio value
7 properties
754,700sf
100% portfolio area
US$68m value
100% portfolio value
1 property
BALTIMORE
COLUMBUS
MINNEAPOLIS
SAN ANTONIO
1,419,500sf
5.9% portfolio area
US$125m value
7.1% portfolio value
9 properties
1,610,300sf
6.7% portfolio area
US$62m value
3.5% portfolio value
4 properties
1,118,300sf
4.7% portfolio area
US$68m value
3.9% portfolio value
8 properties
1,047,000sf
4.4% portfolio area
US$74m value
4.2% portfolio value
12 properties
BOSTON
DALLAS
NTH VIRGINIA
SAN DIEGO
153,400sf
0.6% portfolio area
US$10m value
0.6% portfolio value
1 property
2,271,300sf
9.5% portfolio area
US$137m value
7.8% portfolio value
18 properties
1,101,600sf
4.6% portfolio area
US$236m value
13.4% portfolio value
8 properties
353,700sf
1.5% portfolio area
US$40m value
2.2% portfolio value
3 properties
CHARLOTTE
HARRISBURG
ORLANDO
SEATTLE
883,100sf
3.7% portfolio area
US$38m value
2.2% portfolio value
3 properties
1,058,200sf
4.4% portfolio area
US$50m value
2.8% portfolio value
3 properties
1,894,000sf
7.9% portfolio area
US$110m value
6.2% portfolio value
3 properties
CHICAGO
LOS ANGELES
PHOENIX
255,400sf
1.1% portfolio area
US$30m value
1.7% portfolio value
1 property
1,050,300sf
4.4% portfolio area
US$167m value
9.5% portfolio value
5 properties
1,782,700sf
7.4% portfolio area
US$117m value
6.6% portfolio value
11 properties
531,100sf
2.2% portfolio area
US$47m value
2.7% portfolio value
3 properties
SOUTH FLORIDA
415,300sf
1.7% portfolio area
US$49m value
2.8% portfolio value
2 properties
Top to bottom: Whirlpool, North Perris Boulevard, Perris, CA; Cornerstone Building, San Antonio TX; Summit Oaks, CA
Leasing
In the year to 30 June 2008, new or renewed leases were
entered into for over 385,000 square metres. This resulted
in a steady occupancy rate of 91.8% (2007: 95.2%) and an
average lease term to expiry of 3.9 years (2007: 3.4 years).
Rent reviews
Over the next two years approximately 32% of the North
American industrial portfolio will be subject to market reviews.
Revaluations
Revaluations resulted in a decrease in asset value of the
North American industrial portfolio of $62 million or
3.3% over book value of the stabilised portfolio.
The weighted average capitalisation rate of the portfolio
now stands at 6.9% (2007: 6.5%).
NORTH AMERICA INDUSTRIAL LEASE EXPIRY PROFILE AS AT 30 JUNE 2008
%
5
.
0
1
%
2
.
8
%
0
.
4
%
6
.
3
16.0%
14.0%
12.0%
10.0%
8.0%
6.0%
4.0%
2.0%
0.0%
%
9
.
4
1
%
9
.
4
1
%
2
.
4
1
%
5
.
3
1
%
8
.
2
1
%
4
.
2
1
%
9
.
3
1
%
2
.
3
1
%
2
.
9
%
2
.
9
%
1
.
8
%
8
.
6
%
7
.
4
%
4
.
4
%
1
.
4
%
6
.
3
%
5
.
4
%
8
.
3
%
5
.
1
%
3
.
1
%
1
.
2
%
4
.
0
Area
Income
Vacant
MTM
< 1 year
< 2 years
< 3 years
< 4 years
< 5 years
< 6 years
< 7 years
< 8 years
< 10 years
> 10 years
< 9 years
DEXUS PROPERTY GROUP ANNUAL REPORT 2008 27
INDUSTRIAL PORTFOLIO EUROPE
THE AUSTRALIAN OFFICE PORTFOLIO HAS EXPERIENCED ANOTHER YEAR OF SOLID
PERFORMANCE IN 2008.
INDUSTRIAL PROPERTIES
20
The European industrial portfolio contributed $21.9 million
(2007: $14 million) of net property income. This represents
4% of total net property income for the year to 30 June 2008.
The portfolio is valued at $314 million (2007: $344 million).
At 30 June 2008, the European industrial portfolio covers
approximately 376,900 square metres of net lettable area
in 20 properties with 30 tenants.
Occupancy remains steady for the European Industrial
portfolio at 85.1% (2007: 92.8%) with the weighted average
lease expiry at 3.6 years (2007: 4.1 years). The European
industrial portfolio consists of approximately 72% warehouse/
distribution centres and 28% industrial estates, by area.
The weighted average capitalisation rate is 7.4% (2007: 7.1%).
EUROPE INDUSTRIAL LEASE EXPIRY PROFILE AS AT 30 JUNE 2008
%
6
.
3
2
%
0
.
8
1
%
4
.
1
2
%
8
.
0
2
25.0%
20.0%
15.0%
10.0%
5.0%
0.0%
%
9
.
4
1
%
3
.
1
1
%
1
.
4
1
%
9
.
1
1
%
1
.
1
1
%
1
.
1
1
%
4
.
7
%
2
.
5
%
.
2
.
7
%
4
.
7
%
3
.
8
%
3
.
6
%
0
.
0
%
0
.
0
%
0
.
0
%
0
.
0
%
0
.
0
%
0
.
0
%
0
.
0
%
0
.
0
Area
Income
Vacant
< 1 year
< 2 years
< 3 years
< 4 years
< 5 years
< 6 years
< 7 years
< 8 years
< 9 years
< 10 years
> 10 years
28 DEXUS PROPERTY GROUP ANNUAL REPORT 2008
FRANCE
PARIS
83,300m2
22.1% portfolio area
$43m value
22.5% portfolio value
5 properties
GERMANY
ELHOFEN
67,400m2
17.9% portfolio area
$34m value
17.5% portfolio value
3 properties
LANGENFELD
UNNA
36,500m2
9.7% portfolio area
$15m value
7.6% portfolio value
2 properties
27,400m2
7.3% portfolio area
$17m value
8.7% portfolio value
1 property
DÜSSELDORF
13,800m2
3.7% portfolio area
$16m value
8.1% portfolio value
1 property
LYON
FRIEDEWALD
LANGENWEDDINGEN
WORMS
BERLIN
27,400m2
7.3% portfolio area
$11m value
5.8% portfolio value
1 property
15,500m2
4.1% portfolio area
$4m value
2.1% portfolio value
1 property
26,300m2
7.0% portfolio area
$7m value
3.4% portfolio value
1 property
11,800m2
3.1% portfolio area
$4m value
2.1% portfolio value
1 property
10,100m2
2.7% portfolio area
$11m value
5.5% portfolio value
1 property
KNETZGAU
LÖBAU
DUISBURG
21,400m2
5.7% portfolio area
$11m value
5.6% portfolio value
1 property
9,000m2
2.4% portfolio area
$1m value
0.5% portfolio value
1 property
27,100m2
7.2% portfolio area
$20m value
10.5% portfolio value
1 property
L to R: Liverpooler Straße, Duisburg; Bremer Ring & Hansestraße, Wustermark, Berlin, Brandenburg
Leasing
The European industrial portfolio occupancy was 85.1%
(2007: 92.8%) with an average lease duration of 3.6 years
(2007: 4.1 years). Leases were agreed for 37% of the
French portfolio and 4% of the German portfolio.
Rent reviews
France – leases covering 11% of the French industrial
portfolio’s property income were subject to fixed rent reviews.
Germany – leases covering 3.6% of the German industrial
portfolio’s property income were subject to fixed rent reviews
and 21.3% were subject to CCI reviews.
Retail portfolio Australia
In August 2007, DEXUS disposed of its 50% share in five
retail centres to the DEXUS Wholesale Property Fund. The
Westfield Whitford City Shopping Centre in WA is the sole
remaining retail asset in the DEXUS retail portfolio.
The centre contributed $27.6 million or 5.4% of DEXUS’s
net property income. Moving Annual Turnover (MAT) for
the 12 months was 12% ($7,379 per square metre) with
occupancy remaining robust at 99.9%. The average lease
duration by income was 4.5 years.
Westfield Whitford City Shopping Centre is valued at
$280 million and has 79,900 square metres of net lettable
area housing 296 tenants. The weighted average
capitalisation rate is 5.8% (2007: 5.6%).
DEXUS PROPERTY GROUP ANNUAL REPORT 2008 29
FUNDS MANAGEMENT
REPORT
360 Collins Street, Melbourne
30 DEXUS PROPERTY GROUP ANNUAL REPORT 2008
DURING THE YEAR, DEXUS PROPERTY GROUP’S THIRD PARTY FUNDS MANAGEMENT
BUSINESS INCREASED BY $1.8 BILLION OR 39% TO $6.4 BILLION COMPRISING THE
DEXUS WHOLESALE PROPERTY FUND, TWO PROPERTY SYNDICATES AND TWO DIRECT
PROPERTY MANDATES.
SOURCE OF FUNDS AT 30 JUNE 2008
DWPF SECTOR ALLOCATION BY BOOK VALUE AT 30 JUNE 2008
Private Clients
Domestic Super Funds
46%
16%
Other Domestic Wholesale 17%
International Wholesale
10%
Retail Investors
Debt
3%
8%
Office
Industrial
Retail
36.4%
3.4%
60.2%
DEXUS Wholesale Property Fund
DEXUS Wholesale Property Fund (DWPF) is an open-ended
unlisted property fund with total gross assets of approximately
$3.2 billion at 30 June 2008. DWPF has a high quality portfolio
with approximately 85% of the portfolio comprising prime
office buildings and regional retail centres.
In the first half of the financial year, DWPF raised more than
$800 million of equity from both Australian and international
investors to support the acquisition of interests in five prime
shopping centres from DEXUS Property Group. There are
approximately 60 institutional wholesale investors in DWPF
with the top 10 unitholders representing approximately
57% of the register.
DWPF’s development pipeline is currently estimated at
approximately $635 million over the next five years, which
provides the opportunity to improve the portfolio quality and
diversity and achieve enhanced returns through the creation
of high quality properties without acquisition costs. The extent
and nature of the development activity in the portfolio is a
strong indication of the future potential of DWPF.
For the year to 30 June 2008, DWPF delivered a total gross
return of 9.09%. Over the three, five and ten year period,
annualised gross returns were 15.55%, 14.55% and
12.27% respectively.
Direct Mandates
Our two direct mandates comprise approximately $3 billion
or 38 direct property assets at 30 June 2008, managed by
the Group on behalf of SAS Trustee Corporation (STC) and
the AXA Group (AXA).
DEXUS Property Syndicates
The Group manages two unlisted assets valued at
approximately $180.9 million as at 30 June 2008. The
syndicates have over 780 unitholders and are closed
ended, fixed term products.
Gordon Property Syndicate
This syndicate owns two retail assets, the Gordon Centre
and the Gordon Village Arcade located in Gordon, NSW.
At 30 June 2008 total assets of the syndicate were
approximately $87.6 million.
Northgate Property Syndicate
This syndicate owns the Northgate Shopping Centre at
Glenorchy in Hobart, TAS. At 30 June 2008 total assets
of the syndicate were approximately $93.3 million.
Abbotsford Property Syndicate
This syndicate owned an office building in Abbotsford, VIC.
Following a review it was terminated early in January 2008
and the syndicate’s only property was sold to take advantage
of the strong prevailing market conditions. A sale price of
$22.1 million was achieved which equated to an approximate
return of 20% per annum over its ten-year life.
DEXUS PROPERTY GROUP ANNUAL REPORT 2008 31
ABOUT DEXUS
DEXUS House, 343 George Street, Sydney
32 DEXUS PROPERTY GROUP ANNUAL REPORT 2008
DEXUS IS ONE OF THE LARGEST DIVERSIFIED PROPERTY GROUPS IN AUSTRALIA, WITH
OVER A$15.3 BILLION OR 260 PROPERTIES UNDER MANAGEMENT. DEXUS HAS EXTENSIVE
EXPERIENCE IN OWNING, MANAGING AND DEVELOPING HIGH QUALITY OFFICE, INDUSTRIAL
AND RETAIL PROPERTIES IN AUSTRALIA, NEW ZEALAND, THE UNITED STATES, CANADA,
GERMANY AND FRANCE.
DEXUS Property Group is the 5th largest property group on
the Australian Stock Exchange and has a Standard & Poor’s
(S&P) rating of BBB+. The Group has two areas of operation:
(cid:132)
our A$8.9 billion direct property portfolio, which is focused
on owning, managing and developing high quality office
and industrial assets in Australia, New Zealand, North
America and Europe
(cid:132)
our A$6.4 billion third party funds management business
which develops and manages office, industrial and retail
properties on behalf of third party investors. This includes
DEXUS Wholesale Property Fund, two private client
mandates and two property syndicates, which collectively
make up one of the largest third party funds management
businesses in Australia.
Local expertise, international reach
In Australia, the Group has over 270 employees nationwide
and our head office is located in the Sydney CBD.
We offer our tenants and investors access to a world-class
property portfolio managed by our expert team of property
and funds management professionals.
The Group also has a number of strategic relationships
with major Australian and international property owners,
property managers and corporate partners. This includes
a strategic relationship with RREEF Alternative Investments
– Deutsche Bank’s global alternative investment management
business – which facilitates international acquisitions and
the management of our property assets in selected
international markets.
GROUP STRUCTURE
RENTS
INVESTORS
DEXUS PROPERTY GROUP
3RD PARTY INVESTORS
DXR
DOT
DDF
DIT
DXO
DEXUS
HOLDINGS
DXPS
DXFM
DWPL
Third party management responsibility
DWPF
STC
MANDATE
AXA
MANDATE
SYNDICATES
DEXUS OWNED
PROPERTY PORTFOLIO
– AUSTRALIA AND
NEW ZEALAND
– NORTH AMERICA
– EUROPE
DEXUS PROPERTY GROUP ANNUAL REPORT 2008 33
BOARD OF DIRECTORS
Christopher T Beare
BSc, BE (Hons), MBA,
PhD, FAICD
Elizabeth A Alexander AM
BComm, FCA, FAICD,
FCPA
Barry R Brownjohn
BComm
Stewart F Ewen OAM
FILE
Chair and Independent
Director Age 57
Chris Beare has extensive
experience in international
business development, strategy
and management.
Chris joined investment bank
Hambros Australia in 1991,
becoming Head of Corporate
Finance in 1994 and joint Chief
Executive in 1995, serving until
Hambros was acquired by
Société Générale in 1998.
During that period Hambros
was active in infrastructure,
telecoms and media. Chris
remained a Director of SG
Australia until 2002. From
1998, he helped form Radiata
(a technology start-up spanning
Sydney and Silicon Valley).
As Chair and Chief Executive
Officer, he then steered it to
a successful sale to Cisco
Systems in 2001. For four years
prior to joining Hambros, Chris
was Executive Director of the
Melbourne based Advent
Management venture capital
firm. Chris has been a Director
of a number of companies in
the finance, infrastructure and
technology sectors.
Chris is both the Chair and an
Independent, Non-Executive
Director of DEXUS Funds
Management Limited. He is
also the Chair of the Board
Nomination and Remuneration
Committee and a member of
the Board Finance Committee.
Independent Director
Age 65
Elizabeth Alexander brings
to the Board extensive
knowledge of accounting,
finance, corporate governance
and risk management.
Independent Director
Age 57
Barry Brownjohn brings
extensive knowledge of the
debt capital markets, risk
management and business
acquisitions.
Elizabeth was formerly
a partner with
PricewaterhouseCoopers and
is currently Chairman of CSL
Limited and a Director of Boral
Limited, Deputy Chair of the
Financial Reporting Council,
and a member of the Takeovers
Panel. Elizabeth’s previous
appointments include National
Chair of the Australian Institute
of Company Directors, National
President of the Australian
Society of Certified Practising
Accountants and a member
of the Australian Accounting
Standards Board. Elizabeth is
also Chair of a number of board
audit committees.
Elizabeth is an Independent,
Non-Executive Director of
DEXUS Funds Management
Limited and Chair of the Board
Audit Committee and the Board
Risk Committee and a member
of the Board Compliance
Committee and Board
Finance Committee.
Barry is a senior consultant
with Pacific Road Corporate
Finance where he focuses on
advising companies on strategic
acquisitions and divestments
in the financial services and
related technology sectors.
He was formerly the Australian
Managing Director of the Bank
of America. While with the
Bank of America, Barry held a
range of senior management
roles in various overseas
locations. He is currently an
Advisory Board Member of
the South Australia Financing
Authority, and a Director of
Citigroup Pty Limited and
Bakers’ Delight Holdings
Limited. Barry’s previous
appointments include Chair
of the International Banks and
Securities Association, and the
Asia Pacific Managed Futures
Association.
Barry is an Independent,
Non-Executive Director of
DEXUS Funds Management
Limited, Chair of the Board
Finance Committee and a
member of the Board Audit
Committee and Board Risk
Committee.
Independent Director
Age 59
Stewart Ewen has an
extensive background in retail,
commercial and industrial
property investment and
development.
Stewart has had over 40 years
of extensive property experience,
commencing with the Hooker
Corporation in 1966 where he
worked throughout Australia
and South East Asia. In 1983
he established Byvan Limited
which, by 2000, managed $8
billion in shopping centre assets
in Australia, Asia and North
America. In 1999, he sold his
interest in Byvan to the Savills
Group in London, remaining as
Chair until 2001. As the major
partner of NavyB Pty Ltd he has
completed numerous residential
and commercial property
projects. He has also held the
position of Managing Director of
Enacon Ltd, was previously a
Director of Abigroup Ltd, and was
instrumental in the establishment
of Converting Technology Pty Ltd.
Stewart has previously served as
President of the Property Council
of NSW and is a Director of the
Cure Cancer Australia Foundation
and assisted in the establishment
of Cell Bank Australia. Stewart
is also a Director of
CapitaCommercial Trust
Management Limited, Singapore.
Stewart is an Independent,
Non-Executive Director of
DEXUS Funds Management
Limited and a member of the
Board Nomination and
Remuneration Committee.
34 DEXUS PROPERTY GROUP ANNUAL REPORT 2008
Victor P Hoog Antink
BComm, MBA, FCA,
FAPI, FRICS, MAICD
Executive Director
Age 55
Victor Hoog Antink has over
25 years experience in general
management, property funds
management and finance.
Victor joined DEXUS after
almost nine years at Westfield
Holdings where he was the
Director of Funds Management,
responsible for both the
Westfield Trust and the
Westfield America Trust.
Victor has a commerce
degree from the University
of Queensland, an MBA from
the Harvard Business School,
is a fellow of the Institute of
Chartered Accountants in
Australia, a fellow of the
Australian Property Institute, a
fellow of the Royal Institute of
Chartered Surveyors and a
member of the Institute of
Company Directors. Victor
is the immediate past president
of the Property Council of
Australia.
Victor is CEO and an Executive
Director of DEXUS Funds
Management Limited.
Andrew J Fay
BAg.Ec (Hons), ASIA
Alternate Director to Charles
B Leitner III Age 43
Andrew Fay brings to the
Board significant experience
in domestic and international
funds management and
exposure to both the retail and
wholesale investments markets.
Andrew was until December
2007 the Head of Deutsche
Asset Management Australia
Limited (DeAM), as well as its
Chief Investment Officer for
Australia. Andrew is dually
responsible for the operation
of DeAM’s Australian business
and the consistency of the
investment process for all
asset classes within Australia.
Andrew joined DeAM in
1994 after six years with the
investment division of AMP
Global Investors. Andrew sits
on the Investment and
Financial Services Association
(IFSA) Investment Board in
Australia. Andrew holds an
Honours degree in Agricultural
Economics from the University
of Sydney and has completed
a graduate diploma with the
Securities Institute of Australia.
Andrew is a Non-Executive
alternate Director to Charles
B Leitner III and a member
of the Board Nomination and
Remuneration Committee.
Charles B Leitner III
BA
Brian E Scullin
BEc
Non-Executive Director
Age 48
Charles Leitner has significant
experience in US property
management and the
international property funds
management industry.
Charles is the Global Head
of RREEF, the global alternative
investments operation of
Deutsche Asset Management,
which manages ¤65.3 billion
of real estate, infrastructure,
private equity and hedge fund
investments worldwide. With 23
years of real estate investment
experience, Charles joined
RREEF in 1988 and became
a partner in the firm in 1996.
In 2001 he assumed overall
responsibility for RREEF’s US
property acquisition business
and in 2004 was appointed
Global Head of RREEF. Based
in New York, Charles graduated
from the University of
Pennsylvania with a BA in
Urban Studies/Regional
Science. He is a Trustee of the
Urban Land Institute, and a
member of the Real Estate
Roundtable, the National
Association of Office and
Industrial Parks, and the
Pension Real Estate
Association (PREA).
Charles in a Non-Executive
Director of DEXUS Funds
Management Limited.
Independent Director
Age 57
Brian Scullin brings to the
Board extensive domestic and
international funds management
knowledge as well as finance,
corporate governance and risk
management experience. Brian
has also worked with many large
corporations and government.
Following a career in government
and politics in Canberra, Brian
was appointed the inaugural
Executive Director of the
Association of Superannuation
Funds of Australia (ASFA) in
1987. He joined Bankers Trust
in Australia in 1993 and held
a number of senior positions,
becoming President of Japan
Bankers Trust in 1997. In 1999
he was appointed Chief Executive
Officer – Asia/Pacific for
Deutsche Asset Management
and retired from this position in
2002. Brian has been a panel
member of the Financial Industry
Complaints Service Limited and a
Director of State Super Financial
Services Limited. Brian is
currently Chair of BT Investment
Management Limited, a
publicly listed company.
Brian is an Independent, Non-
Executive Director of DEXUS
Funds Management Limited,
Chair of the Board Compliance
Committee and is a member of
the Board Nomination and
Remuneration Committee, Board
Audit Committee and Board Risk
Committee. Brian is also Chair
and an Independent, Non-
Executive Director of DEXUS
Wholesale Property Limited.
DEXUS PROPERTY GROUP ANNUAL REPORT 2008 35
CORPORATE RESPONSIBILITY AND SUSTAINABILITY
CEO/CHAIRMAN STATEMENT
WE ARE PLEASED TO REPORT THAT THE 07/08 FINANCIAL YEAR HAS SEEN FURTHER
PROGRESS IN OUR CORPORATE RESPONSIBILITY AND SUSTAINABILITY (CR&S) PROGRAMS.
We are pleased to report that we have achieved further
progress in our Corporate Responsibility & Sustainability
(CR&S) programs in the 07/08 financial year.
We also continued to see sustainability gain further
momentum in both the corporate and public sectors and
growing public awareness is being combined with greater
political commitment to CR&S. The property industry is
no exception and in 2008 sustainability is increasingly
becoming a market standard.
At the top end of the market, and in particular in premium
office space – where DEXUS leads the way – we are seeing
increasing tenant demands for sustainable buildings and
leading edge green features. For example at 123 Albert Street
in Brisbane, our commitment to achieving a 6 star Green Star
building was a crucial component in securing our anchor
tenant – Rio Tinto – who shared our vision for a sustainable
building and fit-out.
In this our 10th year of sustainability programs, we have
continued to roll-out new portfolio-wide initiatives to improve
the performance of our buildings step by step, in line with
the individual asset strategies, ensuring our sustainability
programs are tailored to each property whilst enhancing
its economic viability and investor returns.
At DEXUS we are committed to incorporating world’s best
practice sustainable design into our developments and
have continued to advance our two new premium grade
developments: 1 Bligh Street in Sydney and 123 Albert
Street in Brisbane. As a major owner, manager and
developer of quality property we are uniquely positioned to
drive the specifications and deliver operationally superior
sustainable buildings.
We are also well advanced in future-proofing our existing
stock – a key challenge for us all in the property industry.
At DEXUS we have focused our future-proofing programs
in the office sector as this sector presents the greatest
opportunity for improving resource efficiency and
reducing carbon emissions.
In addition, as the largest owner and manager of office
properties in Australia, we feel it is appropriate that we
concentrate our efforts here. We have also commenced
programs in our retail and industrial portfolios.
36 DEXUS PROPERTY GROUP ANNUAL REPORT 2008
Making a difference
The recent Garnaut report and the Green Paper released
by the Government in July 2008 reported that buildings
and their occupants are the source of 23% of Australia’s
greenhouse emissions. Clearly action in our industry can
make a real difference to the Australian and international
carbon footprint.
At DEXUS we are reducing carbon emissions by
determining our carbon footprint, reducing resource
consumption and implementing energy efficiency
projects across our portfolio and have implemented a
new reporting and data capture system to measure
operational performance against targets.
The DEXUS difference to sustainability is that we take a
group-wide approach and look to improve our social,
economic and environmental performance.
Our major achievements this year include:
Our corporate approach
(cid:132)
Continued to develop and refine our CR&S strategy
including:
–
–
setting up our CR&S Committee and associated
working groups
defining CR&S performance objectives and action
plans for the Group and across our operating sectors
(office, industrial, retail and corporate)
(cid:132)
Our commitment has been well recognised during
this period including maintaining our listing on the
FTSE4Good Index and obtaining our first listing on the
Australian SAM Sustainability Index
(cid:132)
Increased the transparency of our reporting by aligning
our CR&S Report for 2007 to GRI (G3) Global
Reporting standards
(cid:132)
Launched our new Vision and Values program
Our people
(cid:132)
Included CR&S measures into our performance
management objectives
(cid:132)
Completed our second employee survey, achieving
stronger and improved results
(cid:132)
Our ratio of women in executive management has
increased from 14% to 40%
Our communities
(cid:132)
Completed new tenant surveys in our Australian office
and industrial portfolios to better understand and improve
the quality of our service delivery
(cid:132)
Set-up our Community Engagement Working Group
(cid:132)
Developed our community engagement strategy
including defining our financial and people support to
charities, in the areas of environmental improvement,
community development and youth programs
(cid:132)
Provided more than $300,000 in financial and in-kind
contributions to registered charities
Our properties and our environment
(cid:132)
Completed the Green Profiling and Green Projects phases
of our Green Building & Resource Management System for
our office portfolio
(cid:132)
Continued to integrate sustainability features into our
development projects notably at 1 Bligh Street in Sydney,
123 Albert Street in Brisbane and in our new US
development properties
(cid:132)
Responded to CDP6, our third year of reporting in the
international carbon disclosure project
Looking forward
In these more uncertain economic times, it is critical to
future-proof our properties to weather the challenges ahead.
We are actively ensuring the portfolio maintains its high
quality and continues to attract tenants, both in terms of
building features and as a result of our reputation and
commitment to operating with the highest levels of ethics,
integrity and social responsibility.
We are also starting to see competitive pressures in this area,
which are driving new levels of innovation and as quality
supply increases, we anticipate sustainability features to be a
key differentiating factor – particularly at the premium end of
the market. A commitment to sustainability is a long-term
strategy, and one we certainly believe at DEXUS sets us
apart from our peers.
Similarly, we anticipate a flight to quality in management,
where active portfolio management and prudent capital
management are key and on both these fronts DEXUS is
well positioned for the future.
We will be releasing our 2008 CR&S Report at the Annual
General Meeting in Sydney on October 29, 2008 and look
forward to reporting to you then.
For any queries or feedback on our CR&S activities, please
email us at crs@dexus.com
Christopher T Beare
Chair
Victor P Hoog Antink
Chief Executive Officer
REPORT SCOPE
This report forms the CR&S section of the 2008 DEXUS Property Group Annual Report and is an extract
from the 2008 DEXUS Corporate Responsibility & Sustainability (CR&S) Report, which will be released at
the Annual General Meeting on 29 October 2008. It represents an annual review of the Group’s CR&S
practices and achievements for the 12 months ending 30 June 2008.
If you have any questions relating to this report, or our CR&S activities, please contact us at crs@dexus.com
For further information and copies of our reports visit www.dexus.com/sustainability
DEXUS PROPERTY GROUP ANNUAL REPORT 2008 37
CR&S – OUR CORPORATE APPROACH
KEY ACHIEVEMENTS
› CONTINUED TO DEVELOP AND REFINE OUR CR&S STRATEGY INCLUDING:
– SETTING UP THE CR&S COMMITTEE AND ASSOCIATED WORKING GROUPS
– DEFINING CR&S PERFORMANCE OBJECTIVES AND ACTION PLANS FOR THE GROUP AND
ACROSS OUR OPERATING SECTORS – OFFICE, INDUSTRIAL, RETAIL AND CORPORATE
› LAUNCHED OUR NEW VISION AND VALUES PROGRAM
› MAINTAINED LISTING ON FTSE4GOOD INDEX AND OBTAINED NEW LISTING ON AUSTRALIAN
SAM SUSTAINABILITY INDEX
› INCREASED THE TRANSPARENCY OF OUR CR&S REPORTING
Above: Foyer at DEXUS House, 343 George Street, Sydney
38 DEXUS PROPERTY GROUP ANNUAL REPORT 2008
About DEXUS
DEXUS is one of Australia’s largest diversified property groups
and a leading owner, manager and developer of world-class
office, industrial and retail properties.
Our values
At DEXUS our corporate values underpin the way we do
business. Ultimately, our values provide us with a common
focus and define our culture.
The Group owns and/or manages more than 260 office,
industrial and retail properties in Australia, New Zealand,
the United States and Europe, valued at $15.3 billion.
Our team has a wealth of experience in asset, property,
development and funds management and we provide
property services to more than 5,000 tenants around
the world, primarily major corporate and government
organisations. We offer our investors access to a
world-class property portfolio managed by our
expert team.
DEXUS STAKEHOLDER GROUPS
I n v e stors
I n v e stors
C
C
o
o
m
m
m
m
u
u
n
n
i
i
t
t
y
y
T
T
e
e
n
n
a
a
n
n
t
t
s
s
Offic e
Offic e
Ind
Ind
u
u
s
s
t
t
260
260
Properties
Properties
r
r
i
i
a
a
l
l
$15.3bn
$15.3bn
R
R
e
e
t
t
ail
ail
I n t
I n t
al
al
e rnation
e rnation
Emplo y e e
Emplo y e e
s
s
Our vision
At DEXUS our vision is to be a leading, diversified property
owner, manager and developer in Australia and selected
international markets. We pride ourselves on providing
world-class property solutions and delivering service
excellence to our tenants. We seek to deliver long-term
returns for our investors and optimum outcomes for our
employees and the wider community.
A key part of this vision is our commitment to be a market
leader in corporate responsibility and sustainability, both
in the property sector and in the communities in which
we operate.
This vision is supported by our ability to understand
risks, identify opportunities and develop best practice
management programs, which exceed the environmental,
social and economic requirements of the properties we own
and manage, and deliver the highest levels of corporate
governance, ethics and integrity in the services we provide.
Our corporate values were originally derived when the Group
was part of Deutsche Bank. In February 2008, when we
acquired the remaining 50% interest in DB RREEF Holdings
and rebranded to DEXUS we took the opportunity to review
our values, to ensure they fully represented our culture and
ethos. Our new values are Respect, Excellence, Service,
Integrity, Teamwork and Empowerment.
Embedding CR&S into our business
We are committed to ensuring that CR&S is a constant
and visible consideration in all aspects of our business
by embedding it into our culture and influencing our
stakeholders. We seek to achieve sustainable outcomes
through ongoing stakeholder engagement, which in the
last year included:
(cid:132)
Our people
We continued to reinforce CR&S as an integral part of our
business, for example, CR&S measures are now included
in our people’s performance management objectives and
we established a number of new management/employee
groups to expand our focus and activity in this area
(cid:132)
Our community
We created a new Community Engagement Working Group
to achieve greater community engagement, aligned to our
business model and values
(cid:132)
(cid:132)
Our tenants
We provided our tenants with greener options in our
properties and developments and engaged our tenants
through our relaunched tenant surveys – the first under
our new brand
Our investors
We improved the standards and transparency of our
reporting, including the alignment of our 2007 CR&S
Report to the GRI G3 framework. We also achieved external
rating recognition through FTSE4Good, Australian SAM
Sustainability Index and both Citigroup and Goldman Sachs
JBWere rated our response to climate change favourably
DEXUS PROPERTY GROUP ANNUAL REPORT 2008 39
CR&S – OUR CORPORATE APPROACH (CONTINUED)
L to R: DEXUS Full Year Results presentation; members of the DEXUS Finance team
CR&S management structure
In December 2007, we established our cross-divisional CR&S Steering Committee to oversee the development
and implementation of strategy, procedures and systems to progress our sustainability programs and enable us to
respond to emerging CR&S issues. This committee reports to our Executive Committee and comprises senior
management including the Chief Operating Officer and the Sector Head of each of our business units.
Our CR&S management structure was further strengthened in 2008 with the formation of two working groups
reporting into the CR&S Committee; Our Workplace and Our Community Engagement Working Groups.
BOARD
EXECUTIVE COMMITTEE
CR&S
COMMITTEE
RISK MANAGEMENT
COMMITTEE
INTERNAL
COMPLIANCE
COMMITTEE
INTERNAL
AUDIT
COMMITTEE
COMMUNITY
ENGAGEMENT
WORKING GROUP
OUR
WORKPLACE
WORKING GROUP
CR&S COMMITTEE MEMBERS
› Chief Operating Officer (Chair)
› Head of Office
› Head of Industrial
› Head of Retail
› Fund Manager, Third Party Funds
› Head of Building Services
› Head of Marketing & Communications
› Sustainability Manager
40 DEXUS PROPERTY GROUP ANNUAL REPORT 2008
IN DECEMBER 2007, WE
ESTABLISHED OUR CROSS-
DIVISIONAL CR&S STEERING
COMMITTEE TO OVERSEE
THE DEVELOPMENT OF OUR
SUSTAINABILITY PROGRAMS
Our Community Engagement Working Group
The objective of this group is to develop our strategic
approach to investing in and supporting our communities.
The group is responsible for the integration of community
involvement into our business model, making it core to our
business culture. Our strategic approach includes:
(cid:132)
Active involvement and investment in the communities
in which we operate
(cid:132)
A coordinated approach to community engagement
ensuring mutual benefit
(cid:132)
Employee involvement and ownership of community
programs
Members of this group include cross divisional representation
from Human Resources, Facilities Management, Asset
Management, Finance, Business Operations, Building
Services and Marketing & Communications.
Our Workplace Working Group
In recognising the importance of reducing our environmental
footprint of our own operations, we have established a
Workplace Working Group. This group is responsible for the
integration of sustainability and resource management
principles into our corporate offices around Australia.
Our strategic approach includes:
(cid:132)
Improving our direct resource consumption (energy, water,
waste, paper)
(cid:132)
Identifying areas to improve our environmental performance
guided by external benchmarks including NABERS Energy
& Green Star
(cid:132)
Integrating sustainability best practice into our workplace
(cid:132)
Engaging and educating our people in sustainable practices
and promoting our achievements
Members of this group include cross divisional representation
from Sustainability, Facilities Management, Property Management,
Business Operations and Marketing & Communications.
FUTURE PLANS
IN 08/09, OUR FOCUS WILL INCLUDE:
› STRIVING TO ACHIEVE A HIGHER GRI REPORTING APPLICATION LEVEL FOR OUR 2008 CR&S REPORT
› CONTINUE OUR PRO-ACTIVE PARTICIPATION IN SUSTAINABILITY RATINGS AND INDICES INCLUDING
– CDP
– FTSE4GOOD INDEX AND THE AUSTRALIAN SAM SUSTAINABILITY INDEX
– OBTAIN LISTINGS ON DOW JONES SUSTAINABILITY INDEX
DEXUS PROPERTY GROUP ANNUAL REPORT 2008 41
CR&S – OUR PEOPLE
KEY ACHIEVEMENTS
› LAUNCHED OUR NEW DEXUS VALUES AWARD PROGRAM
› INCLUDED CR&S OBJECTIVES AS KEY PERFORMANCE INDICATORS FOR OUR PEOPLE
› EXTENDED OUR LONG-TERM INCENTIVE PLAN TO ALL OUR PEOPLE
› STRONGER RESULTS ACHIEVED IN OUR SECOND EMPLOYEE OPINION SURVEY
› OUR RATIO OF WOMEN IN EXECUTIVE MANAGEMENT HAS INCREASED FROM 14% TO 40%
Above: Executive Committee at DEXUS House, 343 George Street, Sydney
42 DEXUS PROPERTY GROUP ANNUAL REPORT 2008
Our people
At DEXUS, our people are our most important asset. The day
to day success of our business is due to the dedication and
expertise of our people. Whether it is sourcing, developing,
leasing or managing our property portfolio, or working with
our tenants, suppliers and corporate partners, our people
are at the forefront of everything we do.
Working at DEXUS
Creating a harmonious and engaging workplace is integral to
ensuring we attract and retain people of the highest calibre
who are passionate about their work. We are committed to
providing an enjoyable and balanced working environment
that supports diversity, equal opportunity, team work,
excellence and integrity in all we do, while growing our
capabilities individually and as an organisation.
The importance we place on corporate responsibility and
sustainability is reflected in our induction sessions and
reinforced regularly at our business update sessions and
through our performance management framework.
Our state of the art head office overlooking Sydney’s
Martin Place has been designed to nurture our culture by
reinforcing our commitment to open communication as
well as sustainable workspaces that enhance our people’s
well-being. We refurbished the interior of our heritage building
to offer large, open floor spaces with floor-to-floor connectivity
via an internal staircase spanning three levels, maximised
access to natural light, introduced 100% fresh air supply
through our chilled beam system and café/breakout spaces.
The results from our employee opinion surveys show that our
people highly value our head office workspace for which we
continued to receive external recognition, achieving a finalist
position in the AFR Boss magazines’s Work Space awards in
March 2008.
WE ARE COMMITTED TO
PROVIDING AN ENJOYABLE
AND BALANCED WORKING
ENVIRONMENT THAT
SUPPORTS DIVERSITY, EQUAL
OPPORTUNITY, TEAM WORK,
EXCELLENCE AND INTEGRITY
An open and engaging workplace
We believe that engaging our people in the business and
in key initiatives such as corporate responsibility and
sustainability is critical both to our success and to maintaining
the highest levels of employee satisfaction and retention.
We continued to progress our internal communications
through our monthly business updates, quarterly newsletters
and active intranet. Our management culture encourages
open communication and the exchange of ideas through
a flat management structure, open door policy and open
plan offices.
Over the past two years we have measured our people’s
engagement through an annual employee opinion survey.
The results give us an insight into our people’s work
satisfaction and areas where we can improve our practices.
The survey covers topics such as my role, my manager,
leadership, training and communication. Employees may
complete the survey anonymously and responses are
collated by an independent party. See Case Study 1
on pages 44 to 45.
WORKFORCE BY EMPLOYMENT ARRANGEMENT
TOTAL WORKFORCE BY GENDER
Permanent
91%
Part-time
Contract
Casual
7%
1%
1%
Female
Male
52%
48%
DEXUS PROPERTY GROUP ANNUAL REPORT 2008 43
CR&S – OUR PEOPLE (CONTINUED)
Members of the DEXUS team at 321 Kent Street, Sydney
Flexibility and work-life balance
The health and wellbeing of our people is integral to
our overall success. We are committed to the continual
development of our flexible work policies and seek to work
with our people, as individuals, to provide suitable flexible
work opportunities.
In response to our people’s desire for greater work-life
balance, in May 2008 we removed the cap of 10 days from
our purchase leave policy. Our people can now purchase
an uncapped amount of additional annual leave each year,
providing more flexibility and enabling them to enjoy a
greater work-life balance.
Training, learning and professional development
We support our people in their roles and encourage
professional development to ensure our people have the
most up-to-date industry knowledge and skills. All DEXUS
employees are encouraged to undertake internal and
external training each year, supported by a corporate
training budget, and to take ownership of their professional
development through the completion of annual personal
development plans.
In addition, we have developed a tailored DEXUS Leadership
and Management training program to address the training
requirements of managers. Currently our people complete
on average 28 hours training each year, the results of
which are reported monthly to, and monitored by, the
Executive Committee.
44 DEXUS PROPERTY GROUP ANNUAL REPORT 2008
Our Study Assistance Policy provides an annual allowance
for our people to undertake formal academic qualifications
such as undergraduate and postgraduate university study
and specialist programs provided by recognised educational
institutions and industry associations. We have recently
increased the flexibility of this policy to provide assistance
for professional study in subjects not directly related to an
employee’s current role but aimed at the development of
broader skills and knowledge and to facilitate future internal
transfers and promotions.
We encourage our people to be members of at least one
professional association relevant to their role. We also run
training and information awareness events to improve
employee understanding of key issues and business
functions. In the area of sustainability and risk management,
for example, we run annual Sustainability and Risk
Management seminars for all our Australian and
New Zealand property management teams.
Talent management and leadership planning
We undertake six-monthly reviews of the performance and
potential of our people to ensure a continuous review of
talent, promotion potential and succession plans for all roles.
During the year we also undertook an independent analysis
of our leadership team’s composition, structure, performance
and potential. Incorporated into this analysis was a new
process to support succession planning and talent
management strategies for the leadership team. This
process has resulted in improved governance around
strategic succession planning, human capital risk
management, talent management and leadership.
CASE STUDY 1
OUR SECOND EMPLOYEE OPINION
SURVEY
In January 2008, we conducted our second employee opinion
survey to measure engagement and receive feedback from our
employees. Results were pleasing, our response rate was again
excellent at 70% (70% in 2007) and year on year increases
were achieved for almost all questions. Stand out results
included:
(cid:132) 91% are satisfied with DEXUS as an employer compared
with 79% last year
TOP FIVE IMPROVEMENTS
Would you recommend DEXUS as an employer?
Overall, how satisfied are you with DEXUS as your employer?
I feel that corporate communications within
DEXUS have improved in the last 12 months
(cid:132) 93% would recommend DEXUS as an employer compared
Morale in my team is high
with 80% last year
The topics and questions from last year’s survey were repeated
this year to allow us to measure year on year progress. The top
five improvements are shown in the adjacent table.
This year’s results will again be used to shape our policies
and practices to further improve employee satisfaction and
engagement in 08/09.
Reward and performance
We continually review our remuneration framework to
ensure we attract, motivate and retain highly talented
people to deliver service excellence to our tenants and
superior long-term returns for our investors.
Performance is assessed at six monthly intervals to ensure
our people receive performance feedback against agreed
objectives and to discuss training needs and career
progression. Since November 2007 CR&S objectives
have been included as a key performance indicator for
all employees.
I am proud to work for DEXUS
0%
20%
40%
60%
80%
100%
2007
2008 % Improvement
Our remuneration policy considers performance at an
individual level as well as overall business results. Annual
salary reviews are conducted to ensure our remuneration
levels remain equitable and competitive with current
market rates. All employees, who meet their performance
management objectives are eligible to receive a cash bonus.
We also offer a long-term incentive scheme to allow our
people to share in our future growth and align the interests
of our people with our investors.
AVERAGE TRAINING HOURS PER EMPLOYEE PER CATEGORY
EMPLOYMENT CATEGORY BY GENDER
Executive Management
Senior Management
Middle Management
Professional/Technical
Administration/Operations
11 hours
Average training hours overall per employee: 28
34 hours
30 hours
33 hours
31 hours
Professional/Technical and Administration/Operations
60%
61%
40%
39%
Middle Management
41%
42%
Senior Management
29%
36%
Executive Management
40%
14%
Female 2008
Female 2007
59%
58%
71%
64%
60%
86%
Male 2008
Male 2007
DEXUS PROPERTY GROUP ANNUAL REPORT 2008 45
CR&S – OUR PEOPLE (CONTINUED)
In June 2007 we launched our Service Awards to reward
5, 10 and 20 years service. As at 30 June 2008, we had
presented 56 awards in total, demonstrating employee
satisfaction and longevity of service.
In June 2008, we also introduced a new Values Award
program to formally reward our people for living the DEXUS
values and to showcase and celebrate our successes across
the organisation.
Diversity and equal opportunity
We value an inclusive and diverse working environment and
our aim is to attract and retain people who are of the highest
calibre and have the skills required to carry out their role –
regardless of age, disability, ethnicity, gender or religion. We
are committed to providing a workplace where our people
have an equal opportunity to succeed, without any form of
discrimination or harassment.
We host a Compliance Induction session for all new
employees which covers appropriate workplace behaviour.
We have also implemented a formal training program for
all our people who have recruitment and selection
responsibilities to ensure selection decisions are free
from bias and comply with EEO principles.
As at 30 June 2008, our overall team composition by gender
was very similar to the prior year with 52% female and 48%
male (53.5% and 46.5% as at 30 June 07). Importantly, we
have increased the ratio of women in executive management
from 14% to 40%. 91% of our people worked full-time, while
9% were part-time or casual – an identical ratio to 2007.
WORKFORCE BY AGE
WORKFORCE BY EMPLOYMENT CATEGORY
<30 years
30-39 years
40-49 years
>50 years
28%
38%
21%
13%
Administration/Operations 21%
Professional/Technical
Middle Management
Senior Management
41%
23%
11%
Executive Management
4%
FUTURE PLANS – OUR PEOPLE
IN 08/09, OUR FOCUS WILL INCLUDE:
› FOSTERING A LEARNING CULTURE BY PROMOTING THE SHARING OF KNOWLEDGE ACROSS OUR
SECTORS AND TEAMS, AND ENCOURAGING COLLABORATION THROUGHOUT OUR BUSINESS
› REVIEWING OUR TALENT STREAM AND IDENTIFYING CROSS DIVISIONAL OPPORTUNITIES FOR
OUR PEOPLE TO GROW AND DEVELOP
› ENCOURAGING CROSS DIVISIONAL COLLABORATION THROUGH ENGAGEMENT OF THE SENIOR
MANAGEMENT GROUP IN CORPORATE BUSINESS PLANNING PROCESSES AND CULTURE
CHANGE ACTIVITIES
46 DEXUS PROPERTY GROUP ANNUAL REPORT 2008
CR&S – OUR COMMUNITY
KEY ACHIEVEMENTS
› ESTABLISHED OUR COMMUNITY ENGAGEMENT WORKING GROUP
› DEVELOPMENT OF OUR COMMUNITY ENGAGEMENT STRATEGY
› COMMENCED TENANT SURVEYS ACROSS OUR OFFICE AND INDUSTRIAL PORTFOLIOS
› CONTRIBUTED $300,000 TO CHARITABLE AND NOT FOR PROFIT GROUPS IN AUSTRALIA
AND NEW ZEALAND
Above: 30 The Bond, Hickson Road, Sydney
DEXUS PROPERTY GROUP ANNUAL REPORT 2008 47
CR&S – OUR COMMUNITY (CONTINUED)
Helen Squires, a customer of Smithfield Shopping Centre, participating in the World's Greatest Shave charity fundraising event
Our community
At DEXUS, we recognise that community participation is
an integral part of our business and as one of the largest
property groups in Australia, we believe it is our responsibility
to ensure we have a positive impact on our communities.
We are committed to making community engagement
a central part of our business and to increasing our
participation and investment in the communities where
we do business.
Our strategy for effective community involvement includes:
(cid:132)
A coordinated approach to community engagement
including access to DEXUS resources, skills and expertise
as well as financial and in kind support
Aligning activity with strategy
In addition to increasing our overall community engagement
activity, our primary objective over the past 12 months, was
to improve the alignment of our activities with our CR&S and
corporate strategy. To achieve this objective we established a
new Community Engagement Working Group, with member
representatives from across our business.
This group has been set-up to drive and coordinate our
group-wide community activity, to develop policy and
guidelines, communicate our achievements and encourage
increased community participation and active employee
involvement. This group is also responsible for the integration
of community engagement into our business model, making it
core to our business culture.
(cid:132)
Employee participation in community programs through
dollar-for-dollar matching and fund raising programs,
volunteering, sponsorship programs, education and
mentoring opportunities
Following a review of our community engagement strategy it
was decided that going forward DEXUS will support programs
aligned to our business and brand values and activity will be
focused in the following areas:
(cid:132)
property industry programs
(cid:132)
environment and sustainability
(cid:132)
homelessness
(cid:132)
children and youth
Further information can be found in our annual CR&S Report,
to be released in October 2008.
DEXUS community sponsorship
In addition to financial donations and sponsorships, we
provide space in our properties for charities, not-for-profit
organisations and community groups to build their profile and
raise funds. We also contribute our time to education and
mentoring activities.
Led by our new Community Engagement Working Group, the
community and charitable groups we support are determined
by our people who work with, live in and understand the
needs of our local communities.
48 DEXUS PROPERTY GROUP ANNUAL REPORT 2008
CASE STUDY 2
DEXUS SUPPORTING THE WORLD’S
GREATEST SHAVE
Every year the Leukaemia Foundation provides support and
care for patients and families living with leukaemia and
related blood disorders, as well as funding vital research into
treatments and cures. One of the most successful fundraising
events the Foundation runs each year is the World's Greatest
Shave – where people pledge to shave or colour their hair
anytime during March and gain sponsorship for doing so.
DEXUS and our employees donate to this charitable event
and we also encourage our retail tenants and our customers
to get involved and donate as well.
In March 2008, four of our retail centres were active in
supporting the World's Greatest Shave; these were Willows
Shopping Town and Smithfield Shopping Centre, North
Queensland, Northgate Shopping Centre in Tasmania,
and Plumpton Marketplace in New South Wales.
Combined the centres raised several thousands of dollars for
the Leukaemia Foundation this year, in addition to the monies
raised by DEXUS customers and tenants. For example, Helen
Squires, pictured left, a regular customer of the Smithfield
Centre, raised over $4,000 alone. Ms Squires had been
growing her hair for 34 years and said her friend who lost her
hair through chemotherapy treatment was her inspiration for
getting involved.
This is just one example of the important role our retail
centres play in the local community and is integral to our
commitment to lead by example through not only raising
monies but also helping to raise the profile of these
charitable groups and their activities.
DEXUS People’s Choice charity
As part of our commitment to engaging our employees in this
area, we selected a new “People’s Choice” charity of the year.
Our people submitted nominations and The Royal Flying
Doctor’s Service was the most popular. Over the next year, we
will be supporting them through our dollar for dollar matching
program and through donating on behalf of our tenants when
they complete tenant surveys.
Measuring our community engagement activity
For the first time we have undertaken a detailed assessment
of both our financial and in-kind donations to not for profit/
charitable groups and this totalled more than $300,000 in
the year to 30 June 2008. In doing so, we have developed a
new community engagement reporting system for the
business to improve our data collation and enabling us to
report on our achievements.
Industry engagement
In addition to supporting charitable and fundraising programs
in the property industry, for example through our involvement
with the Property Industry Foundation, we also actively
engage in industry education and mentoring programs. For
example in the past year we continued both our professional
exchange program with one of our partner property agencies
and the Finance Graduate Trainee program with UTS. In
2008 we joined the AGSM “Lucy” mentoring program, an
innovative leadership program to promote opportunities for
women in business.
FUTURE PLANS – OUR COMMUNITY
IN 08/09 OUR COMMUNITY FOCUS WILL INCLUDE:
› EXCEEDING OUR 07/08 CHARITABLE CONTRIBUTIONS
› DEVELOPING A NEW EMPLOYEE VOLUNTEERING PROGRAM
› DEVELOPING A NEW COMMUNITY CHARTER FOR OUR RETAIL CENTRES
› ROLLING OUT OUR COMMUNITY ENGAGEMENT REPORTING SYSTEM ACROSS OUR BUSINESS
DEXUS PROPERTY GROUP ANNUAL REPORT 2008 49
CR&S – OUR PROPERTIES AND OUR ENVIRONMENT
KEY ACHIEVEMENTS
› COMPLETED THE GREEN PROFILING AND GREEN PROJECTS PHASES OF OUR GREEN
BUILDING AND RESOURCE MANAGEMENT SYSTEM (GBRMS) FOR OUR OFFICE PORTFOLIO
› CONTINUED TO INTEGRATE SUSTAINABILITY FEATURES INTO OUR DEVELOPMENT PROJECTS
NOTABLY AT 1 BLIGH IN SYDNEY, 123 ALBERT STREET IN BRISBANE AND US DEVELOPMENTS
› RESPONDED TO CDP6, OUR THIRD YEAR OF REPORTING IN THE INTERNATIONAL CARBON
DISCLOSURE PROJECT
› ACHIEVED RECOGNITION IN THE GOLDMAN SACHS JBWERE CLIMATE CHANGE DISCLOSURE
LEADERSHIP INDEX
› IMPROVED THE CAPTURE AND COVERAGE OF OUR ENVIRONMENTAL PERFORMANCE DATA
› OFFSET EMISSIONS FROM OUR BUSINESS AIR TRAVEL AND MAJOR CORPORATE EVENTS
› ROLLED OUT WATERLESS URINALS PROJECT TO SELECTED OFFICE PROPERTIES
› ROLLED OUT RAINWATER HARVESTING PROJECT AND PROJECT LANDSCAPING
GUIDELINES TO SELECTED INDUSTRIAL ESTATES
Above: Artist’s impression, 1 Bligh Street, Sydney
50 DEXUS PROPERTY GROUP ANNUAL REPORT 2008
Our properties
DEXUS manages and operates over 260 properties across
the office, retail and industrial sectors. Our operations
encompass both the management and refurbishment of
existing properties and the development of new properties.
In our experience investing in sustainability not only reduces
our environmental footprint, but adds value to our properties
and the services we offer and, in turn, attracts potential
tenants and employees. It also results in direct commercial
advantages from improved resource efficiency and lower
operating costs, bringing financial savings for our tenants.
Positive social benefits can also be delivered through
greater tenant and employee satisfaction and positive
corporate citizenship.
We believe the greatest challenge facing our industry is
future-proofing; ensuring our existing properties meet the
future demands of tenants, the challenges of a low carbon
economy, climate change and appropriate resource
management.
We are investing the necessary resources to determine how
this can best be achieved and have prioritised the future-
proofing of our existing office properties; as it is here that the
greatest opportunity exists for improving resource efficiency
and reducing carbon emissions.
Office sector
We are well ahead in future-proofing our existing office
portfolio with further progress in the roll-out of our Green
Building and Resource Management System (GBRMS).
Our GBRMS defines our approach to managing our
environmental footprint and to future-proofing our properties.
Our GBRMS has three phases:
Phase 1. Green Profiling: Each property’s resource
consumption is measured and its environmental performance
is established under Green Star/Office Existing and ABGR/
NABERS – Energy.
Phase 2. Green Project Opportunities: A review of
suitable green project opportunities to improve the
environmental performance of our properties is undertaken.
A property-specific Green List of projects is then developed.
Phase 3. Improvement Roadmaps: Improvement action
plans or roadmaps are then developed. Structured in a logical
order, the roadmap is considered against the overall strategic
asset plan of each property and progressively implemented.
Over the past year we have completed Phases 1 and 2 for our
office properties, and are progressively rolling out Phase 3
with improvement roadmaps completed for over a quarter
of the properties with the balance to be completed in 08/09.
Post-implementation, our property and asset managers will
continue to monitor, manage and improve each property’s
green credentials and environmental performance.
A number of our property specific and portfolio wide
initiatives, including building management system tuning,
improved identification of resource consumption profiles and
refurbishing or replacing end of life plant and equipment, are
expected to deliver significantly reduced energy consumption
over the next year. Case Study 4 demonstrates the reduction
in resource consumption that can be achieved through
efficient management and implementation of green projects.
Our progress with the roll-out of our GBRMS has been
reaffirmed by a comparison to the Property Council of
Australia’s recently released “Existing Buildings/Survival
Strategies”, which represents a “how to” manual for
future-proofing existing office properties. See Case Study 3.
In the coming year, we plan to roll out a version of the
GBRMS to our industrial and retail sectors and will update
our progress in future reporting periods.
Industrial sector
Although our industrial sector properties require far less
resources to operate, compared to our office buildings, we
are committed to ensuring they operate at a high level of
resource efficiency. We are establishing consumption profiles
for our industrial sector properties and are implementing a
number of initiatives including minimising water usage.
We have also developed water treatment and conservation
policies for the landscaping of our industrial properties
including:
(cid:132)
Reduction of lawn areas where possible
(cid:132)
Use of drought tolerant grass species and selection of
plants which have low water requirements
(cid:132)
Irrigation restricted to plant establishment period only
Retail sector
All DEXUS managed retail sites are taking part in a pilot
project to develop a NABERS Energy and Water rating tool for
the retail sector. This is an exciting initiative that will, for the
first time, provide industry benchmarks on energy and water
consumption, and we will be building on the experience
gained from the office sector.
Implemented this year, retail developments are now
measured against our Green Projects/Ecologically
Sustainable Development checklist. This checklist covers
applicable environmental, social, economic and governance
considerations and is cross referenced to the Green Star
Shopping Centre Design Pilot rating tool, enabling our
team to benchmark our developments against industry
best practice.
DEXUS PROPERTY GROUP ANNUAL REPORT 2008 51
CR&S – OUR PROPERTIES AND OUR ENVIRONMENT
(CONTINUED)
CASE STUDY 3
FUTURE-PROOFING OUR EXISTING BUILDINGS
Our substantial progress in future-proofing our existing office buildings can be demonstrated by comparing our GBRMS
established in 2006 against the recently released Existing Buildings/Survival Strategies paper from the Property Council
of Australia (PCA). DEXUS is currently at the equivalent of Step 6 on the PCA’s plan.
DEXUS GBRMS – OFFICE SECTOR
THE PCA SIX STEP PLAN FOR IMPROVING
THE SUSTAINABILITY OF EXISTING BUILDINGS
Phase 1: Green profiling: determine where we are now
Step 1: Determine your baseline
Phase 1: Green profiling: assess ratings (Green Star, NABERS,
energy and water), engage stakeholders and identify portfolio targets
Step 2: Establish your targets and goals
Phase 2: Contracts and specifications upgrade, bulk purchase
of energy, install smart metering and purchase green power
Step 3: Review maintenance, housekeeping and
energy purchase strategy
Phase 2: Identify all Green project opportunities including
implementing our Minimum Green List
Step 4: Crunch time: Refurbish or demolish
Phase 3: Produce property specific improvement roadmaps
Step 5: Select your optimal upgrade initiatives
Phase 3: Implement the roadmap
Step 6: Get started
OUR CARBON FOOTPRINT
ELECTRICITY
Total Electricity Purchased
203,201MWh
Total Electricity Purchased
from Renewable Sources
15,400MWh
GAS
Total Onsite Consumption
96,998,200MJ
Since our last CR&S Report we have continued to refine our
systems and processes for estimating our entire portfolio’s
GHG emissions. This year our German properties have been
included in this report for the first time.
In addition an automated data entry system was used
to minimise data inaccuracies from our Australian and
international properties. We are continually seeking to
improve the accuracy and comprehensiveness of our data
collection and reporting procedures. Additional sources of
emissions continue to be identified and factored into our
overall emission inventory.
This year’s data is within our expected range given
movements in the number and type of properties within
our portfolio during the year.
Our environment
At DEXUS, we are committed to reducing or eliminating our
environmental impact across the key areas of energy, water,
greenhouse gas (GHG) emissions and waste management.
We aim to identify and control the environmental impacts of
our properties and associated operational activities.
ANNUAL GREEN HOUSE GAS EMISSIONS
Scope 2:
Indirect emissions
from electricity
consumption
181,159 tCO2e
Scope 1:
Direct fuel consumption
and onsite fuel use
5,110 tCO2e
Total Greenhouse Gas
(GHG) Emissions*
231,532 tCO2e
Scope 3:
Indirect emissions from fuel extraction,
production transport, air travel
and transmission loss
45,263 tCO2e
*GHG emissions arising from the global portfolio represent properties located
within the United States, Australia, Germany and New Zealand.
Throughout this report, tCO2e represents tonnes of carbon dioxide equivalent.
52 DEXUS PROPERTY GROUP ANNUAL REPORT 2008
The Zenith, Chatswood
The adjacent table shows our carbon footprint for the
2007 calendar year. This has been calculated following
methodologies within the Greenhouse Gas Protocol: A
Corporate Accounting and Reporting Standard (Revised
Edition), developed by the World Resources Institute (WRI)
and the World Business Council for Sustainable Development
(WBCSD).
We continue to report our performance via requirements
under the Carbon Disclosure Project (CDP) and publish our
reports on our website.
Climate change and managing our
carbon footprint
At DEXUS, we recognise that climate change presents
the property sector with a number of challenges and
opportunities. Key challenges are generally associated
with risks to market competitiveness, increased regulatory
requirements, short to long-term changes in climate, and
rising energy, fuel and water costs. We believe that these
challenges, where they are managed well, can present
opportunities in the form of improved resource efficiency
and community engagement.
Accordingly we address the challenge of climate change
within our risk management framework and sustainability
programs. The progressive implementation of our GBRMS,
for example, is establishing a structured platform and
management system from which to continue to proactively
manage future resource shortages and reduce our resource
consumption.
We believe that stakeholder education is critical to the
success of managing our carbon footprint and we provide
information and training to our property management teams
and tenants to enable skills and knowledge to be enhanced.
We have identified a number of key areas through which
we can reduce the impact of climate change and the overall
environmental footprint of our business operations and
property portfolio.
These are:
1. Energy management
Emissions reduction is driven primarily through the control
of energy use and is an integral part of our property
management strategy. Key programs are targeted at ensuring
wastage is limited and the building is operating as efficiently
as possible. Monthly consumption profiles and optimised
Building Management Systems (BMS) are two key points of
reference for the on–site team to ensure performance is
tracking to targets and improving over time.
We have sought to improve our real time monitoring of our
energy consumption by using a smart metering system at
the base building meter in our properties. We are currently
finalising a new consolidated database to capture historical
consumption information through an innovative on-line
system. This will enable consumption data to be captured
directly from the smart metering program and, where smart
metering is not in place, to monitor and report resource
consumption across our entire portfolio including our
international assets more effectively. This program will
replace our previous manual reporting system.
DEXUS PROPERTY GROUP ANNUAL REPORT 2008 53
CR&S – OUR PROPERTIES AND OUR ENVIRONMENT
(CONTINUED)
CASE STUDY 4: RESOURCE EFFICIENCY
130 GEORGE STREET,
PARRAMATTA, NSW
130 George Street is a 13 storey office tower located in
Parramatta CBD. We have taken steps to future-proof this
property by introducing a number of resource efficient
initiatives such as lighting movement sensors and T5
fluorescent lighting on refurbished floors, dual flush toilets
and low flush urinals. The energy initiatives have resulted
in a 20% reduction in overall energy consumption in
2007 as the graph below illustrates.
The greenhouse gas emissions created by the site have
been reduced from 2,593 to 2,040 tCO2e resulting in a
reduction of 553 tonnes of greenhouse gas emissions,
equivalent to taking over 120 cars off the road.
Additional initiatives have been identified through the
Improvement Roadmap and include reducing the overnight
energy load, improving boiler operations, reducing chilled
water operations during winter, reconfiguring car park
ventilation systems to run on demand and upgrading
common area lighting.
At DEXUS we take a holistic approach to CR&S and as
well as environmental improvements such as upgrading
existing waste management to increase recycling rates,
we also look at measures to improve tenant services such
as the incorporation of bicycle and shower facilities.
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Electricity (kWh)
Natural Gas (MJ)
Total Energy (MJ)
2. Building controls
A significant factor affecting the energy efficiency of buildings
is the standard to which building controls/management
systems operate. These BMS's drive the heating and cooling
requirements and determine the output of major plant and
equipment. In April 2008 we engaged a specialist controls
consultancy to undertake a strategic review and ‘tune-up’
of the BMS's in our office sector properties which will
continue into 08/09. This program is already delivering
significant energy improvements as the identified system
corrections are implemented.
3. Low emissions energy solutions
Delivering emissions solutions for the future also requires the
incorporation of low emissions energy solutions. The use of
co-generation and tri-generation systems offer a unique
opportunity to deliver buildings that have far smaller carbon
footprints than their predecessors. We are completing a
feasibility study of how these systems can be incorporated
into our existing buildings.
4. Water
Water use in buildings is mainly in three key areas; amenities,
cooling towers and leakage. Operating our buildings in
accordance with best practice guidelines ensures water-
efficient fixtures and fittings are implemented, comprehensive
cooling tower maintenance programs are in place and an
effective leak detection and rectification plan operates.
Throughout our office sector properties and as part of all
refurbishments, water saving measures are incorporated
including dual flush toilets, low or no water urinals, flow
restrictors, water saving taps and rated showerheads.
The measurement and monitoring of water consumption
assists in the identification of leaks and consumption
anomalies through the use of real time smart metering
at the incoming mains supply.
In addition, to implementing initiatives to minimise the use of
water, we look for opportunities, to include the harvesting of
rainwater for reuse and the treatment of rainwater run-off
in our property designs.
5. Waste
Managing and benchmarking waste management in an
office building is a key challenge in the property sector due
to the diversity of waste management programs provided by
cleaning contractors. As a consequence, waste recycling
programs that incorporate good levels of waste diversion
from landfill tend to be very management intensive.
Our objective is to improve our waste recycling and
management programs, review and enhance existing
systems to ensure comprehensive recycling programs and
measurement capability are incorporated within every
property’s waste management program. As part of this project
a best practice guideline is being developed which will be
utilised for all office properties in Australia.
2006
2007
54 DEXUS PROPERTY GROUP ANNUAL REPORT 2008
6. Business travel
Each year, members of the DEXUS team travel by air to
service our national and international portfolio.
EMISSIONS ARISING FROM BUSINESS TRAVEL (tCO2E) IN 2007
AIR TRAVEL (tCO2E) (INCLUDED IN TOTAL SCOPE 3 EMISSIONS)
In 2007, our people travelled a total of 3,435,975 kilometres.
We have purchased offsets for this business travel and other
business event emissions, such as our Annual Sustainability
& Risk Management Roadshows.
FLIGHT TYPE
DEFINITION TOTAL KM’S
Short Haul
Less than 500 km
41,885
Medium Haul
Less that 1,600 km
928,015
Long Haul
More than 1,600 km
2,466,075
Total
3,435,975
SCOPE 3
EMISSIONS
6.28
110.81
271.27
388.40
Notes: Based on GHG Protocol (2007) and a workforce of approxiamately
270 employees.
Source: GHG Protocol, Greenhouse Gas Protocol (2007).
Calculation Tools: CO2 Emissions from Business Travel – www.ghgprotocol.org
FUTURE PLANS – OUR PROPERTIES AND OUR ENVIRONMENT
IN 08/09 OUR FOCUS WILL INCLUDE:
› MINIMISING GREENHOUSE GAS EMISSIONS
› OFFSETTING EMISSIONS FROM OUR BUSINESS TRAVEL AND MAJOR CORPORATE EVENTS
› RESPONDING TO CARBON DISCLOSURE PROJECT CDP7
› DEVELOPING A CR&S AND SERVICE EXCELLENCE CHARTER FOR INTEGRATION INTO OUR
SUPPLY CHAIN AGREEMENTS
› IMPROVING SUSTAINABILITY DATA CAPTURE AND REPORTING TO REFINE BASELINE DATA
AND TARGETS
› CONTINUING TO BENCHMARK OUR ENVIRONMENTAL PERFORMANCE THROUGH THE USE
OF INDUSTRY RATING TOOLS
› ROLL OUT OF GBRMS:
OFFICE:
– COMPLETING PHASE 3 IMPROVEMENT ROADMAPS FOR REMAINING OFFICE PROPERTIES
RETAIL AND INDUSTRIAL:
– COMPLETING PHASE 1: GREEN PROFILING AND PHASE 2: GREEN OPPORTUNITIES FOR
RETAIL AND SELECTED INDUSTRIAL PROPERTIES
› INTEGRATING SUSTAINABILITY INITIATIVES INTO DEVELOPMENT PROJECTS:
› ENGAGING TENANTS ON SUSTAINABILITY INCLUDING:
– ROLL OUT OF TENANT SUSTAINABILITY GUIDELINES & GREEN LEASE SCHEDULE
– ENABLING TENANTS TO ACCESS OUR SUPPLY CHAIN TO SOURCE GREEN PRODUCTS
DEXUS PROPERTY GROUP ANNUAL REPORT 2008 55
CORPORATE GOVERNANCE STATEMENT
44 Market Street, Sydney
56 DEXUS PROPERTY GROUP ANNUAL REPORT 2008
DEXUS FUNDS MANAGEMENT LIMITED (DXFM) IS THE RESPONSIBLE ENTITY OF EACH OF
THE FOUR TRUSTS THAT COMPRISE DEXUS PROPERTY GROUP (DEXUS). DXFM IS ALSO
RESPONSIBLE FOR THE MANAGEMENT OF A NUMBER OF THIRD PARTY FUNDS AND
MANDATES.
The Board has determined that the following corporate
governance framework will apply to all the DXFM funds
and mandates for which it is responsible.
The corporate governance framework is designed to
support the strategic objectives for the Group by defining
accountability and creating control systems appropriate to
mitigate the risks inherent in its day to day operations.
To achieve this objective, DXFM has implemented a corporate
governance framework that meets the requirements of ASX
Corporate Governance Principles and Recommendations
(2nd edition) and addresses additional aspects of governance
that the Board considers appropriate.
A reconciliation of the ASX Principles against DXFM’s
governance framework can be found on the web page
www.dexus.com/Corporate-Governance.aspx
The Board
Roles and responsibilities
As DEXUS comprises four unit trusts, its corporate
governance practices satisfy the requirements relevant to
unit trusts. However, as the Group conducts itself as if it
were a public company, the Board has determined that its
governance framework will also satisfy the highest standards
of a publicly listed company. These additional governance
aspects include the conduct of an annual general meeting,
the appointment of directors by DEXUS security holders and
additional disclosures, such as the remuneration report.
The governance framework enables the Board to provide
strategic guidance, while exercising effective oversight of
management. The framework also defines the roles and
responsibilities of the Board and executive management in
order to facilitate Board and management accountability
and ensure a balance of authority.
The Board is responsible for establishing objectives and
ensuring strategies for their achievement are in place and
monitored. Goals are reviewed periodically to ensure that they
remain consistent with the Group’s priorities and the changing
nature of its business. These goals become the performance
targets for the CEO and Executive Committee. Performance
against these goals is reviewed annually by the Board
Nomination and Remuneration Committee and is taken
into account in the remuneration review of Executive
Committee members.
The Board carries ultimate responsibility for the approval
and monitoring of annual business plans, the approval of
acquisitions, divestments and major developments. The
Board also ensures that the fiduciary and statutory obligations
to its own security holders, third party clients and investors
are met.
The Board is directly responsible for appointing and removing
the Chief Executive Officer (CEO), ratifying the appointment
of the Chief Financial Officer (CFO) and Company Secretary,
and monitoring the performance of the Executive team.
The Board meets regularly throughout the year and, when
required, Directors also meet to consider specific business.
At each regular Board meeting the Independent Directors
also meet without Executive Directors.
Each year the Directors also meet with the Executive and
Senior Management to specifically consider strategy.
In addition to meeting these requirements, DXFM is
committed to maintaining, through both the Executive
Committee and the Board itself, a balance of skills,
experience and independence appropriate to the nature
and extent of its operations.
Composition
The composition of the Board reflects its role and the
duties and responsibilities it discharges. It reflects the need
for the Board to work together as a team with each Director
making their own contribution to the Board’s decision
making process.
General qualifications for Board membership include the
ability and competence to make appropriate business
recommendations and decisions, an entrepreneurial talent
for contributing to the creation of investor value, relevant
experience in the industry sector, high ethical standards,
exposure to emerging issues, sound practical sense and a
total commitment to the fiduciary and statutory obligations
to further the interests of all investors and achieve the
Group’s objectives.
The Board comprises seven members, five of whom are
independent, one of whom is a Non-Executive Director and
the Global Head of RREEF, Deutsche Bank’s global real
estate business and the seventh member is the DEXUS
CEO. Each Director held office for the full financial year.
DEXUS PROPERTY GROUP ANNUAL REPORT 2008 57
CORPORATE GOVERNANCE STATEMENT (CONTINUED)
The Chair is an Independent Director, and is responsible for
the leadership of the Board, for the efficient organisation and
conduct of the Board’s functions, and for the briefing of
Directors in relation to issues arising pertinent to the Board.
The Board has clearly defined the responsibilities and
performance of the CEO. The performance of the CEO is
monitored by the Chair.
CVs outlining the skills and experience of each Director are
set out in the Annual Report.
Please refer to www.dexus.com/Corporate-Governance.aspx
for a description of the procedure followed to select and
appoint new Directors to the Board of DXFM, which includes
specific criteria applied to determine Director independence.
Performance
To ensure that new Directors are able to meet their
responsibilities effectively, Directors receive an information
pack and induction briefing, which addresses the corporate
governance framework, committee structures and their terms
of reference, governing documents and background reports.
In addition, Directors undertake training, through regular
presentations by management and external advisers on
sector, fund and industry specific trends and conditions.
Directors are also encouraged to:
(cid:132)
take independent professional advice, at the Group’s
expense;
(cid:132)
seek additional information from management; and
(cid:132)
directly access the Company Secretary, General Counsel
and Head of Risk & Compliance.
The Board Nomination and Remuneration Committee
oversees the Board performance evaluation program which
extends over a two year period. The process is designed to
identify opportunities for performance improvement.
In 2008, the evaluation process looked at the performance of
the whole Board and its Committees and in 2007, individual
Director performance was evaluated. In each alternate year
the Board also reviews the progress of findings of the
previous year’s evaluation. The evaluation is undertaken
through the use of questionnaires and face to face interviews
on a broad range of issues.
Specific skills the incumbent Directors bring to the Board
include strategy, property management, funds management,
capital markets and financial management.
Independent Directors are independent of management and
free of any business or other relationship that could materially
interfere with the exercise of their unfettered and independent
judgement. Independent Directors are active in areas which
enable them to relate to the strategies of DEXUS and to make
a meaningful contribution to the Board’s deliberations.
The Board regularly assesses the independence of its
Independent Directors, in light of interests disclosed to it.
Directors of the Responsible Entity are not technically subject
to the approval of security holders. However, the Board has
determined that all Directors other than the CEO, will stand
for election by DEXUS stapled security holders. If a
nominated Director fails to receive a majority vote that
Director will not be appointed to the Board of DXFM.
DXFM Directors, other than the CEO, will hold office for three
years, following their first appointment (or, if appointed by the
Board between DEXUS Property Group Annual General
Meetings, from the date of the Annual General Meeting
immediately succeeding this appointment). It is not generally
expected that an Independent Director would hold office for
more than ten years, or be nominated for more than three
consecutive terms, whichever is the longer.
During the year, and as a result of internalisation of the
management of the Group, the Board considered the
independent status of Mr Brian Scullin.
Prior to 21 February 2008, Mr Scullin was a Deutsche Bank
appointed director. From 21 February 2008 Deutsche Bank is
no longer a related party of the DEXUS Property Group.
Mr Scullin’s final executive position with the Deutsche Bank
group was that of CEO of Deutsche Asset Management, until
in October 2002. Mr Scullin is no longer associated with
Deutsche Bank or RREEF, its global real estate business.
During the years that Mr Scullin has been a Director of
DEXUS Funds Management Limited, he has exercised his
responsibilities with a high degree of independence and has
significantly contributed to the effective review of the
performance of management. Mr Scullin has invariably
demonstrated autonomous thought and independent
judgement.
The Board therefore concluded that Mr Scullin is free of any
business or other relationship that could materially interfere
with, or could reasonably be perceived to materially interfere
with, the independent exercise of his judgement.
The Board has therefore determined that Mr Scullin should
be recognised as an independent Director of DXFM.
58 DEXUS PROPERTY GROUP ANNUAL REPORT 2008
Governance
The Board has established a number of committees to assist
it in the fulfilment of its responsibilities.
Board Nomination and Remuneration Committee
A Board Nomination and Remuneration Committee has been
established to oversee all aspects of Director and Executive
remuneration, Board renewal, Board and management
succession, performance evaluation, training and Director
nominations. It comprises three Independent Directors (one
of whom is the Chair). The members of the Board Nomination
and Remuneration Committee are:
The Board Audit Committee currently comprises three
Independent Directors, including the Chair. The Board Audit
Committee operates under formal Terms of Reference, has
access to management, and internal and external auditors
without management present, and has the right and
opportunity to seek explanations and additional information.
In addition, the external auditor is invited to attend all Board
Audit Committee meetings. The Committee may also obtain
independent professional advice in the satisfaction of its
duties at the cost of the Group. The Committee meets as
frequently as required to undertake its role effectively and not
less than four times per annum.
Christopher T Beare (Chair)
Independent Director
The members of the Board Audit Committee are:
Stewart F Ewen OAM
Brian E Scullin
Independent Director
Independent Director
Reporting to the Board Nomination and Remuneration
Committee and the Executive Committee, the Compensation
Committee has been established to oversee the development
and implementation of human resource management systems
and advise the Board Nomination and Remuneration
Committee.
Remuneration and incentive payments for employees are
considered by the Compensation Committee and
recommended to the Board Nomination and Remuneration
Committee, based on the achievement of approved
performance objectives and market comparatives.
Details of the Group’s remuneration framework for Executive,
Non-Executive Directors and employees are set out in the
Remuneration Report that forms part of the Directors’ Report
contained in this Annual Report.
There are no schemes for retirement benefits (other than
superannuation) for Non-Executive Directors.
Board Audit Committee
To ensure the truthful and factual presentation of each Trust’s
financial position, DXFM has put in place a structure of
review and authorisation for each of the Trust’s financial
records and reports. This structure includes:
(cid:132)
the establishment of a Board Audit Committee to review the
Financial Statements of each entity and review the
independence and competence of the external auditor; and
(cid:132)
semi-annual management representations to the Board
Audit Committee, affirming the veracity of each entity’s
Financial Statements.
The Board Audit Committee’s Terms of Reference require that
all members are financially literate and have an understanding
of the industry in which the Group operates, and one or more
members have specific financial expertise.
Elizabeth A Alexander AM (Chair)
Independent Director
Barry R Brownjohn
Brian E Scullin
Independent Director
Independent Director
In order to ensure the independence of the external auditor,
the Board Audit Committee has responsibility for approving
the engagement of the auditor for any non-audit service of
greater than $100,000.
Both the Chief Financial Officer and the Chief Executive
Officer, on a semi annual basis, make representations to the
Board Audit Committee regarding the veracity of the financial
statements and the financial risk management systems.
The Chief Executive Officer makes a representation in relation
to risk management at least quarterly to the Head of Risk &
Compliance, regarding conformance with compliance policies
and procedures. Any exceptions are reported by Compliance
to the Board Compliance Committee.
Furthermore, on a quarterly basis, the Chief Financial Officer
provides certification to the Board Compliance Committee
as to the continued adequacy of financial risk management
systems.
Board Compliance Committee
The Corporations Act does not require DXFM to maintain
a Compliance Committee while more than half its Directors
are external directors. However, the Board of DXFM has
determined that the Compliance Committee provides
additional control, oversight and independence of the
compliance function and therefore will be continued.
The Board Compliance Committee reviews compliance
matters and monitors DXFM conformance with the
requirements of the Corporations Act 2001 as it relates
to Managed Investment Schemes.
The Committee includes only members who are familiar
with the requirements of the Managed Investments Schemes
and have extensive risk and compliance experience. The
Committee is also encouraged to obtain independent
professional advice in the satisfaction of its duties at
the cost of the Group.
DEXUS PROPERTY GROUP ANNUAL REPORT 2008 59
CORPORATE GOVERNANCE STATEMENT (CONTINUED)
As at 30 June 2008, the Committee comprised five
members, three of whom are external members (i.e members
who satisfy the requirements of Section 601JB(2) of the
Corporations Act 2001), and two of whom are executives of
the Group.
The scope of the Committee includes all Trusts, including the
Group’s investment mandates. The Committee reports to the
Responsible Entity breaches of the Corporations Act 2001 or
breaches of the provisions contained in any Trust’s
Constitution or Compliance Plan, and further reports to ASIC
in accordance with legislative requirements. The members of
the Board Compliance Committee, as at 30 June 2008, are:
Brian E Scullin (Chair)
Independent Member
Elizabeth A Alexander AM
Independent Member
Andrew P Esteban
Tanya L Cox
John C Easy
Independent Member
Executive Member
Executive Member
The skills, experience and qualifications of Mr Scullin,
Ms Alexander, Ms Cox and Mr Easy are contained in this
Annual Report.
Mr Esteban holds a Bachelor of Business majoring in
Accounting. He is an Associate of the Australian Society of
CPA’s and a member of the Australian Institute of Company
Directors. He has 30 years experience in the financial
services industry, 21 years of which were with
Perpetual Trustees.
In December 1999 he established FP Esteban and
Associates, a private company specialising in implementing
and monitoring risk management and compliance frameworks
in the financial services industry.
Andrew has provided compliance consulting services to
organisations including UBS Global Asset Management in
Australia, Hong Kong, Singapore, Taiwan and China. He
currently sits as an independent member of compliance
committees or risk and audit committees for a range of
managed investment schemes, superannuation, insurance
and infrastructure products (retail and wholesale) including
Macquarie Bank, Credit Suisse Asset Management, Suncorp,
IAG, Schroder Investment Management and Deutsche Asset
Management Australia Ltd.
To enable the Board Compliance Committee to effectively
fulfil its obligations, the Internal Compliance Committee has
been established to monitor the effectiveness of the Group’s
internal compliance and control systems.
60 DEXUS PROPERTY GROUP ANNUAL REPORT 2008
Board Risk Committee
To oversee risk management at DEXUS, the Board has
established a Board Risk Committee responsible for reviewing
the Group’s operational risk management, environmental
management, and internal audit practices and to review any
incidents of fraud. The Committee also oversees the
effectiveness of the Group’s Risk Management Framework.
Issues relating to Occupational Health & Safety are also
reported to the Committee, as well as sustainability issues.
As at 30 June 2008, the Committee comprised three
Independent Directors:
Elizabeth A Alexander AM (Chair)
Independent Member
Brian E Scullin
Barry R Brownjohn
Independent Member
Independent Member
The Group is subject to those risks inherent in the business of
property funds management. These risks include:
1. Real Estate Risk – risks relating to the determination of
price supporting the acquisition or divestment of property.
2. Construction Risk – risks relating to the construction and
development of properties within the portfolio.
3. Operational Risk – risks relating to the ongoing operations
of each property including human resources, ethical
conduct, disaster recovery and business continuity.
4. Environmental Risk – the risk of damage to the
environment emanating from a property owned by the
Group or caused by a tenant of the Group.
5. Safety Risk – the risk of accidents or injury of employees
or visitors at properties owned or managed by the Group.
6. Compliance Risk – risks relating to the failure to comply
with applicable laws and regulations.
7. Market Risk – risks relating to the adverse affect of
changing economic conditions.
The management of both risk and compliance are important
aspects of the Group's activities. Consequently the Group has
created a segregated Risk & Compliance function reporting to
the Chief Operating Officer on a day to day basis, as well as
an Internal Compliance Committee, an Internal Risk
Committee, all of whom have independent reporting
lines to corresponding Board Committees.
Risk & Compliance team’s responsibility is to promote an
effective risk and compliance culture including the provision
of advice, the drafting and updating of relevant risk and
compliance policies and procedures, conducting training,
monitoring and reporting adherence to key policies
and procedures.
Furthermore, DXFM has appointed an external firm to provide
internal audit services to the Group. The appointment of an
external organisation has the advantage of introducing
broader industry experience to DXFM.
Ethical behaviour
Code of Conduct
To ensure the satisfaction of statutory and fiduciary
obligations to each of its investor groups and to maintain
confidence in its integrity, the Board has implemented a
series of clearly articulated compliance policies and
procedures by which it requires all employees to abide. In
addition, the Board considers it important that its employees
meet the highest ethical and professional standards and
consequently has established both an Employee Code of
Conduct, for all employees, and a Directors’ Code of Conduct.
Please refer to www.dexus.com/Corporate-Governance.aspx
for a copy of the Group’s Codes of Conduct.
The Group is committed to and strongly supports disclosure
being made of corrupt conduct, illegality or substantial waste
of company assets. The Group aims to provide protection to
employees who make such disclosures from any detrimental
action or reprisal.
Please refer to www.dexus.com/Corporate-Governance.aspx
for a copy of the whistle-blowing policy.
The internal audit program has a three year cycle. The results
of all audits are reported to the Internal Audit Committee and
the Board Risk Committee on a quarterly basis, and the
internal audit function has a dual reporting line to the Internal
Audit Committee and the Board Risk Committee.
Board Finance Committee
The Group has significant financial risks, including interest
rate and foreign exchange exposures. To assist in the effective
management of these exposures the Board has established a
number of committees to specifically manage these financial
risks. These committees are the Board Finance Committee
(previously the Board Treasury Policy Committee) and
management Capital Markets Committee. The Board Finance
Committee’s role is to review and recommend for approval to
the Board, financial risk management policies and hedging
and funding strategies, and to review forward looking
financial management processes and recommend periodic
market guidance.
Members of the Board Finance Committee at
30 June 2008 are:
Barry R Brownjohn (Chair)
Independent Director
Christopher T Beare
Independent Director
Elizabeth A Alexander AM
Independent Member
Management
The day to day management of each of the Trusts rests in the
hands of the management team. To assist this team in the
direction, implementation and monitoring of its plans and
strategies, a number of management committees have been
established and responsibilities delegated.
The management committees in place in 2008 are:
(cid:132)
Executive Committee
(cid:132)
Investment Committee
(cid:132)
Trust Planning Committee
(cid:132)
Internal Risk Committee
(cid:132)
Internal Audit Committee
(cid:132)
Internal Compliance Committee
(cid:132)
Capital Markets Committee
(cid:132)
Corporate Responsibility & Sustainability Committee
(cid:132)
Project Steering Committee
(cid:132)
Compensation Committee
A summary of the responsibilities of these
management committees is available at
www.dexus.com/Corporate-Governance.aspx
DEXUS PROPERTY GROUP ANNUAL REPORT 2008 61
CORPORATE GOVERNANCE STATEMENT (CONTINUED)
Insider Trading and Trading in DEXUS Securities
The Group has implemented a trading policy that sets out the
guidelines that apply to Directors and employees who wish to
invest in any of the Group’s financial products for their
personal account or on behalf of an associate.
The policy requires any Director or employee who wishes to
trade in any security issued or managed by DXFM to obtain
written approval before entering into a trade.
Generally, approval will not be granted during defined
blackout periods. These periods commence at the end of the
financial half-year or full-year reporting periods and end on
the day the results are released. In addition, if Compliance
or the Chief Executive Officer considers that there is the
potential that inside information may be held or that a
significant conflict of interest may arise, additional blackout
periods will be imposed.
The Board has determined that Directors will not trade in any
security managed by the Group, and the Senior Executive
team has similarly determined that they will not trade in any
security managed by the Group.
Directors have made this decision because the Board of
DXFM has responsibility for DEXUS as well as the third party
business. Directors are obliged to act in the best interests of
each group of investors independently of each other.
Therefore, to minimise the appearance of conflict that may
arise by being a Director of multiple funds, the Board has
determined that it will not invest in any fund managed by the
Group, including DEXUS. This position is periodically
reviewed by the Board.
With regard to aligning Senior Executives’ interests with the
interests of DEXUS's investors, the Board has put in place a
long-term incentive scheme that it considers ensures an
alignment of Senior Executive’s interests with all investors.
A description of the Senior Executives’ long-term incentive
scheme is contained in the Directors’ Report.
All employees are required to provide a quarterly declaration
confirming their understanding and compliance with the
Employee Trading Policy. Risk & Compliance undertakes
regular monitoring of the share register.
Please refer to www.dexus.com/Corporate-Governance.aspx
for a copy of the Employee Trading Policy.
Conflicts of Interest and Related Party Dealings
The Group has implemented policies covering the
management of conflicts of interest including:
(cid:132)
Employee trading
(cid:132)
Receipt and provision of gifts, benefits and entertainment
(cid:132)
Allocating property transactions
(cid:132)
Tenant conflicts
(cid:132)
Related party dealings
Where a conflict of interest has been identified, Compliance
liaises with the party concerned to ensure the effective and
timely management of the conflict.
Where a related party dealing has been identified, the
following process is adopted:
(cid:132)
at management level, the interests of both parties are
represented by dedicated teams, each headed by a
DEXUS executive;
(cid:132)
when required, at Board level the interests of both parties
are represented by dedicated Board members;
(cid:132)
information barriers are established with dedicated team
members operating on either side of the “wall”;
(cid:132)
team members are briefed by Compliance regarding their
obligations and responsibilities while working on the
transaction;
(cid:132)
a clean desk policy applies while the transaction is in
progress;
(cid:132)
documentation resulting from the transaction is maintained
on a restricted access database; and
(cid:132)
ongoing training is conducted for dedicated employees in
relation to management of conflicts of interest during the
life of the transaction.
On a monthly basis, the General Counsel reports to the Board
on related party transactions that have been managed in the
previous period. On a quarterly basis, the Head of Risk &
Compliance reports related party transactions to the Board
Compliance Committee. During the last financial year, related
party transactions have included:
(cid:132)
the sale of an industrial development by DEXUS to a
mandated client; and
(cid:132)
the acquisition of the 50% interest of DB RREEF Holdings
Pty Limited from Deutsche Bank.
62 DEXUS PROPERTY GROUP ANNUAL REPORT 2008
Continuous Disclosure
DXFM has implemented a process to ensure timely and
balanced continuous disclosure for all material matters that
impact the Group.
The process puts in place mechanisms designed to ensure
compliance with ASX Listing Rules and ASIC’s disclosure
requirements such that:
(cid:132)
all investors have equal and timely access to material
information, including the financial status, performance,
ownership and governance of the Trusts; and
(cid:132)
all announcements are factual and presented in a clear and
balanced way.
Please refer to www.dexus.com/Corporate-Governance.aspx
for a copy of the Continuous Disclosure and Analyst
Briefings Policy.
Training
Newly appointed members of the Senior Executive team
undertake induction training soon after commencing
employment. Induction training in relation to the operations
of DEXUS takes the form of a three hour, interactive training
session presented by the heads of various business units.
The Head of Risk & Compliance undertakes a one-to-one
Compliance Induction session with each newly appointed
Senior Executive outlining DEXUS’s approach to risk
management and compliance.
Annual General Meeting
DEXUS respects the rights of investors and to facilitate the
effective exercise of those rights, the Board has committed
to the conduct of an Annual General Meeting for DEXUS
Property Group.
Each annual general meeting is designed to:
(cid:132)
supplement effective communication with investors;
(cid:132)
provide investors ready access to balanced and
understandable information about their fund;
(cid:132)
increase the opportunities for investor participation; and
(cid:132)
facilitate investors’ rights to appoint Non-Executive
Directors to the Board of DXFM the Responsible Entity.
The external auditor of the Trust attends each Annual General
Meeting and will be available to answer investor questions
about the conduct of the audits of both the Trusts’ financial
records and their Compliance Plans and the preparation and
content of the Auditor’s Report.
In addition to conducting an Annual General Meeting, the
Group has a communications and investor relations strategy
that promotes an informed market and encourages
participation with its investors.
This strategy includes the use of the Group's website to
enable ready access to DEXUS announcements, annual and
half-year reports, presentations and analyst support material.
The website also has available significant historical
information on announcements, distributions and
other related information on its website at
www.dexus.com/Investor-Centre/DXS.aspx
DEXUS PROPERTY GROUP ANNUAL REPORT 2008 63
FINANCIAL REPORTS
DEXUS DIVERSIFIED TRUST
(FORMERLY DB RREEF DIVERSIFIED TRUST)
(ARSN 089 324 541)
ANNUAL FINANCIAL REPORT
30 JUNE 2008
CONTENTS
DIRECTORS’ REPORT
AUDITOR’S INDEPENDENCE DECLARATION
INCOME STATEMENTS
BALANCE SHEETS
STATEMENTS OF CHANGES IN EQUITY
CASH FLOW STATEMENTS
NOTES TO THE FINANCIAL STATEMENTS
DIRECTORS’ DECLARATION
INDEPENDENT AUDITOR’S REPORT
65
79
80
81
82
83
84
139
140
DEXUS Property Group (formerly DB RREEF Trust) (DXS) (ASX Code: DXS),
consists of DEXUS Diversified Trust (formerly DB RREEF Diversified Trust)
(DDF), DEXUS Industrial Trust (formerly DB RREEF Industrial Trust) (DIT),
DEXUS Office Trust (formerly DB RREEF Office Trust) (DOT), and DEXUS
Operations Trust (formerly DB RREEF Operations Trust) (DXO), (the Trusts).
Under Australian equivalents to International Financial Reporting Standards
(AIFRS), DDF has been deemed the parent entity for accounting purposes.
Therefore the DDF Consolidated Financial Statements include all entities
forming part of DXS.
All press releases, financial reports and other information are available on
our website: www.dexus.com
30 The Bond, Hickson Road, Sydney
64 DEXUS PROPERTY GROUP FINANCIAL REPORTS 2008
DIRECTORS’ REPORT
FOR THE YEAR ENDED 30 JUNE 2008
The Directors of DEXUS Funds Management Limited (formerly DB RREEF Funds Management Limited) (DXFM) as
Responsible Entity of DEXUS Diversified Trust (formerly DB RREEF Diversified Trust) (the Trust) and its consolidated
entities, DEXUS Property Group (formerly DB RREEF Trust) (DXS) present their Directors’ Report together with the
Consolidated Financial Statements for the year ended 30 June 2008.
The Trust together with DEXUS Industrial Trust (formerly DB RREEF Industrial Trust), DEXUS Office Trust (formerly
DB RREEF Office Trust) and DEXUS Operations Trust (formerly DB RREEF Operations Trust) form the DEXUS
Property Group stapled security.
1. Directors and secretaries
1.1 Directors
The following persons were Directors or Alternate Directors of DXFM at all times during the year, and to the date of this Directors’ Report:
DIRECTORS
Christopher T Beare
Elizabeth A Alexander AM
Barry R Brownjohn
Stewart F Ewen OAM
Victor P Hoog Antink
Charles B Leitner III
Brian E Scullin
Alternate Director
Andrew J Fay for Charles B Leitner III
APPOINTED
4 August 2004
1 January 2005
1 January 2005
4 August 2004
1 October 2004
10 March 2005
1 January 2005
30 January 2006
Particulars of the qualifications, experience and special responsibilities of current Directors and alternate Directors at the date of this Directors’
Report are set out in the Directors section of the Annual Report and form part of this Directors’ Report.
1.2 Company Secretaries
The names and details of the Company Secretaries of DXFM as at 30 June 2008 are as follows:
Tanya L Cox MBA MAICD ACIS (Company Secretary)
Appointed: 1 October 2004
Tanya Cox joined Deutsche Asset Management in July 2003 as Chief Operating Officer for the real estate funds management business,
responsible for the overall operational efficiency of the business in Australia. Tanya has held various general management positions over the past
16 years, including Director and Chief Operating Officer of NM Rothschild & Sons (Australia) Ltd and General Manager – Finance, Operations
and IT of Bank of New Zealand (Australia).
Tanya is Chief Operating Officer and Company Secretary of DXFM, DEXUS Holdings Pty Limited (formerly DB RREEF Holdings Pty Limited)
(DXH) and DEXUS Wholesale Property Limited (formerly DB RREEF Wholesale Property Limited) (DWPL) and is a member of the Board
Compliance Committee.
John C Easy B Comm LLB ACIS (Company Secretary)
Appointed: 1 July 2005
John Easy joined Deutsche Asset Management as a senior lawyer in 1997 and was involved in the listing of Deutsche Office Trust and a number
of major acquisition, disposal and leasing transactions for DXS. John has responsibility for all legal issues affecting DXS. John was formerly a
senior associate with law firms Allens Arthur Robinson and Gilbert & Tobin.
John is General Counsel and Company Secretary for DXFM, DXH and DWPL and is a member of the Board Compliance Committee.
DEXUS PROPERTY GROUP FINANCIAL REPORTS 2008 65
DIRECTORS’ REPORT (CONTINUED)
2. Attendance of Directors at Board meetings and Board Committee meetings
The number of Directors’ meetings held during the year and each Director’s attendance at those meetings is set out in the table below.
The Directors met 17 times during the year. Ten Board meetings were main meetings and seven meetings were held to consider specific
business. While the Board continuously considers strategy, in March 2008 it met with the executive and senior management over two days
to consider DXS’s strategic plans.
BOARD MEETINGS
MAIN MEETINGS HELD
MAIN MEETINGS
ATTENDED1
SPECIAL MEETINGS
HELD
SPECIAL MEETINGS
ATTENDED1
DIRECTORS
Christopher T Beare
Elizabeth A Alexander AM
Barry R Brownjohn
Stewart F Ewen OAM
Victor P Hoog Antink
Charles B Leitner III2
Brian E Scullin
10
10
10
10
10
10
10
10
10
10
10
10
9
10
7
7
7
7
7
7
7
7
6
7
7
6
7
6
1 Indicates where a Director attended either personally or their Alternate was in attendance.
2 Based in New York, USA.
Special meetings are held at a time to enable the maximum number of Directors to attend and are generally held to consider specific items that
cannot be held over to the next scheduled main meeting.
During the year the Board reviewed its Board Committee structure and on 1 October 2007 the Board implemented a number of committee
changes to enable the Directors to dedicate more time to the varying priorities of each Committee.
The table below sets out the number of Board Committee meetings held during the year for the Committees in place at the end of the year and
each Directors’ attendance at those meetings.
BOARD AUDIT
COMMITTEE
BOARD RISK
COMMITTEE
BOARD
COMPLIANCE
COMMITTEE
BOARD NOMINATION
AND REMUNERATION
COMMITTEE
BOARD
FINANCE
COMMITTEE
HELD ATTENDED HELD ATTENDED HELD ATTENDED HELD ATTENDED HELD ATTENDED
DIRECTORS
Christopher T Beare
Elizabeth A Alexander
AM
Barry R Brownjohn
Stewart F Ewen OAM
Victor P Hoog Antink
Charles B Leitner III
Brian E Scullin
–
5
5
–
–
–
5
–
5
5
–
–
–
5
–
3
3
–
–
–
3
–
3
3
–
–
–
3
–
3
–
–
–
–
3
–
3
–
–
–
–
3
3
–
–
3
–
–
3
3
–
–
3
–
–
3
3
3
3
–
–
–
–
3
3
3
–
–
–
–
66 DEXUS PROPERTY GROUP FINANCIAL REPORTS 2008
The table below sets out each Director’s attendance at the Board Risk and Compliance Committee meeting held prior to it being disbanded on
1 October 2007.
In addition, the Board Treasury Policy Committee did not meet before it was disbanded during the year.
DIRECTORS
Christopher T Beare
Elizabeth A Alexander AM
Barry R Brownjohn
Stewart F Ewen OAM
Victor P Hoog Antink
Charles B Leitner III
Brian E Scullin
BOARD RISK AND COMPLIANCE
COMMITTEE
BOARD TREASURY POLICY
COMMITTEE
HELD
ATTENDED
HELD
ATTENDED
1
1
1
1
–
–
–
–
–
–
3. Remuneration report
The Directors of DXFM as Responsible Entity of the Trust and its consolidated entities (DEXUS Property Group or DXS) present the
Remuneration Report. Sections 3.1, 3.2, 3.3, 3.4, 3.5, 3.6, 3.7 and 3.8 of this Remuneration Report for the year ended 30 June 2008 have
been prepared by the Board Nomination Remuneration Committee and adopted by the Board in accordance with (AASB 124: Related Party
Disclosures) which has been transferred from the Financial Report and has been audited. The remaining disclosures required by the
Corporations Law have not been audited.
Please note that a reference to remuneration in this Report has the same meaning as compensation for the purposes of AASB 124.
3.1 Board nomination and remuneration committee
The Board Nomination and Remuneration Committee oversees the remuneration of Directors and Senior Executives. The role and membership
of the Board Nomination and Remuneration Committee is set out in the Corporate Governance Statement in this Annual Report. The terms of
reference of the Board Nomination and Remuneration Committee can be found on the web page
http://www.dexus.com/Corporate–Governance.aspx
3.2 Non-Executive Director remuneration
The disclosures in this section of the report relate to the Non-Executive Directors of DXFM who held office during the year ended 30 June 2008.
3.2.1 Non-Executive Directors’ remuneration framework
The objective of the Non-Executive Directors’ remuneration framework is to ensure Non-Executive Directors’ fees reflect the responsibilities of
Directors and the demands which are made on them, as well as ensuring they are in line with market.
Non-Executive Directors’ fees are reviewed annually by the Board Nomination and Remuneration Committee. The Committee also obtains advice
from independent remuneration consultants from time to time. Non-Executive Directors, other than the Chair, receive a base fee plus an
additional fee for membership of a Board Committee. Taking into account the greater time commitment required, the Chair receives a higher fee
than other Directors, which is benchmarked to the market median for comparably sized ASX listed organisations. The Chair receives no Board
Committee fees, nor is the Chair present during any discussion relating to the determination of his fees.
Fees paid to Non-Executive Directors are paid from a remuneration pool of up to $1,250,000 per annum, which was approved by
DEXUS Property Group investors at the Annual General Meeting held on 25 November 2005.
DEXUS PROPERTY GROUP FINANCIAL REPORTS 2008 67
DIRECTORS’ REPORT (CONTINUED)
3. Remuneration report (continued)
3.2 Non-Executive Director remuneration (continued)
3.2.1 Non-Executive Directors’ remuneration framework (continued)
Board and Committee fees paid to Non-Executive Directors for the years ended 30 June 2007 and 30 June 2008 are set out in the table below:
DIRECTORS’
FEES
COMMITTEE FEES
BOARD
COMPLIANCE
BOARD
NOM & REM
NAME
Christopher T Beare
2008
2007
Elizabeth A Alexander AM
2008
2007
Barry R Brownjohn
2008
2007
Stewart F Ewen OAM
2008
2007
Charles B Leitner III1
2008
2007
Brian E Scullin
2008
2007
Total
2008
2007
BOARD
CHAIR
DWPL
$
$
BOARD
AUDIT &
RISK2
$
300,000
272,500
130,000
110,000
130,000
110,000
130,000
110,000
–
–
–
–
–
–
–
–
–
–
–
–
–
–
30,000
20,000
15,000
10,000
–
–
–
–
130,000
30,000
15,000
110,000
15,000
10,000
820,000
30,000
60,000
712,500
15,000
40,000
$
–
–
8,125
833
–
–
–
–
–
–
16,250
20,000
24,375
20,833
TOTAL
CASH
SALARY
AND FEES
BOARD
FINANCE4
$
–
–
$
300,000
272,500
5,625
173,750
–
130,833
15,000
160,000
–
–
–
–
–
–
–
135,000
137,500
117,500
–
–
198,750
162,500
20,625
970,000
BOARD
TREASURY
POLICY3
$
–
–
–
–
–
15,000
–
–
–
–
–
–
–
$
–
–
–
–
–
–
7,500
7,500
–
–
7,500
7,500
15,000
15,000
15,000
–
818,333
1 As an employee of the Deutsche Bank group Mr Leitner has waived his right to receive Directors’ fees. Accordingly, Mr Leitner’s alternate Director, Mr Fay, does not receive
directors’ fees when acting as his alternate.
2 Board Audit & Risk Committee was separated into two discrete committees on 1 October 2007.
3 Treasury Policy Committee was discontinued on 1 October 2007.
4 Finance Committee was newly constituted on 1 October 2007.
All Non-Executive Directors also receive reimbursement for reasonable travel, accommodation and other expenses incurred whilst undertaking
DEXUS Property Group business.
During the year ended 30 June 2008, Charles B Leitner III, Non-Executive Director, was an employee of RREEF America Inc., a Deutsche Bank
group company, and was not paid fees or any other remuneration by DXFM or DXH or any of their subsidiaries.
The Chief Executive Officer, Victor P Hoog Antink, does not receive fees in respect of his role as a Director, but does receive remuneration as
a Senior Executive of DXFM.
A private company associated with Mr Fay, received a consulting/advisory fee of $65,000 from DXFM for services rendered during the year
ended 30 June 2008.
68 DEXUS PROPERTY GROUP FINANCIAL REPORTS 2008
3.2.2 Remuneration paid
Details of the nature and amount of each element of remuneration for each Non-Executive Director of DXFM for the years ended 30 June 2007
and 30 June 2008 are set out in the following table.
NAME
Christopher T Beare
2008
2007
Elizabeth A Alexander AM
2008
2007
Barry R Brownjohn
2008
2007
Stewart F Ewen OAM
2008
2007
Brian E Scullin
2008
2007
Total
2008
2007
SHORT-TERM
EMPLOYEE BENEFITS
$
POST–EMPLOYMENT
BENEFITS1
$
OTHER LONG-TERM
BENEFITS
$
286,871
259,814
160,621
25,720
123,379
29,887
126,147
107,798
139,605
119,797
836,623
543,016
13,129
12,686
13,129
105,113
36,621
105,113
11,353
9,702
59,145
42,703
133,377
275,317
–
–
–
–
–
–
–
–
–
–
–
TOTAL
$
300,000
272,500
173,750
130,833
160,000
135,000
137,500
117,500
198,750
162,500
970,000
818,333
1 Post employment benefits represent compulsory and salary sacrificed superannuation benefits.
3.3 Executive remuneration framework
The disclosures in this section of the Report relate to the executives listed below, being the Chief Executive Officer and the Senior Executives
with authority and responsibility for planning, directing and controlling the activities of DEXUS Property Group during the financial year.
NAME
TITLE
Victor P Hoog Antink
Chief Executive Officer
THE DATE THEY QUALIFIED OR CEASED TO QUALIFY AS A
SENIOR EXECUTIVE DURING THE 12 MONTHS ENDED 30 JUNE 2008
Tanya L Cox
Pat A Daniels
John C Easy
Chief Operating Officer
Head of Human Resources
Qualified 14 January 2008
General Counsel
Ben J Lehmann
Fund Manager, DEXUS Property Group Ceased to qualify 27 March 2008
Louise J Martin
Head of Office
Qualified 27 March 2008
Craig D Mitchell
Chief Financial Officer
Qualified 17 September 2007
Paul G Say
Head of Corporate Development
Mark F Turner
Head of Unlisted Funds
Andrew P Whiteside
Head of Industrial
Qualified 28 April 2008
DEXUS PROPERTY GROUP FINANCIAL REPORTS 2008 69
DIRECTORS’ REPORT (CONTINUED)
The Board has made this decision because DXFM has responsibility
for the performance of DEXUS Property Group itself, as well as a
number of third party funds and mandates. To minimise any
appearance of conflict that may arise by being a manager of both
listed and unlisted funds, the Directors and Senior Executives have
determined that they will not directly invest in any fund managed by
DEXUS, including DEXUS Property Group’s own securities. This
action ensures that the Directors and Senior Executives are not
motivated to act in the interests of any one group of investors over
another.
Recognising the need to achieve an alignment of interest with
DXS investors, and the contribution third party funds make to the
performance of the DEXUS Property Group, the Board has
implemented a long-term incentive plan based on the combined
performance of DEXUS Property Group and each fund managed
by DEXUS. A detailed description of the long-term incentive plan
is outlined below.
Fixed remuneration
Fixed remuneration is positioned at the market median.
External remuneration consultants are retained to provide analysis
and advice regarding market remuneration for comparable roles,
responsibility and accountability. The fixed pay for all employees
is reviewed annually.
Performance incentive pool
All short-term incentive payments and long-term incentive allocations
are taken from a single performance incentive pool. The size of the
performance incentive pool in any year is determined after reference
to the group’s performance against specific financial and
non-financial targets determined by the Board. Should these
predetermined performance targets be achieved, an incentive pool,
approved by the Board following the recommendation of the Board
Nomination and Remuneration Committee, is made available for
allocation to all employees, including Senior Executives and the
Chief Executive Officer, for the financial year.
Short-term performance incentive
At the end of each year, performance against set targets is assessed
and the results reflected in the short-term performance incentive
allocation from the incentive pool to each employee. The
performance assessment is weighted to non-financial measures that
vary between positions but include matters such as achieving
delivery of projects, operational improvements, performance
enhancements, leadership and team work.
Where performance falls below minimum threshold levels, no
short-term performance incentive is paid. Short-term performance
incentives are payable in cash in August/September each year.
The Board reserves the right to exercise discretion in the final
determination of short-term incentives.
3. Remuneration report (continued)
3.3 Executive remuneration framework (continued)
The objective of DXFM’s executive remuneration framework is to
ensure remuneration for performance is competitive and appropriate
for the results delivered.
The framework for Senior Executive remuneration is based on the
following key criteria:
(cid:132)
transparency, competitiveness and reasonableness;
(cid:132)
linked to performance;
(cid:132)
the ability to attract high quality executives;
(cid:132)
the retention of high performing executives; and
(cid:132)
alignment of executives’ and investors’ interests.
Alignment to investors’ interests is achieved by a substantial
proportion of Senior Executive remuneration being dependent upon
performance. This ensures that remuneration for Senior Executives,
including the Chief Executive Officer, is closely linked to:
(cid:132)
overall share price performance, relative to peer performance; and
(cid:132)
achievement of key non-financial value drivers.
The DXFM performance management program incorporates the
establishment of specific, measurable, financial and non-financial
objectives for all employees, which are then monitored throughout
the year. Each of these individual objectives contribute to the
achievement of DEXUS’s overall strategic plans. At each year end
the degree of an employee’s achievement against objectives is
assessed and the results reflected in their “at risk” performance
incentive allocation.
Employee remuneration structure is a mix of:
(cid:132)
fixed salary, subject to annual review; and
(cid:132)
variable “at risk” pay earned according to short-term and
long-term performance incentive plans.
The balance of an employee’s remuneration between these
components changes to reflect the employee’s accountability and
responsibility for results. As an employee’s accountability and
responsibility increases the lower will be the fixed component and
the greater the “at risk” incentive component of their remuneration.
The DXFM target remuneration mix between fixed salary, short-term
and long-term incentives for the Chief Executive Officer and other
Senior Executives is outlined below:
2008
2007
FIXED
STI
LTI FIXED
STI
LTI
Chief Executive
Officer
Senior Executives
– Property
Senior Executives
– Other
40
45
50
30
30
25
30
25
25
45
50
50
25
25
25
30
25
25
No employee receives DEXUS Property Group securities or securities
in any other DEXUS product as part of their remuneration package.
This practice is in line with the DEXUS trading policy outlined in the
Corporate Governance Statement.
70 DEXUS PROPERTY GROUP FINANCIAL REPORTS 2008
Long-term incentive plan
In 2005 the Board implemented a long-term incentive plan, which has operated without change. The plan is designed to:
(cid:132)
more closely align participants’ interests with those of investors;
(cid:132)
provide participants with an incentive to create long-term, sustainable value for investors by enabling them to benefit from the long-term
success of DEXUS activities; and
(cid:132)
assist in attracting and retaining high quality executives.
At the end of each year, performance against set targets is assessed and the results reflected in the long-term performance incentive allocation
from the incentive pool to each participant. The performance assessment is weighted to financial measures that vary between positions but
include matters such as DXS total shareholder return relative to its peer group, earnings growth, net tangible asset backing and third party fund
performance. No long-term performance incentive allocation is granted for less than satisfactory performance. The Board Nomination and
Remuneration Committee recommends to the Board the employees, including Senior Executives, who will be eligible to participate in the
long-term incentive plan and the amount of long-term incentive that should be allocated to each participant.
The long-term incentive plan employs the following concepts:
(cid:132)
(cid:132)
the “Composite Total Return” is 50% of the total return of DEXUS Property Group, plus 50% of the combined asset weighted total return of its
unlisted funds and mandates; and
the “Performance Benchmark” is 50% of the S&P/ASX 200 Property Accumulation Index for DEXUS Property Group and 50 percent of the
Mercers Unlisted Property Fund Index for its unlisted funds and mandates.
In determining the construction of the Composite Total Return and in particular the relative weighting between the returns of DEXUS Property
Group and its unlisted funds and mandates, the Board considered the following factors:
(cid:132)
the desire of DEXUS Property Group to attract and retain third party funds and mandates based on the assurance that incentives are in place
to ensure their equitable treatment;
(cid:132)
the economic contribution to DEXUS Property Group of management fees arising from third party funds under management;
(cid:132)
the increased investment in its management team and infrastructure, enabled by third party funds management fees, which benefit investors
in both the unlisted funds platform and DEXUS Property Group, including an in–house research team, valuations team, building services team
and sustainability team, the cost of which is defrayed by those fees;
(cid:132)
the greater market presence that the third party business brings to the DEXUS Property Group.
The Board also considered whether the construction of the Composite Total Return should reflect the actual value of the unlisted funds and
mandates, and DEXUS Property Group’s own funds under management. However, the Board determined that a 50/50 allocation would provide
greater assurance that all investors were treated equitably, than an uneven allocation.
Consequently, the Board is satisfied that the composition of the long-term incentive plan reflects the value contribution of third party funds to
DEXUS Property Group.
The DXFM long-term incentive plan operates as follows:
(cid:132)
(cid:132)
(cid:132)
(cid:132)
each year the Board, following a recommendation from the Board Nomination and Remuneration Committee, allocates participants a
long-term incentive value. The long-term incentive value allocated varies depending on the role of the participant and the participant’s
performance against key performance indicators
the long-term incentive value is held by DXH until the end of the three year vesting period, and is notionally reinvested during the vesting
period in DEXUS Property Group securities (50% of long–incentive value) and its other unlisted funds and mandates (50% of long-term
incentive value). The resulting “banked value” of each participant’s long-term incentive allocation fluctuates in line with changes in the
Composite Total Return
at the end of the three year vesting period the final long-term incentive payment is determined by grossing up the final “banked value” by the
Performance Multiplier
the relevant Performance Multiplier is determined by comparing the Composite Total Return over the three year vesting period, to the
Benchmark.
The table below sets out the appropriate Performance Multiplier based on the comparison of Composite Total Return to the relevant
Benchmark performance:
PERFORMANCE
HURDLE
LESS THAN 95% OF
BENCHMARK
UP TO 100% OF
BENCHMARK
UP TO 115% OF
BENCHMARK
UP TO 130% OF
BENCHMARK
GREATER THAN
130% OF
BENCHMARK
Performance Multiplier
100%
110%
120%
140%
150%
(cid:132)
consequently, the long-term incentive payment made to each participant at the end of the vesting period reflects the overall return received by
DEXUS investors, with performance exceeding the benchmark being recognised by a greater long-term incentive payment.
Participants in the long-term incentive plan only receive cash payments. In addition, if a participant terminates their employment during the
vesting period their long-term incentive grant is forfeited, unless otherwise determined by the Board Nomination and Remuneration Committee.
DEXUS PROPERTY GROUP FINANCIAL REPORTS 2008 71
DIRECTORS’ REPORT (CONTINUED)
3. Remuneration report (continued)
3.3 Executive remuneration framework (continued)
Long-term incentive plan (continued)
The rules of the plan allow the Board Nomination and Remuneration Committee to exercise discretion in regard to the allocation of
long-term incentives.
The Board regularly reviews the construction of the long-term incentive plan. To ensure that the long-term incentive plan fairly reflects the
interests of DXS and other funds’ investors, during the 2008/09 year the Board will conduct a review of the plan, including consultation with
investors. Suggested plan improvements will be considered by the Nomination and Remuneration Committee and changes deemed to more
effectively motivate participants to create long-term, sustainable value for investors will be adopted in the 2008/09 plan year.
Performance indicators
Key performance indicators are typically a combination of financial and non-financial indicators which reflect the employee’s role, seniority,
accountability and responsibility and their personal objectives, and may include one or more of the following measures:
PERFORMANCE INDICATORS
REASON FOR USE
Financial performance indicators
Total shareholder return, relative to its peers
to ensure focus on total return, relative to its peer group
Earnings growth
Distributions growth
to ensure focus on improving earnings
to ensure focus on distributions to investors
Third party funds performance
to ensure focus on achieving each funds objectives
Property performance indicators
Net property income per property
to ensure focus on target income returns to investors
Percentage of vacant space per property
to ensure focus on target income returns to investors
Expenses against budget
Non-financial indicators
Project Delivery
Team work
3.4 DEXUS performance
to ensure focus on appropriate cost model
to ensure focus on achievement of non-financial drivers of performance
to ensure focus on achievement of non-financial drivers of performance
DEXUS Property Group was created as a single stapled security in September 2004. Since stapling, DEXUS Property Group’s operational and
financial performance has been in line with expectations.
FUNDS UNDER MANAGEMENT
AS AT 30 JUNE
2008
2007
2006
2005
DEXUS FUNDS
UNDER MANAGEMENT
($ BILLION)
THIRD PARTY FUND
UNDER MANAGEMENT
($ BILLION)
TOTAL DEXUS FUNDS
UNDER MANAGEMENT
($ BILLION)
8.86
9.03
7.85
7.00
6.41
4.63
3.90
3.50
15.27
13.66
11.75
10.50
72 DEXUS PROPERTY GROUP FINANCIAL REPORTS 2008
DEXUS PROPERTY GROUP – ASX MARKET CAPITALISATION
AS AT 30 JUNE
2008
2007
2006
2005
Source: IRESS
MARKET CAPITALISATION
($ BILLION)
4.20
5.69
4.10
3.70
DEXUS PROPERTY GROUP – EARNINGS, DISTRIBUTIONS AND NET TANGIBLE ASSETS (NTA)
YEAR TO 30 JUNE
EARNINGS PER SECURITY1
DISTRIBUTION PER SECURITY
NTA PER SECURITY
2008
2007
2006
2005
1 Earnings attributable to staple security holders.
Total return analysis
14.80 Cents
40.90 Cents
36.44 Cents
18.25 Cents
11.90 Cents
11.30 Cents
11.00 Cents
10.50 Cents
$1.77
$1.82
$1.53
$1.28
(cid:132)
(cid:132)
Composite Total Return – 50% of the total return of DEXUS Property Group, plus 50% of the combined asset weighted total return of its
unlisted funds and mandates.
Composite Performance Benchmark – 50% of the Mercers Unlisted Property Fund Index and 50% of the S&P/ASX 200 Property
Accumulation Index.
PERIOD TO 30 JUNE 2008
1 YEAR
(% PER ANNUM)
2 YEARS
(% PER ANNUM)
3 YEARS
(% PER ANNUM)
SINCE 1 OCTOBER 20041
(% PER ANNUM)
Composite Total Return
Composite Performance Benchmark
DEXUS Property Group
S&P/ASX 200 Property Accumulation Index
1 Inception date is 1 October 2004.
(7.2)
(10.8)
(24.7)
(36.3)
8.3
3.2
3.6
(10.5)
11.5
7.4
7.6
(2.1)
12.4
8.7
9.4
0.9
During the year DEXUS Property Group did not buy back or cancel any of its securities.
DEXUS Property Group Security Price Performance
DXS relative market price performance compared to S&P/ASX 200 (GICS) Property Accumulation Index
6 October 2004 to 30 June 2008
5/10/2004 = 100
160
140
120
100
)
$
(
e
c
i
r
P
80
Oct 04
S&P/ASX 200 (GICS) Property Accumulation Index
DXS
Source: IRESS/DEXUS
Dec 04
Mar 05
Jun 05
Sep 05
Dec 05
Mar 06
Jun 06
Sep 06
Dec 06
Mar 07
Jun 07
Sep 07
Dec 07
Mar 08
Jun 08
DEXUS PROPERTY GROUP FINANCIAL REPORTS 2008 73
DIRECTORS’ REPORT (CONTINUED)
3. Remuneration report (continued)
3.5 Details of Senior Executive remuneration paid/payable
Details of the nature and amount of each element of remuneration for the Chief executive officer and other Senior executives for the
years ended 30 June 2007 and 30 June 2008 are set out in the following table. this table includes details of the five highest paid Directors
or executives.
Short-tErm EmployEE bEnEfitS
CaSh Salary
anD fEES
Short-tErm
inCEntivE
namE
$
$
victor p hoog antink
othEr
Short-tErm
bEnEfit
$
poSt–Employ
bEnEfitS
pEnSion anD
SUpEr bEnEfitS
$
100,000
92,833
10,941
3,172
5,471
–
37,129
28,686
9,847
12,686
1,250
–
othEr long-tErm
bEnEfitS
total
long-tErm
inCEntivE
valUE
$
900,000
650,000
175,000
110,000
100,000
–
120,000
75,000
tErmination
bEnEfitS
$
$
– 3,000,000
– 2,200,000
–
–
–
–
–
–
725,000
600,000
268,941
–
605,000
500,000
–
1,105,000 1,461,191
250,000
250,000
–
1,100,000
907,167
900,000
550,000
339,059
311,828
200,000
175,000
103,470
60,000
–
–
297,871
286,314
150,000
110,000
346,344
407,314
–
250,000
116,607
225,000
–
–
–
–
–
–
–
–
–
–
–
–
–
–
273,768
250,000
162,592
42,899
250,000
–
–
292,438
–
–
–
466,871
122,438
225,000
20,000
377,172
297,615
200,000
200,000
61,228
200,000
–
–
–
–
–
–
280,000
–
–
–
–
–
–
39,206
13,129
4,229
42,828
42,385
3,282
–
–
–
–
250,000
–
200,000
180,000
100,000
–
–
–
–
–
–
–
920,000
592,857
–
979,259
–
–
500,000
831,644
–
–
–
–
–
–
955,000
426,667
820,000
720,000
364,510
–
2008
2007
tanya l Cox
2008
2007
pat a Daniels1
2008
2007
John C Easy
2008
2007
ben J lehmann2
2008
2007
louise J martin3
2008
2007
Craig D mitchell4
2008
2007
peter C roberts5
2008
2007
paul g Say
2008
2007
mark f turner
2008
2007
andrew p Whiteside6
2008
2007
total
2008
2007
3,482,390
2,410,000
2,625,114
1,305,000
162,592
280,000
266,776
223,197
2,345,000
1,105,000 9,771,758
1,265,000
500,000
6,198,311
1 pat Daniels qualified as a Senior executive on 14 January 2008.
2 Ben Lehmann ceased to qualify as a Senior executive on 27 March 2008.
3 Louise Martin qualified as a Senior executive on 27 March 2008.
4 Craig Mitchell qualified as a Senior executive on 17 September 2007.
5 peter Roberts ceased to qualify as a Senior executive on 8 June 2007.
6 Andrew Whiteside qualified as a Senior executive on 28 April 2008.
In addition to the above remuneration, Ben Lehmann received salary payments until 20 June 2008.
74 DEXUS propErty groUp FINANCIAL RepoRtS 2008
3.6 Details of Senior Executive long-term incentive plan grants
The table below sets out details of the long-term incentive plan grants to each Senior Executive.
NAME
YEAR GRANTED
LTI GRANT
VALUE
MOVEMENT IN
“BANKED VALUE”
CLOSING “BANKED
VALUE” AS AT
30 JUNE 2008
$
AWARD VESTED
AS AT
30 JUNE 2008
$
YEAR THAT
AWARD WILL
VEST
Victor P Hoog Antink
Tanya L Cox
Pat A Daniels1
John C Easy
Ben J Lehmann2
Louise J Martin3
Craig D Mitchell4
Paul G Say
Mark F Turner
Andrew P Whiteside5
2008
2007
2006
2005
2008
2007
2006
2005
2008
2008
2007
2006
2005
2007
2006
2005
2008
2008
2008
2008
2007
2006
2005
2008
$
900,000
650,000
250,000
187,500
175,000
110,000
60,000
10,000
100,000
120,000
75,000
50,000
12,500
250,000
120,000
50,000
250,000
250,000
250,000
200,000
180,000
70,000
10,000
100,000
$
(46,605)
43,625
73,556
(7,887)
10,470
3,923
(5,378)
8,725
4,904
(17,923)
20,940
19,615
603,395
293,625
261,056
102,113
70,470
13,923
69,622
58,725
17,404
232,077
140,940
69,615
391,584
20,885
26,106
232,077
140,940
104,423
(12,906)
12,215
3,923
167,094
82,215
13,923
20,885
2011
2010
2009
2008
2011
2010
2009
2008
2011
2011
2010
2009
2008
2010
2009
2008
2011
2011
2011
2011
2010
2009
2008
2011
1 Pat Daniels qualified as a Senior Executive on 14 January 2008.
2 Ben Lehmann ceased to qualify as a Senior Executive on 27 March 2008.
3 Louise Martin qualified as a Senior Executive on 27 March 2008.
4 Craig Mitchell qualified as a Senior Executive on 17 September 2007.
5 Andrew Whiteside qualified as a Senior Executive on 28 April 2008.
Differences in closing “banked value” and vested amounts shown in the above table reflect the impact of the performance multiplier described
in the terms of the long-term incentive plan outlined on page 71.
3.7 Equity plans and loans
DXFM does not operate a security or option participation plan or a loan plan for any Director or Senior Executive.
DEXUS PROPERTY GROUP FINANCIAL REPORTS 2008 75
DIRECTORS’ REPORT (CONTINUED)
3. Remuneration report (continued)
3.8 Employment agreements
The table below outlines employment arrangements for the Chief Executive Officer and other Senior Executives:
NAME AND TITLE
COMMENCEMENT DATE
TERM
TERMINATION PROVISIONS/BENEFITS
Non-Executive Directors
Three years
Non-Executive Directors are appointed for a maximum
three year term, at which time they may stand for re–election.
Victor P Hoog Antink
Chief Executive Officer
1 October 2004
Unlimited in term
Other Senior Executives
Various
Unlimited in term
In the event of termination DXH will provide six months notice
and may elect to pay out all or part of the notice period.
In the event that DXH initiates the termination for reasons
outside the control of the CEO, a severance payment, equal to
100% of fixed remuneration, is payable.
In the event of termination DXH will provide three months
notice and may elect to pay out all or part of the notice period.
In the event that DXH initiates the termination for reasons
outside the control of the executive, a severance payment will
be made taking into account the seniority of the executive, the
length of service, performance of the executive and the reasons
for termination.
The Nomination and Remuneration Committee will determine whether any STI or LTI payment is made. No notice is required in the event that
termination is for misconduct or serious or persistent breach of the agreement.
4. Directors’ interests
The Board’s policy on insider trading and trading in DXS securities or securities in any of the funds managed by DEXUS, by any Director or
employee is outlined in the Corporate Governance Statement.
While the trading policy described in the Corporate Governance Statement applies to Directors and Senior Executives, the Board has determined
that Directors will not trade in any security managed by DEXUS.
Directors have made this decision because the Board of DXFM has responsibility for DXS as well as the third party business. Directors are
obliged to act in the best interests of each group of investors independently of each other. Therefore, to minimise the appearance of conflict that
may arise by being a Director of multiple funds, the Directors have determined that they will not invest in any fund managed by DEXUS including
DXS. This position is periodically reviewed by the Board.
As a direct result of DEXUS’s policy regarding Directors holding DXS securities, or securities in any of the funds managed by DEXUS, as at the
date of this Directors’ Report no Director or alternate Director directly or indirectly held:
(cid:132)
securities in DXS; or
(cid:132)
options over, or any other contractual interest in, securities in DXS; or
(cid:132)
an interest in any other fund managed by DXFM or any other entity that forms part of DXS.
5. Directors’ directorships in other listed entities
The following table sets out directorships of other listed entities, not including DXFM, held by the Directors at any time in the three years
immediately prior to the end of the year, and the period for which each directorship was held:
DIRECTOR
COMPANY
CSL Limited
Boral Limited
Elizabeth A Alexander AM
AMCOR Limited
Deutsche Asset Management (Australia) Limited1
IYS Instalment Receipt Limited1
SPARK Infrastructure RE Limited2
Brian E Scullin
BT Investment Management Limited
Deutsche Asset Management (Australia) Limited1
Alternate Director
Andrew J Fay (alternate
to Charles B Leitner III)
IYS Instalment Receipt Limited1
SPARK Infrastructure RE Limited2
DATE
APPOINTED
DATE RESIGNED OR
CEASED BEING A DIRECTOR
OF A LISTED SECURITY
12 Jul 1991
15 Dec 1999
Apr 1994
24 Oct 2000
24 Oct 2000
1 Nov 2005
17 Sep 2007
20 Oct 2004
20 Oct 2004
7 Dec 2006
Oct 2005
17 Oct 2006
17 Oct 2006
24 Aug 2007
17 Oct 2006
17 Oct 2006
12 Dec 2007
1 IYS Instalment Receipt Limited had until 29 November 2006 issued ASX listed instalment receipts over units in the Deutsche Retail Infrastructure Trust, a managed
investment scheme that was until 17 October 2006 listed but not quoted on the ASX and whose Responsible Entity was Deutsche Asset Management (Australia) Limited.
Deutsche Asset Management (Australia) Limited ceased to be the Responsible Entity of IYS Instalment Receipt Limited on 17 October 2006.
2 SPARK Infrastructure RE Limited has issued ASX listed stapled securities trading as SPARK Infrastructure Group (ASX:SKI).
76 DEXUS PROPERTY GROUP FINANCIAL REPORTS 2008
6. Principal activities
During the year the principal activity of DXS was real estate funds
management and investment in real estate assets. There were no
significant changes in the nature of DXS’s activities during the year.
The number of employees of DXS at the end of the reporting period
being 30 June 2008 was 270 (2007: 227).
14. Interests in DXS
The movement in securities on issue in DXS during the year and the
number of securities on issue as at 30 June 2008 are detailed in
note 27 of the Notes to the financial statements and form part of this
Directors’ Report.
DXS did not have any options on issue as at 30 June 2008 (2007: nil).
7. Total value of Trust assets
The total value of the assets of DXS as at 30 June 2008 was
$9,349.0 million (2007: $9,486.8 million). Details of the basis of
this valuation are outlined in note 1 of the Notes to the financial
statements and form part of this Directors’ Report.
8. Review and results of operations
A review of the results, financial position, operations including
business strategies and the expected results of operations of DEXUS
Property Group, are set out in the Chief Executive Officer’s Report in
this Annual Report and forms part of this Directors’ Report.
9. Likely developments and expected results
of operations
In the opinion of the Directors, disclosure of any further information
regarding business strategies and the future developments or results
of DXS, other than the information already outlined in this Directors’
Report or the financial statements accompanying this Directors’
Report would be unreasonably prejudicial to DXS.
10. Significant changes in the state
of affairs
The Directors are not aware of any matter or circumstance, not
otherwise dealt with in this Directors’ Report or the financial
statements that has significantly or may significantly affect the
operations of DXS, the results of those operations, or the state
of DXS’s affairs in future financial years.
11. Matters subsequent to the end of
the financial year
Since the end of the year the Directors of DXFM are not aware of any
matter or circumstance not otherwise dealt with in this Directors’
Report or the financial statements that has significantly or may
significantly affect the operations of DXS, the results of those
operations, or the state of DXS’s affairs in future financial years.
12. Distributions
Distributions paid or payable by DXS for the year ended 30 June
2008 were 11.9 cents per security (2007: 11.3 cents per security)
as outlined in note 30 of the Notes to the financial statements.
13. DXFM’s fees and associate interests
Details of fees paid or payable by DXS to DXFM for the year ended
30 June 2008 are outlined in note 34 of the Notes to the financial
statements and form part of this Directors’ Report.
The number of interests in DXS held by DXFM or its associates as
at the end of the financial year are nil (2007: nil).
15. Environmental regulation
DXS senior management, through its Risk Management Committee,
oversee the policies, procedures and systems that have been
implemented to ensure the adequacy of its environmental risk
management practices. It is the opinion of this Committee that
adequate systems are in place for the management of its
environmental responsibilities and compliance with its various
licence requirements and regulations. Further, the Committee is not
aware of any breaches of these requirements and to the best of its
knowledge all activities have been undertaken in compliance with
environmental requirements.
16. Indemnification and insurance
The insurance premium for a policy of insurance indemnifying
Directors, officers and others (as defined in the relevant policy of
insurance) is paid by DXH. The auditors are in no way indemnified
out of the assets of DXS.
17. Audit
17.1 Auditor
PricewaterhouseCoopers (PwC or the Auditor) continues in office in
accordance with section 327 of the Corporations Act 2001.
17.2 Non-audit services
Details of the amounts paid to the Auditor, which include amounts
paid for non-audit services are set out in note 6 of the Notes to the
financial statements.
The Board Audit Committee is satisfied that the provision of
non-audit services provided during the year by the Auditor (or by
another person or firm on the Auditor’s behalf) is compatible with the
standard of independence for auditors imposed by the Corporations
Act 2001. The reasons for the Directors being satisfied are:
(cid:132)
Board Audit Committee has determined that the external auditor
will not provide services that have the potential to impair the
independence of its audit role, including:
–
participating in activities that are normally undertaken by
management; and
–
being remunerated on a “success fee” basis.
(cid:132)
Board Audit Committee has determined that the Auditor will not
provide services where the Auditor may be required to review or
audit its own work, including:
–
–
–
–
–
the preparation of accounting records;
the design and implementation of information technology
systems;
conducting valuation, actuarial or legal services;
promoting, dealing in or underwriting securities; or
providing internal audit services.
DEXUS PROPERTY GROUP FINANCIAL REPORTS 2008 77
DIRECTORS’ REPORT (CONTINUED)
17. Audit (continued)
17.2 Non-audit services (continued)
(cid:132)
Board Audit Committee regularly reviews the performance and
independence of the Auditor and whether the independence of
this function has been maintained having regard to the provision
of non-audit services. The Auditor has provided a written
declaration to the Board regarding its independence at each
reporting period and Board Audit Committee approval is required
before the engagement of the Auditor to perform any non-audit
service for a fee in excess of $100,000.
The above Directors’ statements are in accordance with the advice
received from the Board Audit Committee.
17.3 Auditor’s independence declaration
A copy of the Auditor’s Independence Declaration as required under
section 307C of the Corporations Act 2001 is set out in the financial
statements and forms part of this Directors’ Report.
18. Corporate governance
DXFM’s Corporate Governance Statement is set out in a separate
section of the Annual Report.
19. Rounding of amounts and currency
DXS is a registered scheme of a kind referred to in Class Order
98/0100, issued by the Australian Securities and Investments
Commission, relating to the “rounding off” of amounts in this
Directors’ Report and the financial statements. Amounts in this
Directors’ Report and financial statements have been rounded off in
accordance with that Class Order to the nearest thousand dollars,
unless otherwise indicated. All figures in this Directors’ Report and
the financial statements, except where otherwise stated, are
expressed in Australian dollars.
20. Management representation
The Chief Executive Officer and Chief Financial Officer have received
certificates from DXS’s Senior Executives, certifying that its financial
reporting processes, policies and procedures together with its risk
management and internal control and compliance policies and
procedures are adequate and it is their opinion that DXS’s financial
records for the financial year have been properly maintained in
accordance with the Corporations Act 2001 and the financial
statements and their notes comply with the accounting standards
and give a true and fair view.
21. Directors’ authorisation
This Directors’ Report is made in accordance with a resolution of the
Directors. The Financial Report was authorised for issue by the
directors on 20 August 2008. The directors have the power to
amend and reissue the Financial Report.
Christopher T Beare
Chair
Victor P Hoog Antink
Chief Executive Officer
20 August 2008
20 August 2008
78 DEXUS PROPERTY GROUP FINANCIAL REPORTS 2008
AUDITOR’S INDEPENDENCE DECLARATION
DEXUS PROPERTY GROUP FINANCIAL REPORTS 2008 79
INCOME STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2008
REVENUE FROM ORDINARY ACTIVITIES
Property revenue
Distribution revenue
Interest revenue
Management fees
CONSOLIDATED
PARENT ENTITY
NOTES
2008
$’000
2007
$’000
2008
$’000
2007
$’000
2
664,831
693,430
–
8,134
26,760
–
8,106
–
142,190
36,810
715
–
153,063
49,050
560
–
Total revenue from ordinary activities
699,725
701,536
179,715
202,673
Share of net profits of associates accounted for using the
equity method
16
Proceeds from sale of inventory
Net gain on sale of investment properties
Net fair value gain of investment properties
Net fair value (loss)/gain of investments
Net fair value (loss)/gain of derivatives
Net foreign exchange gain
Other income
Total income
EXPENSES
Property expenses
Responsible Entity fees
Finance costs
Carrying value of inventory sold
Depreciation and amortisation
Impairment of goodwill
Employee benefits expense
Other expenses
Total expenses
Profit before tax
TAX EXPENSE
Income tax benefit
Withholding tax (expense)
Total tax expense
Profit after tax
Profit attributable to:
34
3
5
4 (a)
4 (c)
2,467
–
2,297
52,715
3,959
3,355
184,444
831,330
–
(3,503)
3,442
1,253
–
727
1,349
1,672
–
–
(5,743)
30,733
(96,517)
(2,203)
48,314
478
–
–
15
217,847
73,909
838
33,322
87
890,125
1,596,643
154,777
528,691
(159,565)
(170,120)
(21,869)
(33,147)
(213,233)
(133,055)
(34,803)
(9,397)
(23,560)
(39,470)
(11,961)
(31,823)
–
(3,002)
(61)
(23,340)
(15,892)
(3,478)
(2,488)
–
–
–
–
–
–
–
–
–
–
(11,091)
(1,213)
(1,580)
(436,962)
(353,379)
(68,973)
(84,834)
453,163
1,243,264
85,804
443,857
1,542
(9,444)
(7,902)
1,110
(33,583)
(32,473)
–
–
–
–
–
–
445,261
1,210,791
85,804
443,857
Equity holders of the parent entity
Equity holders of other stapled entities (minority interest)
Stapled security holders
83,470
354,807
446,378
722,441
85,804
443,857
–
–
438,277
1,168,819
85,804
443,857
Net profit attributable to other minority interests
6,984
41,972
–
–
Net profit
445,261
1,210,791
85,804
443,857
EARNINGS PER UNIT
CENTS
CENTS
CENTS
CENTS
Basic earnings per unit on profit attributable to equity holders
of the parent entity
Diluted earnings per unit on profit attributable to equity
holders of the parent entity
40
40
2.82
2.82
The above Income Statements should be read in conjunction with the accompanying notes.
EARNINGS PER UNIT
Basic earnings per unit on profit attributable to stapled
security holders
Diluted earnings per unit on profit attributable to stapled
security holders
40
40
14.80
14.80
80 DEXUS PROPERTY GROUP FINANCIAL REPORTS 2008
15.62
15.62
40.90
40.90
2.90
2.90
15.53
15.53
BALANCE SHEETS
AS AT 30 JUNE 2008
CURRENT ASSETS
Cash and cash equivalents
Receivables
Derivative financial instruments
Other financial assets
Current tax assets
Other
Total current assets
NON-CURRENT ASSETS
Investment properties
Property plant and equipment
Other financial assets at fair value through profit and loss
Investments accounted for using the equity method
Investments in associates
Loans with related parties
Deferred tax assets
Intangible assets
Other
Total non-current assets
Total assets
CURRENT LIABILITIES
Payables
Interest bearing liabilities
Loans with related parties
Current tax liabilities
Provisions
Derivative financial instruments
Other
Total current liabilities
NON-CURRENT LIABILITIES
Interest bearing liabilities
Loans with related parties
Deferred tax liabilities
Financial liability with other minority interests
Provisions
Other
Total non-current liabilities
Total liabilities
Net assets
EQUITY
Equity attributable to equity holders of the parent entity
Contributed equity
Reserves
Undistributed income
CONSOLIDATED
PARENT ENTITY
NOTES
2008
$’000
2007
$’000
2008
$’000
2007
$’000
7
8
10
11
12
13
14
15
16
16
9
17
18
19
20
21
9
22
10
23
21
9
24
25
22
26
27
28
28
99,214
40,669
191,162
–
124
9,372
59,603
36,389
145,425
51,936
112
9,664
340,541
303,129
31,004
8,419
70,059
–
–
1,307
110,789
9,096
19,495
33,124
–
–
2,439
64,154
8,182,295
8,585,703
1,589,089
1,987,034
443,633
314,021
62,644
–
–
107,734
270,155
–
–
14,882
255,113
4,789
–
–
3,921
–
9,907
–
–
314,989
119,533
–
–
566
–
294,901
–
481,712
–
–
–
803
9,008,446
9,183,707
2,086,821
2,764,450
9,348,987
9,486,836
2,197,610
2,828,604
118,396
576,131
–
1,019
194,314
97,078
1,799
124,509
18,443
13,968
–
–
34,332
1,930
164,992
21,333
3,150
–
102,300
43,429
–
24,129
–
34,332
–
68,470
7,861
–
988,737
334,357
194,029
134,792
2,430,788
3,334,884
–
76,543
–
9,818
8,048
–
73,809
28,305
–
10,538
2,525,197
3,447,536
–
–
–
–
–
959
959
3,513,934
3,781,893
194,988
–
702,914
–
–
–
1,210
704,124
838,916
5,835,053
5,704,943
2,002,622
1,989,688
1,297,831
1,151,526
1,297,831
1,151,526
1,248
705,510
(925)
–
–
839,248
704,791
838,162
Parent entity security holders’ interest
2,004,589
1,989,849
2,002,622
1,989,688
Equity attributable to equity holders of other entities stapled to DDF (minority interest)
Contributed equity
Reserves
Undistributed income
Other stapled security holders’ interest
Stapled security holders’ interest
Other minority interest
Total equity
27
28
28
2,280,052
2,182,833
49,689
3,054
1,294,725
1,091,034
3,624,466
3,276,921
–
–
–
–
–
–
–
–
5,629,055
5,266,770
2,002,622
1,989,688
29
205,998
438,173
–
–
5,835,053
5,704,943
2,002,622
1,989,688
The above Balance Sheets should be read in conjunction with the accompanying notes.
DEXUS PROPERTY GROUP FINANCIAL REPORTS 2008 81
STATEMENTS OF CHANGES IN EQUITY
FOR THE YEAR ENDED 30 JUNE 2008
Total equity at the beginning of the year
5,704,943
4,715,513
1,989,688
1,619,954
CONSOLIDATED
PARENT ENTITY
NOTES
2008
$’000
2007
$’000
2008
$’000
2007
$’000
Exchange differences on translation of foreign operations
Revaluation increment on investment
Net income recognised directly in equity
Net profit
Total recognised income and expense for the year
Transactions with equity holders in their capacity as equity holders:
Contributions of equity, net of transaction costs
Distributions provided for or paid
Acquisition of investment
Transactions with other minority interest:
28
28
27
30
(14,486)
63,294
48,808
1,951
–
1,951
–
–
–
–
–
–
445,261
1,210,791
494,069
1,212,742
85,804
85,804
443,857
443,857
243,524
145,328
146,305
57,382
(355,380)
(324,638)
(219,175)
(131,505)
402
–
Contributions of equity, net of transaction costs
1,899
4,130
–
–
–
–
–
–
–
–
–
–
30
(17,536)
(19,045)
(265,989)
–
29,121
(29,087)
(363,959)
(223,312)
(72,870)
(74,123)
5,835,053
5,704,943
2,002,622
1,989,688
Distributions provided for or paid
Disposal of minority interest
Foreign currency translation reserve
Total transactions with equity holders
Total equity at the end of the year
Total recognised income and expense for the year is attributable to:
Equity holders of the parent entity – DDF unitholders
Equity holders of other entities stapled to DDF (minority interest)
85,643
401,442
444,714
726,056
85,804
443,857
–
–
Security holders of DEXUS Diversified Trust
487,085
1,170,770
85,804
443,857
Other minority interest
6,984
41,972
–
–
Total recognised income and expense for the year
494,069
1,212,742
85,804
443,857
The above Statements of Changes In Equity should be read in conjunction with the accompanying notes.
82 DEXUS PROPERTY GROUP FINANCIAL REPORTS 2008
CASH FLOW STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2008
CONSOLIDATED
PARENT ENTITY
NOTES
2008
$’000
2007
$’000
2008
$’000
2007
$’000
CASH FLOWS FROM OPERATING ACTIVITIES
Receipts in the course of operations (inclusive of GST)
783,742
768,804
179,091
178,475
Payments in the course of operations (inclusive of GST)
(252,212)
(280,014)
(74,314)
(81,829)
Interest received
10,149
9,702
Finance costs (paid to)/received from financial institutions
(174,204)
(191,047)
Distributions received
Dividends received
Income and withholding taxes paid
9,862
3,250
(6,142)
13,177
4,750
(5,637)
606
8,189
36,810
–
–
560
(11,015)
49,050
–
–
Net cash inflow from operating activities
38 (a)
374,445
319,735
150,382
135,241
CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds from sale of investment properties
793,200
194,160
446,799
Proceeds from sale of inventory
–
3,959
–
–
–
Payments for capital expenditure on investment properties
38 (b)
(167,642)
(167,233)
(58,198)
(84,637)
Payments for investment properties
Proceeds from sale of investments
Payments for acquisition of investments net of cash
Payments for investments accounted for using the equity method
Wind up of investment
Payments for property plant and equipment
Payments for capital expenditure on property plant and equipment
(321,327)
(393,627)
(2,800)
215,200
(321,191)
(18,630)
67
(80,661)
(87,951)
–
–
–
–
–
503,601
(96)
(8,897)
(141,178)
(1,131)
–
(69,683)
(96,591)
–
–
(15,605)
–
–
–
Net cash inflow/(outflow) from investing activities
11,065
(537,912)
732,523
(85,768)
CASH FLOWS FROM FINANCING ACTIVITIES
Establishment expenses and unit issue cost
Increase in other minority interest
Borrowings provided to the Trusts
Borrowings provided by the Trusts
Proceeds from borrowings
Repayment of borrowings
Repayment of loan notes
Distributions paid to security holders
Dividends paid to related parties
Distributions paid to other minority interests
(154)
1,651
–
–
–
2,343
–
–
2,487,200
2,053,575
–
–
–
–
(606,896)
(141,644)
104,348
264,620
80,165
111,340
(2,662,111)
(1,693,134)
(584,032)
(46,150)
(51,936)
–
–
–
(94,306)
(169,841)
(39,037)
(59,831)
(5,974)
–
(16,884)
(18,577)
–
–
–
–
Net cash (outflow)/inflow from financing activities
(342,514)
174,366
(860,997)
(56,120)
Net increase/(decrease) in cash and cash equivalents
Cash and cash equivalents at the beginning of the year
Effects of exchange rate changes on cash and cash equivalents
Cash and cash equivalents at the end of the year
7
42,996
59,603
(3,385)
99,214
(43,811)
106,428
(3,014)
59,603
21,908
9,096
–
31,004
(6,647)
15,743
–
9,096
The above Cash Flow Statements should be read in conjunction with the accompanying notes.
DEXUS PROPERTY GROUP FINANCIAL REPORTS 2008 83
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2008
Note 1. Summary of significant accounting policies
(b) Principles of consolidation
(a) Basis of preparation
In accordance with AASB Interpretation 1002: Post-Date-of-
Transition Stapling Arrangements, the Trusts must be consolidated.
The parent entity and deemed acquirer of the Trusts is DDF.
The DDF consolidated column represents the consolidated result of
DDF, which comprises DDF and its controlled entities, DIT and its
controlled entities, DOT and its controlled entities, DXO and its
controlled entities. Equity attributable to other trusts stapled to DDF
is a form of minority interest in accordance with AASB 1002 and, in
the DDF consolidated column, represents the equity of DIT, DOT and
DXO. Other minority interests represent the equity attributable to
parties external to the Trusts.
DEXUS Property Group (formerly DB RREEF Trust) stapled securities
(DXS) are quoted on the Australian Stock Exchange under the code
“DXS” and comprise one unit in each of DDF, DIT, DOT and DXO.
Each entity forming part of DXS continues as a separate legal entity
in its own right under the Corporations Act 2001 and is therefore
required to comply with the reporting and disclosure requirements
under the Corporations Act 2001 and Australian Accounting
Standards.
DEXUS Funds Management Limited (formerly DB RREEF Funds
Management Limited) (DXFM) as Responsible Entity for each of the
Trusts may only un-staple the Trusts if approval is obtained by
special resolution of the stapled security holders.
This general purpose Financial Report for the year ended
30 June 2008 has been prepared in accordance with the
requirements of the Trusts’ Constitutions, the Corporation Act 2001,
Australian Equivalents to International Financial Reporting Standards
(AIFRS) and Urgent Issues Group Interpretations. Compliance with
AIFRS ensures that the Consolidated Financial Statements and Notes
comply with International Financial Reporting Standards (IFRS).
This Financial Report is prepared on the going concern basis and
in accordance with historical cost conventions and has not been
adjusted to take account of either changes in the general purchasing
power of the dollar or changes in the values of specific assets,
except for the revaluation of certain non-current assets and financial
instruments (refer notes 1(e), 1(o), and 1(t)).
The accounting policies adopted are consistent with those of the
previous financial year and corresponding interim reporting period,
unless otherwise stated.
Critical accounting estimates
The preparation of Financial Statements in conformity with AIFRS
may require the use of certain critical accounting estimates and
management to exercise its judgement in the process of applying the
Trusts’ accounting policies. Other than the estimation of fair values
described in notes 1(e), 1(o), and 1(t), no key assumptions
concerning the future or other estimation of uncertainty at the
reporting date have a significant risk of causing material adjustments
to the Financial Statements in the next annual reporting period.
Controlled entities
The Financial Statements have been prepared on a consolidated
basis in recognition of the fact that while the securities issued by the
Trusts are stapled into one trading security and cannot be traded
separately, the Financial Statements must be presented on a
consolidated basis. The parent entity and deemed acquirer of the
Trusts is DDF. The accounting policies of the subsidiary trusts are
consistent with those of the parent.
The Financial Statements incorporate an elimination of inter-entity
transactions and balances to present the Financial Statements on a
consolidated basis. Net profit and equity in controlled entities, which
is attributable to the unitholdings of minority interests, are shown
separately in the Income Statements and Balance Sheets respectively.
Where control of an entity is obtained during a financial year, its
results are included in the Income Statements from the date on
which control is gained.
The Financial Statements incorporate all the assets, liabilities and
results of the parent and its controlled entities.
Partnerships and joint ventures
Where assets are held in a partnership or joint venture with another
entity directly, the Trusts’ share of the results and assets of this
partnership or joint venture are consolidated into the Income
Statements and Balance Sheets of the Trusts. Where assets are
jointly controlled via ownership of units in single purpose unlisted
unit trusts or shares in companies, the Trusts apply equity
accounting to record the operations of these investments
(refer note 1(r)).
(c) Revenue recognition
Rent
Rental income is brought to account on a straight-line basis over
the lease term for leases with fixed rent review clauses. In all other
circumstances rental income is brought to account on an accruals
basis. If not received at balance date, rental income is reflected in
the Balance Sheets as a receivable. Recoverability of receivables is
reviewed on an ongoing basis. Debts which are known to be not
collectable are written off.
Interest income
Interest income is brought to account on an accruals basis using the
effective interest rate method and, if not received at balance date, is
reflected in the Balance Sheets as a receivable.
Dividends and distribution income
Income from dividends and distributions are recognised when
declared. Amounts not received at balance date are included as
a receivable in the Balance Sheets.
84 DEXUS PROPERTY GROUP FINANCIAL REPORTS 2008
(d) Expenses
Expenses are brought to account on an accruals basis and, if not
paid at balance date, are reflected in the Balances Sheets as
a payable.
Property expenses
(iii) Debt and equity instruments issued by the Trusts
Financial instruments issued by the Trusts are classified as either
liabilities or as equity in accordance with the substance of the
contractual arrangements. Accordingly, ordinary units issued by DDF,
DIT, DOT and DXO are classified as equity.
Property expenses include rates, taxes and other property outgoings
incurred in relation to investment properties and property plant and
equipment where such expenses are the responsibility of the Trusts.
Interest and distributions are classified as expenses or as
distributions of profit consistent with the balance sheet classification
of the related debt or equity instruments.
Borrowing costs
Borrowing costs include interest, amortisation of discounts or
premiums relating to borrowings, amortisation or ancillary costs
incurred in connection with arrangement of borrowings and foreign
exchange losses net of hedged amounts on borrowings, including
trade creditors and lease finance charges. Borrowing costs are
expensed as incurred unless they relate to qualifying assets.
Qualifying assets are assets which take more than 12 months to
get ready for their intended use or sale. In these circumstances,
borrowing costs are capitalised to the cost of the asset. Where funds
are borrowed generally, borrowing costs are capitalised using a
weighted average capitalisation rate.
(e) Derivatives and other financial instruments
(i) Derivatives
The Trust’s activities expose it to a variety of financial risks including
foreign exchange risk and interest rate risk. Accordingly, the Trust
enters into various derivative financial instruments such as interest
rate swaps and foreign exchange contracts to manage its exposure to
certain risks. Written policies and limits are approved by the Board of
Directors of the Responsible Entity, in relation to the use of financial
instruments to manage financial risks. The Responsible Entity
continually reviews the Trust’s exposures and updates its treasury
policies and procedures. The Trust does not trade in derivative
instruments for speculative purposes.
Even though derivative financial instruments are entered into for the
purpose of providing the Trusts with an economic hedge, the Trusts’
have elected not to apply hedge accounting under AASB 139:
Financial Instruments: Recognition and Measurement. Accordingly,
derivatives including interest rate swaps, cross currency swaps and
foreign exchange contracts, are measured at fair value with any
changes in fair value recognised in the income statement.
(ii) Embedded derivatives
Derivatives embedded in other financial instruments or other host
contracts are treated as separate derivatives when their risks and
characteristics are not closely related to those of host contracts and
the host contracts are not measured at fair value with changes in fair
value recognised in the Income Statements.
Transaction costs arising on the issue of equity instruments are
recognised directly in equity (net of tax) as a reduction of the
proceeds of the equity instruments to which the costs relate.
Transaction costs are the costs that are incurred directly in
connection with the issue of those equity instruments and which
would not have been incurred had those instruments not been issued.
(iv) Financial guarantee contracts
Financial guarantee contracts are recognised as a financial liability at
the time the guarantee is issued. The liability is initially measured at
fair value and subsequently at the higher of the amount determined
in accordance with AASB 137: Provisions, Contingent Liabilities and
Contingent Assets and the amount initially recognised less
cumulative amortisation, where appropriate.
The fair value of financial guarantees is determined as the present
value of the difference in the net cash flows between the contractual
payments under the debt instrument and the payments that would
be required without the guarantee, or the estimated amount that
would be payable to a third party for assuming the obligations.
Where guarantees in relation to loans or other payables of
subsidiaries or associates are provided for no compensation, the fair
values are accounted for as contributions and recognised as part of
the cost of the investment.
(v) Other financial assets
Loans and other receivables are measured at amortised cost using
the effective interest rate method less impairment.
(f) Goods and services tax/value added tax
Revenues, expenses and capital assets are recognised net of any
amount of Australian/New Zealand/Canada goods and services tax
(GST) or French and German value added tax (VAT), except where
the amount of GST/VAT incurred is not recoverable. In these
circumstances the GST/VAT is recognised as part of the cost of
acquisition of the asset or as part of the expense.
Cash flows are included in the cash flow statements on a gross
basis. The GST component of cash flows arising from investing and
financing activities which is recoverable from or payable to the
Australian Taxation Office is classified as operating cash flows.
DEXUS PROPERTY GROUP FINANCIAL REPORTS 2008 85
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 JUNE 2008
DEXUS GLOG Trust (formerly DB RREEF GLOG Trust), a wholly
owned Australian sub-trust of DIT, is liable for German income tax
on its German taxable income at the rate of 15.82% from
1 January 2008 (this rate was 26.375% prior to 1 January 2008). In
addition, a deferred tax liability or asset and its related deferred tax
expense/benefit is recognised on differences between the tax cost
base of the German real estate assets and their accounting carrying
value at balance date.
DOT NZ Sub-Trust No. 1, a wholly owned Australian sub-trust of
DOT, is liable for New Zealand corporate tax on its New Zealand
taxable income at the rate of 33%. In addition, a deferred tax liability
or asset and its related deferred tax expense/benefit is recognised
on differences between the tax cost base of the New Zealand real
estate asset and the accounting carrying value at balance date.
DEXUS Canada Trust (formerly DB RREEF Canada Trust), a wholly
owned Australian sub-trust of DIT, is liable for Canadian income tax
on its Canadian taxable income at the rate of 25%. In addition, a
deferred tax liability or asset and its related deferred tax expense/
benefit is recognised on differences between the tax cost base of the
Canadian real estate asset and the accounting carrying value at
balance date.
Tax consolidation
DXH is the head entity in the DXH tax consolidated group comprising
DEXUS Funds Management Limited (formerly DB RREEF Funds
Management Limited), DEXUS Property Services Pty Limited
(formerly DB RREEF Property Services Pty Limited), DEXUS
Financial Services Pty Limited (formerly DB RREEF Financial
Services Pty Limited) and DEXUS Wholesale Property Limited
(formerly DB RREEF Wholesale Property Limited). The implementation
date for the tax-consolidated group was 1 October 2004.
The entities in the DXH tax consolidated group entered into a Tax
Sharing Deed on 29 June 2007 (effective 1 July 2006). In the
opinion of the directors, this limits the joint and several liability of the
wholly-owned entities in the case of a default by the head entity, DXH.
DXH and the controlled entities in the tax consolidated group
continue to account for their own current and deferred tax amounts.
These notional tax amounts are measured as if each entity in the
tax consolidated group continues to be a stand alone taxpayer in its
own right pursuant to the Tax Funding Deed entered into on 29 June
2007 (effective 1 July 2006).
Under the Tax Funding Deed, the wholly owned entities fully
compensate DXH for any current tax payable assumed and are
compensated by DXH for any current tax receivable. The funding
amounts are determined by reference to the amounts recognised in
the wholly owned entities’ financial statements and are recognised
as current intercompany receivables or payables.
(h) Distributions
In accordance with the Trusts’ Constitutions, the Trusts distribute
their distributable income to unitholders by cash or reinvestment.
Distributions are provided for when they are approved by the Board
of Directors and declared.
Note 1. Summary of significant accounting policies
(continued)
(g) Taxation
Under current Australian income tax legislation DDF, DIT and DOT,
are not liable for income tax provided they satisfy certain legislative
requirements. These Trusts may be liable for income tax in
jurisdiction where foreign property is held (i.e United States,
France, Germany, Canada, New Zealand).
DXO is a trading trust and is subject to Australian income tax
as follows:
(cid:132)
(cid:132)
(cid:132)
(cid:132)
The income tax expense for the year is the tax payable on the
current year’s taxable income based on a tax rate of 30% adjusted
for changes in deferred tax assets and liabilities and unused tax
losses;
Deferred tax assets and liabilities are recognised for temporary
differences arising from differences between the carrying amount
of assets and liabilities and the corresponding tax base of those
items. The relevant tax rates are applied to the cumulative
amounts of deductible and taxable temporary differences to
measure the deferred tax assets or liabilities. An exception is
made for certain temporary differences arising from the initial
recognition of an asset or a liability (where they do not arise as a
result of a business combination and did not affect either
accounting profit/loss or taxable profit/loss);
Deferred tax assets are recognised for deductible temporary
differences and unused tax losses only if it is probable that future
taxable amounts will be available to utilise those temporary
differences and losses;
Deferred tax assets and liabilities are not recognised for temporary
differences between the carrying amount and tax bases of
investments in controlled entities where the parent entity is able to
control the timing of the reversal of the temporary differences and
it is probable that the differences will not reverse in the
foreseeable future; and
(cid:132)
Current and deferred tax balances attributable to amounts
recognised directly in equity are also recognised directly in equity.
Withholding tax payable on distributions received by the Trusts from
DEXUS Industrial Properties Inc (formerly DB RREEF Industrial
Properties Inc) (US REIT) and DEXUS US Properties Inc (formerly
DB RREEF US Properties Inc) (US REIT II) are recognised as an
expense when tax is withheld.
In addition, a deferred tax liability or asset and related deferred tax
expense/benefit is recognised on differences between the tax cost
base of US assets and liabilities in the Trusts (held by US REIT and
US REIT II) and their accounting carrying values at balance date.
Any deferred tax liability or asset is calculated using a blend of the
current withholding tax rate applicable to income distributions and
the applicable US federal and state taxes.
Under current Australian income tax legislation, the security holders
will generally be entitled to receive a foreign tax credit for US
withholding tax deducted from distributions paid by the US REIT and
US REIT II.
DIT France Logistique SAS (DIT France), a wholly owned sub-trust of
DIT, is liable for French corporation tax on its taxable income at the
rate of 34.43%. In addition, a deferred tax liability or asset and its
related deferred tax expense/benefit is recognised on differences
between the tax cost base of the French real estate assets and their
accounting carrying value at balance date.
86 DEXUS PROPERTY GROUP FINANCIAL REPORTS 2008
(i) Repairs and maintenance
(o) Investment properties
Plant is required to be overhauled on a regular basis and is managed
as part of an ongoing major cyclical maintenance program. The costs
of this maintenance are charged as expenses as incurred, except
where they relate to the replacement of a component of an asset, in
which case the replaced component will be derecognised and the
replacement costs capitalised in accordance with note 1(o). Other
routine operating maintenance, repair costs and minor renewals are
also charged as expenses as incurred.
(j) Cash and cash equivalents
Cash and cash equivalents include cash on hand, deposits held at
call with financial institutions and other short-term, highly liquid
investments with original maturities of three months or less that are
readily convertible to known amounts of cash and which are subject
to an insignificant risk of changes in value.
(k) Receivables
Trade receivables are recognised initially at fair value and
subsequently measured at amortised cost using the effective interest
rate method, which is based on the invoiced amount less provision
for doubtful debts. Trade receivables are required to be settled within
30 days and are assessed on an ongoing basis for impairment.
Receivables which are known to be uncollectible are written off. A
provision for doubtful debts is established when there is objective
evidence that the Trusts will not be able to collect all amounts due
according to the original terms of the receivables.
(l) Other financial assets at fair value through profit and loss
Interests held by the Trust in controlled entities and associates are
measured at fair value with changes in fair value recognised
immediately in the Income Statements.
(m) Property plant and equipment
Property under development is carried at historical cost until the
development is complete. All costs of development are capitalised
against the property and are not depreciated. Upon completion of
development, the assets are classified as investment property.
Investment properties consist of properties held for long-term rental
yields, capital appreciation or both. Investment properties are initially
recognised at cost including transaction costs. Investment properties
are subsequently recognised at fair value in the Financial Statements.
Each valuation firm and its signatory valuer are appointed on
the basis that they are engaged for no more than three
consecutive valuations.
The basis of valuations of investment properties is fair value being
the amounts for which the assets could be exchanged between
knowledgeable willing parties in an arm’s length transaction, based
on current prices in an active market for similar properties in the
same location and condition and subject to similar leases. Where this
is not available, an appropriate valuation method is used, which may
include the discounted cashflow and the capitalisation method.
Discount rates and capitalisation rates are determined based on
industry expertise and knowledge, and where possible a direct
comparison to third party rates for similar assets in a comparable
location. Rental income from current leases and assumptions about
future leases, as well as any expected operational cash outflows in
relation to the property, are also reflected in fair value.
External valuations of the individual investments are carried out in
accordance with the Trusts’ Constitutions, or may be earlier where
the Responsible Entity believes there is a potential for a material
change in the fair value of the property.
Changes in fair values are recorded in the Income Statements. The
gain or loss on disposal of an investment property is calculated as
the difference between the carrying amount of the asset at the date
of disposal and the net proceeds from disposal and is included in the
Income Statements in the year of disposal.
Subsequent redevelopment and refurbishment costs (other than
repairs and maintenance) are capitalised to the investment property
where they result in an enhancement in the future economic benefits
of the property. Repairs and maintenance are accounted for in
accordance with 1(i).
All other property plant and equipment is stated at historical cost
less depreciation. Historical cost includes expenditure that is directly
attributable to its acquisition. Subsequent costs are included in the
asset’s carrying amount or recognised as a separate asset, as
appropriate, only when it is probable that future economic benefits
associated with the item will flow to the trust and the cost of the item
can be measured reliably. All other repairs and maintenance are
charged to the Income Statements during the financial period in
which they are incurred.
Held for sale investment properties
Investment properties intended for sale are separately disclosed
on the Balance Sheets as “Held for sale investment properties”.
Such properties are measured using the same methodology as
investment properties.
(p) Leasing fees
Leasing fees incurred are capitalised and amortised over the lease
periods to which they relate.
(n) Depreciation of property plant and equipment
(q) Lease incentives
Land is not depreciated. Depreciation on buildings (including fit-out)
is calculated on a straight-line basis so as to write off the net cost of
each non-current asset over its expected useful life. Estimates for
remaining useful lives are reviewed on a regular basis for all assets
and are as follows:
Buildings (including fit-out)
IT equipment
5–50 years
3–5 years
Prospective lessees may be offered incentives as an inducement to
enter into operating leases. These incentives may take various forms
including cash payments, rent free periods, or a contribution to
certain lessee costs such as fit out costs or relocation costs.
The costs of incentives are recognised as a reduction of rental
income on a straight-line basis from the earlier of the date which the
tenant has effective use of the premises or the lease commencement
date to the end of the lease term. The carrying amount of the lease
incentives is reflected in the fair value of investment properties.
DEXUS PROPERTY GROUP FINANCIAL REPORTS 2008 87
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 JUNE 2008
Note 1. Summary of significant accounting policies (continued)
(r) Investments accounted for using the equity method
Some property investments are held through the ownership of units in single purpose unlisted trusts or shares in unlisted companies where the
Trusts exert significant influence or joint control but does not have a controlling interest. These investments are considered to be associates and
the equity method of accounting is applied in the Consolidated Financial Statements.
Under this method, the entity’s share of the post-acquisition profits of associates is recognised as revenue in the Consolidated Income
Statements. The cumulative post-acquisition movements are adjusted against the carrying amount of the investment. Dividends or distributions
receivable from associates are recognised in the parent entity’s Income Statements, while in the Consolidated Financial Statements they reduce
the carrying amount of the investment.
When the Trusts’ share of losses in an associate equal or exceed its interest in the associate (including any unsecured receivables) the Trusts do
not recognise any further losses unless it has incurred obligations or made payments on behalf of the associate.
(s) Business combinations
The purchase method of accounting is used for all business combinations, including business combinations involving entities or businesses
under common control, regardless of whether equity instruments or other assets are acquired. Cost is measured as the fair value of the assets
given up, shares issued or liabilities assumed at the date of exchange plus costs directly attributable to the acquisition. Where equity instruments
are issued in an acquisition, the value of the instruments is their published market price as at the date of exchange unless, in rare
circumstances, it can be demonstrated that the published price at the date of exchange is an unreliable indicator of fair value and that other
evidence and valuation methods provide a more reliable measure of fair value. Transaction costs arising on the issue of equity instruments are
recognised directly in equity.
Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are measured initially at their fair values.
The excess of the acquisition cost over the fair value of the assets and liabilities acquired is recorded as goodwill (refer note 1(t)). If the cost is
less than the fair value of the net assets acquired, the difference is recognised directly in the Income Statements.
Where settlement of any part of cash consideration is deferred, the amounts payable in the future are discounted to their present value as at the
date of exchange at the entity’s incremental financing rate.
(t) Intangible assets
(i) Goodwill
Where a business combination is acquired, the identifiable net assets acquired are measured at fair value. The excess of the acquisition costs
over the fair value of the identifiable net assets is brought to account as goodwill in the Balance Sheets. The carrying value of the goodwill is
tested for impairment at each reporting date with any decrement in value taken to the Income Statements as an expense.
(ii) Management rights
Management rights represent the asset management rights owned by the Trust which entitle it to management fee revenue from both finite and
infinite trusts. The carrying value of these management rights is tested for impairment annually. If there is any impairment, this will be recognised
through the Income Statements and separately disclosed. Those rights that are deemed to have a finite useful life, are measured at cost and
amortised using the straight-line method over their estimated useful lives which vary from six to twenty-two years.
(u) Financial assets and liabilities
(i) Classification
DXS has classified its financial assets and liabilities as follows:
FINANCIAL ASSET/LIABILITY
CLASSIFICATION
VALUATION BASIS
REFERENCE
Refer note 1(j).
Refer note 1(k).
Refer note 1(e) (v).
Refer note 1(l).
Refer note 1(v).
Refer note 1(w).
Refer note 1(e).
Cash
Receivables
Fair value through profit and loss
Fair value
Loans and receivables
Other financial assets
Loans and receivables
Amortised cost
Amortised cost
Other financial assets
Fair value through profit and loss
Fair value
Payables
Financial liability at amortised cost
Amortised cost
Interest bearing liabilities
Financial liability at amortised cost
Amortised cost
Derivatives
Fair value through profit and loss
Fair value
Financial assets and liabilities are classified in accordance with the purpose for which they were acquired.
88 DEXUS PROPERTY GROUP FINANCIAL REPORTS 2008
(ii) Fair value estimation of financial assets and liabilities
(y) Earnings per unit
The fair value of financial assets and financial liabilities must be
estimated for recognition and measurement and for disclosure
purposes.
Earnings per unit are determined by dividing the net profit
attributable to equity holders of the parent entity by the weighted
average number of ordinary units outstanding during the year.
The fair value of financial instruments traded in active markets (such
as publicly traded derivatives and available for sale securities) is
based on quoted market prices at the balance sheet date. The
quoted market price used for financial assets held by the Trusts is
the current bid price. The appropriate quoted market price for
financial liabilities is the current ask price.
The fair value of financial instruments that are not traded in an active
market (for example, over-the-counter derivatives) is determined
using valuation techniques including dealer quotes for similar
instruments and discounted cash flows. In particular, the fair value of
interest rate swaps and cross currency swaps are calculated as the
present value of the estimated future cash flows, the fair value of
forward exchange rate contracts is determined using forward
exchange market rates at the balance sheet date, and the fair value
of barrier interest rate swaps and interest rate option contracts are
calculated as the present value of the estimated future cash flows
taking into account the time value and implied volatility of the
underlying instrument.
(v) Payables
These amounts represent liabilities for amounts owing at balance
date. The amounts are unsecured and are usually paid within 30
days of recognition.
(w) Interest bearing liabilities
Subsequent to initial recognition at fair value, net of transaction costs
incurred, interest bearing liabilities are measured at amortised cost.
Any difference between the proceeds (net of transaction costs) and
the redemption amount is recognised in the Income Statements over
the period of the borrowings using the effective interest method.
(x) Employee benefits
(i) Wages, salaries and annual leave
Liabilities for employee benefits for wages, salaries and annual leave
represent present obligations resulting from employees’ services
provided to reporting date, calculated at undiscounted amounts
based on remuneration wage and salary rates that the Trusts expect
to pay as at reporting date including related on-costs, such as
workers compensation, insurance and payroll tax.
(ii) Long service leave
The provision for employee benefits for long service leave represents
the present value of the estimated future cash outflows, to be made
resulting from employees’ services provided to reporting date.
The provision is calculated using expected future increases in wage
and salary rates including related on-costs and expected settlement
dates based on turnover history and is discounted using the rates
attaching to national government bonds at reporting date which most
closely match the term of the maturity of the related liabilities. The
unwinding of the discount is treated as long service leave expense.
(z) Foreign currency
Items included in the Financial Statements of the Trust are measured
using the currency of the primary economic environment in which
the entity operates (the functional currency). The Financial
Statements are presented in Australian dollars, which is the
functional and presentation currency of the Trust.
(i) Foreign currency transactions
Foreign currency transactions are translated into the functional
currency using the exchange rates prevailing at the dates of the
transactions. Foreign exchange gains and losses resulting from the
settlement of such transactions and from the translation at period
end exchange rates of financial assets and liabilities denominated in
foreign currencies are recognised in the Income Statements.
(ii) Foreign operations
Foreign operations are located in the United States of America,
New Zealand, France, Germany and Canada. These operations
have a functional currency of US Dollars, NZ Dollars, Euros and
Canadian Dollars respectively, which are translated into the
presentation currency.
The assets and liabilities of the foreign operations are translated at
exchange rates prevailing at the reporting date. Income and expense
items are translated at the average exchange rates for the period.
Exchange differences arising, are recognised in the foreign currency
translation reserve and recognised in profit or loss on disposal of the
foreign operation.
Goodwill and fair value adjustments arising on the acquisition of
a foreign operation on or after the date of transition to AIFRS are
treated as assets and liabilities of the foreign operation and
translated at exchange rates prevailing at the reporting date.
(aa) Segment reporting
A business segment is a group of assets and operations engaged
in providing services that are subject to risks and returns that are
different to those of other business segments. A geographical
segment is engaged in providing services within a particular
geographic environment and is subject to risks and returns that
are different from those of segments operating in other
geographic environments.
(ab) Rounding of amounts
The Trusts are the kind referred to in Class Order 98/0100, issued
by the Australian Securities and Investment Commission, relating to
the rounding off of amounts in the Financial Report. Amounts in the
Financial Report have been rounded off in accordance with that
Class Order to the nearest thousand dollars, or in certain cases,
the nearest dollar.
DEXUS PROPERTY GROUP FINANCIAL REPORTS 2008 89
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 JUNE 2008
Note 1. Summary of significant accounting policies
(continued)
(ac) New accounting standards and UIG interpretations
Certain new accounting standards and UIG interpretations have been
published that are not mandatory for the 30 June 2008 reporting
period. Our assessment of the impact of these new standards and
interpretations is set out below:
(i) AASB 8 Operating Segments and AASB 2007-3 Amendments to
Australian Accounting Standards arising from AASB 8 are effective for
annual reporting periods commencing on or after 1 January 2009.
AASB 8 will result in a significant change in the approach to segment
reporting, as it requires adoption of a “management approach” to
reporting on financial performance. The information being reported
will be based on what the key decision-makers use internally for
evaluating segment performance and deciding how to allocate
resources to operating segments. The Trusts intend to apply the
revised standard from 1 July 2009. Application of AASB 8 may result
in different segments, segment results and different type of
information being reported in the segment note of the financial
report. However, it will not affect any of the amounts recognised
in the financial statements.
(ii) Revised AASB 101 Presentation of Financial Statements and
AASB 2007-8 Amendments to Australian Accounting Standards
arising from AASB 101. The revised AASB 101 that was issued in
September 2007 is applicable for annual reporting periods beginning
on or after 1 January 2009. It requires the presentation of a
statement of comprehensive income and makes changes to the
Statements of Changes in Equity but will not affect any of the
amounts recognised in the financial statements. If an entity has
made a prior period adjustment or a reclassification of items in the
financial statements, it will also need to disclose a third balance
sheet (Statement of Financial Position), this one being as at the
beginning of the comparative period. The Trusts intend to apply the
revised standard from 1 July 2009.
(iii) Revised AASB 123 Borrowing Costs and AASB 2007-6
Amendments to Australian Accounting Standards arising from AASB
123 [AASB 1, AASB 101, AASB 107, AASB 111, AASB 116 & AASB
138 and Interpretations 1 & 12]. The revised AASB 123 is applicable
to annual reporting periods commencing on or after 1 January 2009.
It has removed the option to expense all borrowing costs and – when
adopted – will require the capitalisation of all borrowing costs directly
attributable to the acquisition, construction or production of a
qualifying asset. There will be no impact on the Financial Report of
the Trusts, as the Trusts already capitalise borrowing costs relating
to qualifying assets.
(iv) Revised AASB 3 Business Combinations, AASB 127
Consolidated and Separate Financial Statements and AASB 2008-3
Amendments to Australian Accounting Standards arising from
AASB 3 and AASB 127. Revised accounting standards for business
combinations and consolidated financial statements were issued in
March 2008 and are operative for annual reporting periods
beginning on or after 1 July 2009, but may apply earlier. The Trusts
will apply the revised standards from 1 July 2009. However, the new
rules generally apply only prospectively to transactions that occur
after the application date of the standard. Their impact will therefore
depend on whether the Trusts will enter into any business
combinations or other transactions that affect the level of ownership
held in the controlled entities in the year of initial application. For
example, under the new rules:
(cid:132)
all payments (including contingent consideration) to purchase a
business are to be recorded at fair value at the acquisition date,
with contingent payments subsequently remeasured at fair value
through income;
(cid:132)
all transaction cost will be expensed;
(cid:132)
the Trusts will need to decide whether to continue calculating
goodwill based only on the parent’s share of net assets or whether
to recognise goodwill also in relation to the non-controlling
(minority) interest; and
(cid:132)
when control is lost, any continuing ownership interest in the entity
will be remeasured to fair value and a gain or loss recognised in
profit or loss.
(v) Amendments to IFRS 1 and IAS 27 Cost of an Investment in a
Subsidiary, Jointly Controlled Entity or Associate. In May 2008, the
IASB made amendments to IFRS 1 First-time Adoption of
International Financial Reporting Standards and IAS 27 Consolidated
and Separate Financial Statements. The new rules will apply to
financial reporting periods commencing on or after 1 January 2009.
Amendments to the corresponding Australian Accounting Standards
are expected to be issued shortly. The Trusts will apply the revised
rules prospectively from 1 July 2009. After that date, all dividends
received from investments in subsidiaries, jointly controlled entities
or associates will be recognised as revenue, even if they are paid out
of pre-acquisition profits, but the investments may need to be tested
for impairment as a result of the dividend payment. Furthermore,
when a new intermediate parent entity is created in internal
reorganisations it will measure its investment in subsidiaries at the
carrying amounts of the net assets of the subsidiary rather than the
subsidiary’s fair value.
(vi) Improvements to IFRS. In May 2008, the IASB issued a number
of improvements to existing International Financial Reporting
Standards. The amendments will generally apply to financial
reporting periods commencing on or after 1 January 2009, except
for some changes to IFRS 5 Non-current Assets Held for Sale and
Discontinued Operations regarding the sale of the controlling interest
in a subsidiary which will apply from 1 July 2009. We expect the
AASB to make the same changes to Australian Accounting Standards
shortly. The Trusts will apply the revised standards from 1 July 2009.
The Trusts do not expect that any adjustments will be necessary as
the result of applying the revised rules.
90 DEXUS PROPERTY GROUP FINANCIAL REPORTS 2008
Note 2. Property revenue
Rent and recoverable outgoings
682,038
705,205
146,070
155,332
CONSOLIDATED
PARENT ENTITY
2008
$’000
2007
$’000
2008
$’000
2007
$’000
Incentive amortisation
Other revenue
Total property revenue
Note 3. Finance costs
Interest paid/payable
Interest paid to related party
Amount capitalised
Other finance costs
Net fair value loss/(gain) of interest rate swaps
Total finance costs
(42,034)
24,827
(37,661)
25,886
(5,822)
1,942
(6,220)
3,951
664,831
693,430
142,190
153,063
CONSOLIDATED
PARENT ENTITY
2008
$’000
2007
$’000
183,164
197,462
–
–
(17,949)
(14,639)
3,281
44,737
1,963
(51,731)
213,233
133,055
2008
$’000
–
10,429
(6,141)
237
19,035
23,560
2007
$’000
97
46,321
(3,746)
–
(10,849)
31,823
The average capitalisation rate used to determine the amount of borrowing costs eligible for capitalisation is 6.40% (2007: 6.58%).
Note 4. Income tax
(a) Income tax benefit
Current tax
Deferred tax
Income tax benefit
Deferred income tax expense included in income tax expense comprises:
(Increase) in deferred tax assets
Increase in deferred tax liabilities
CONSOLIDATED
2008
$’000
4,256
(5,798)
(1,542)
(6,135)
337
2007
$’000
2,241
(3,351)
(1,110)
(3,729)
378
(5,798)
(3,351)
DEXUS PROPERTY GROUP FINANCIAL REPORTS 2008 91
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 JUNE 2008
Note 4. Income tax (continued)
(b) Reconciliation of income tax benefit to net profit
Profit before tax
Profit not subject to income tax (note 1(g))
Prima facie Tax at the Australian tax rate of 30% (2007: 30%)
Tax effect of amounts which are not deductible (taxable)
in calculating taxable income:
Depreciation and amortisation
Share of net profits of associates
Revaluation of investment properties
Difference in overseas tax rates
Previously unrecognised tax losses now recognised
Tax offset for franked dividends
Sundry items
Under/(over) provision in prior year
Income tax benefit
(c) Withholding tax expense
CONSOLIDATED
2008
$’000
2007
$’000
453,163
1,243,264
(492,953)
(1,241,409)
(39,790)
(11,937)
1,855
557
(1,640)
700
13,445
–
(641)
(1,567)
25
10,322
73
(1,542)
(430)
47
1,628
(194)
(390)
(1,950)
(3)
(1,292)
(375)
(1,110)
Withholding tax expense of $9,444,000 (2007: $33,583,000) includes $7,236,000 (2007: $31,178,000) of deferred tax expense which
is recognised on differences between the tax cost base of the US assets and liabilities and their accounting carrying value at balance date.
The majority of the deferred tax expense arises due to the tax depreciation and revaluation of US investment properties as well as
mark-to-market of derivatives.
Note 5. Other expenses
Audit and other fees
Custodian fees
Legal and other professional fees
Bad and doubtful debts
Registry costs and listing fees
Occupancy expenses
Administration expenses
Other staff expenses
RREEF management fees
Other expenses
Total other expenses
CONSOLIDATED
PARENT ENTITY
2008
$’000
3,114
489
1,413
–
511
463
1,716
1,015
2,828
4,343
2007
$’000
2,829
515
448
2,083
443
–
–
–
1,907
2,866
15,892
11,091
2008
$’000
2007
$’000
386
136
378
–
161
–
–
–
–
562
172
1
644
142
–
–
–
–
152
1,213
59
1,580
92 DEXUS PROPERTY GROUP FINANCIAL REPORTS 2008
Note 6. Audit and advisory fees
During the year the auditor of the parent entity and its related practices and non-related audit firms earned the following remuneration:
(a) Assurance services
CONSOLIDATED
PARENT ENTITY
2008
$
2007
$
2008
$
2007
$
Audit Services
PwC audit and review of financial reports and other
audit work under the Corporations Act 2001
1,262,986
1,111,630
385,980
PwC fees paid in relation to outgoings audit1
171,118
194,627
24,206
426,183
38,250
Remuneration for audit services to PwC
1,434,104
1,306,257
410,186
464,433
Fees paid to non-PwC audit firms
885,981
691,626
–
22,941
Total remuneration for assurance services
2,320,085
1,997,883
410,186
487,374
(b) Taxation services
Fees paid to PwC Australia
Fees paid to PwC US
Remuneration for taxation services to PwC
Fees paid to non-PwC audit firms
518,070
269,105
787,175
295,648
318,843
443,588
762,431
263,815
Total remuneration for taxation services2
1,082,823
1,026,246
Total remuneration for assurance and taxation services
3,402,907
3,024,129
117,359
112,307
–
–
117,359
112,307
370
117,729
527,915
–
112,307
599,681
1 Included in property expenses are PwC fees paid in relation to outgoing audits.
2 These services include general compliance work, one off project work and advice with respect to the management of day to day tax affairs of the Trusts.
Note 7. Current assets – cash and cash equivalents
Cash at bank
Short-term deposits
Total current assets – cash and cash equivalents
CONSOLIDATED
PARENT ENTITY
2008
$’000
88,516
10,698
99,214
2007
$’000
59,603
–
2008
$’000
31,004
–
59,603
31,004
2007
$’000
9,096
–
9,096
DEXUS PROPERTY GROUP FINANCIAL REPORTS 2008 93
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 JUNE 2008
Note 8. Current assets – receivables
Rent receivable
Less: Provision for doubtful debts
Total rental receivables
Dividend receivable
Fee receivable
Other receivables from controlled entities
GST receivable
Interest receivable
Other receivables
Total other receivables
Total current assets – receivables
CONSOLIDATED
PARENT ENTITY
2008
$’000
12,254
(1,487)
10,767
–
11,907
–
–
4,532
13,463
29,902
40,669
2007
$’000
17,671
(2,232)
15,439
6,500
–
–
1,513
6
12,931
20,950
36,389
2008
$’000
1,802
(377)
1,425
–
–
2007
$’000
2,840
(681)
2,159
–
–
4,700
12,559
–
–
2,294
6,994
8,419
891
–
3,886
17,336
19,495
Other receivables from controlled entities
Other receivables from controlled entities is an inter-entity loan, which is a non-interest bearing loan between the Trust and its controlled entities.
Note 9. Loan with related parties
Non-current assets – loans with related parties
Intercompany loans2
Total non-current assets – loan with related parties
Current liabilities – loans with related parties
Non-interest bearing loans with the Trusts1
Total current liabilities – loan with related parties
Non-current liabilities – loans with related parties
Intercompany loans2
Total non-current liabilities – loan with related parties
CONSOLIDATED
PARENT ENTITY
2008
$’000
2007
$’000
2008
$’000
2007
$’000
–
–
–
–
–
–
–
–
–
–
–
–
119,533
119,533
34,332
34,332
–
–
34,332
34,332
–
–
702,914
702,914
1 Non-interest bearing loans with the Trusts were created to effect the stapling of the Trust, DIT, DOT and DXO. These loan balances eliminate on consolidation.
2 The intercompany loans represent interest-bearing loans with DEXUS Finance Pty Limited (formerly DB RREEF Finance Pty Limited) (DXF) to or from the Trusts.
These loan balances eliminate on consolidation.
94 DEXUS PROPERTY GROUP FINANCIAL REPORTS 2008
Note 10. Derivative financial instruments
CONSOLIDATED
PARENT ENTITY
2008
$’000
2007
$’000
2008
$’000
2007
$’000
Current assets
Interest rate swap contracts
Cross currency swap contracts
Forward foreign exchange contracts
138,359
136,160
42,141
10,662
–
9,265
Total current assets – derivative financial instruments
191,162
145,425
Current liabilities
Interest rate swap contracts
Forward foreign exchange contracts
Total current liabilities – derivative financial instruments
Net current derivative financial instruments
95,602
1,476
97,078
94,084
21,196
137
21,333
124,092
Refer note 31 for further discussion regarding derivative financial instruments.
Note 11. Current assets – other financial assets
34,470
30,567
5,022
70,059
42,539
890
43,429
26,630
28,961
–
4,163
33,124
7,861
–
7,861
25,263
Loan notes receivable from DEXUS Holdings Pty Limited
Total current assets – other financial assets
CONSOLIDATED
PARENT ENTITY
2008
$’000
–
–
2007
$’000
51,936
51,936
2008
$’000
–
–
2007
$’000
–
–
On 27 September 2004, DEXUS Holdings Pty Limited (formerly DB RREEF Holdings Pty Limited) (DXH) issued an equal amount of loan notes
to its two owners – First Australian Property Group Holdings Pty Limited (FAP) and DXO, in order to fund its 100% acquisition of DXFM (the
Responsible Entity of DXO). On 31 October 2006, DXH issued further loan notes of equal amounts to its two owners to fund the acquisition of
DWPL, the Responsible Entity of DEXUS Wholesale Property Fund (formerly DB RREEF Wholesale Property Fund) (DWPF). These loan notes
pay a coupon of 11% per annum, mature on 1 October 2024 and may be redeemed at any time prior to maturity.
On 21 February 2008, DXO purchased the remaining 50% interest in DXH from FAP resulting in DXH being consolidated from that date and
loan notes on issue to DXO being eliminated on consolidation. At the same time, DXH repaid the loan notes on issue to FAP.
Note 12. Current assets – other
Prepayments
Tenant bonds
Total current assets – other
CONSOLIDATED
PARENT ENTITY
2008
$’000
9,372
–
9,372
2007
$’000
9,651
13
9,664
2008
$’000
1,307
–
1,307
2007
$’000
2,439
–
2,439
DEXUS PROPERTY GROUP FINANCIAL REPORTS 2008 95
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 JUNE 2008
Note 13. Non-current assets – investment properties
(a) Properties
Held by parent entity
Kings Park Industrial Estate, Bowmans Road, Marayong, NSW
Target Distribution Centre, Lot 1, Taras Avenue, Altona North, VIC
Axxess Corporate Park, 164–180 Forster Road, 11 & 21–45 Gilby Road,
307–355 Ferntree Gully Road, Mount Waverley, VIC
Knoxfield Industrial Estate, 20 Henderson Road, Knoxfield, VIC
12 Frederick Street, St Leonards, NSW
40 Talavera Road, North Ryde, NSW
2 Alspec Place, Eastern Creek, NSW
Redwood Gardens Industrial Estate Stages 3,5,6 & 7 and Lot 4, Dingley, VIC
44 Market Street, Sydney, NSW
8 Nicholson Street, Melbourne, VIC
130 George Street & 105 Phillip Street, Parramatta, NSW
Flinders Gate Complex, 172 Flinders Street & 189 Flinders Lane, Melbourne, VIC
383–395 Kent Street, Sydney, NSW
14 Moore Street, Canberra, ACT**
Sydney CBD Floor Space1
Westfield Whitford City Shopping Centre Marmion & Whitfords Avenue, Hillarys, WA2
Westfield Whitfords Avenue Lot 6 Endeavour Road, Hillarys, WA2
West Lakes Shopping Centre, West Lakes, SA
Plenty Valley Town Centre, 330–464 McDonald’s Road, South Morang, VIC
Westfield North Lakes Shopping Centre, Corner Anzac Avenue and Northlakes Drive, Mango Hill, QLD
Albert & Charlotte Streets Carpark, Brisbane, QLD
34–60 Little Collins Street, Melbourne, VIC**
32–44 Flinders Street, Melbourne, VIC
Flinders Gate Carpark, 172–189 Flinders Street, Melbourne, VIC
383–395 Kent Street, Sydney, NSW
John Martin’s Carpark & Retail Plaza Joint Venture
Total parent entity
1 This relates to heritage floor space retained following the disposal of 1 Chifley Square, Sydney.
2 The valuation reflects 50% of the independent valuation amount.
The title to all properties is freehold, with the exception of the properties marked** which are leasehold.
OWNERSHIP
ACQUISITION
DATE
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
50%
50%
–
–
–
100%
100%
100%
100%
100%
1%
May 1990
Oct 1995
Oct 1996
Aug 1996
Jul 2000
Oct 2002
Mar 2004
Dec 1994
Sep 1987
Nov 1993
May 1997
Mar 1999
Sep 1987
May 2002
Jul 2000
Oct 1984
Dec 1992
Nov 1998
Nov 1999
Aug 2004
Oct 1984
Nov 1984
Jun 1998
Mar 1999
Sep 1987
Sep 1994
96 DEXUS PROPERTY GROUP FINANCIAL REPORTS 2008
COST INCLUDING
ALL ADDITIONS
$’000
INDEPENDENT
VALUATION DATE
INDEPENDENT
VALUATION AMOUNT
$’000
INDEPENDENT
VALUER
CONSOLIDATED BOOK
VALUE 30 JUNE 2008
$’000
CONSOLIDATED BOOK
VALUE 30 JUNE 2007
$’000
80,649
25,536
156,657
30,269
25,551
33,451
23,606
24,982
178,262
69,846
98,016
15,573
106,283
37,706
2,174
130,506
5,506
–
–
–
35,102
16,186
21,331
47,306
30,257
–
Jun 2008
Dec 2007
Jun 2008
Jun 2006
Jun 2007
Dec 2006
Dec 2006
Jun 2008
Jun 2008
Dec 2007
Jun 2006
Jun 2006
Jun 2008
Dec 2007
n/a
Jun 2007
Jun 2007
n/a
n/a
n/a
Jun 2006
Jun 2006
Jun 2006
Jun 2006
Jun 2008
n/a
104,000
37,500
192,650
37,050
38,000
31,200
26,000
30,250
225,000
106,500
80,000
18,000
153,000
49,500
–
252,350
24,650
–
–
–
38,500
37,500
32,500
39,000
65,000
–
(e)
(a)
(i)
(f)
(f)
(d)
(a)
(e)
(e)
(e)
(d)
(d)
(f)
(a)
–
(f)
(f)
–
–
–
(e)
(d)
(d)
(d)
(f)
–
104,000
34,200
192,650
35,300
37,000
33,910
24,800
30,250
225,000
99,000
92,000
21,350
153,000
46,500
2,174
255,350
24,650
–
–
–
–
41,000
32,592
39,263
65,000
100
101,000
36,512
184,000
37,098
38,000
33,800
26,010
29,950
220,000
98,000
93,059
18,265
131,378
45,000
2,173
252,350
24,650
174,000
66,750
164,500
39,354
39,500
32,585
39,000
60,000
100
1,194,755
1,618,150
1,589,089
1,987,034
DEXUS PROPERTY GROUP FINANCIAL REPORTS 2008 97
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 JUNE 2008
Note 13. Non-current assets – investment properties (continued)
(a) Properties (continued)
Other consolidated investment properties – non-current
79–99 St Hilliers Road, Auburn, NSW
3 Brookhollow Avenue, Baulkham Hills, NSW
1 Garigal Road, Belrose, NSW
2 Minna Close, Belrose, NSW
114–120 Old Pittwater Road, Brookvale, NSW
145–151 Arthur Street, Flemington, NSW
436–484 Victoria Road, Gladesville, NSW
1 Foundation Place, Greystanes, NSW
5–15 Rosebery Avenue & 25–55 Rothschild Avenue, Rosebery, NSW
10–16 South Street, Rydalmere, NSW
19 Chifley Street, Smithfield, NSW
Pound Road West, Dandenong, VIC
352 Macaulay Road, Kensington, VIC
DEXUS Industrial Estate Boundary Road, Laverton North, VIC1
250 Forest Road, South Lara, VIC
15–23 Whicker Road, Gillman, SA
25 Donkin Street South, Brisbane, QLD
52 Holbeche Road, Arndell Park, NSW
3–7 Bessemer Street, Blacktown, NSW
30–32 Bessemer Street, Blacktown, NSW
27–29 Liberty Road, Huntingwood, NSW
154 O’Riordan Street, Mascot, NSW
11 Talavera Road, North Ryde, NSW
DEXUS Industrial Estate, Egerton Street, Silverwater, NSW
239–251 Woodpark Road, Smithfield, NSW
40 Biloela Street, Villawood, NSW
114 Fairbank Road, Clayton, VIC
30 Bellrick Street, Acacia Ridge, QLD
68 Hasler Road, Herdsman, WA
Zone Industrial Epone II, Epone
19 rue de Bretagne, Saint–Quentin Fallavier
21 rue du Chemin Blanc, Champlan
32 avenue de l’Oceanie, Villejust
RN 19 ZAC de L’Ormes Road, Servon (1)
RN 19 ZAC de L’Ormes Road, Servon (2)
Im Holderbusch 3, Industriestraße, Sulmstraße, Ellhofen–Weinsberg
Schillerstraße 51, Ellhofen
Schillerstraße 42, 42a, Bahnhofstraße 44, 50, Ellhofen
Im Gewerbegebiet 18, Friedewald
Im Steinbruch 4, 6, Knetzgau
OWNERSHIP
ACQUISITION
DATE
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
Sep 1997
Dec 2002
Dec 1998
Dec 1998
Sep 1997
Sep 1997
Sep 1997
Dec 2002
Apr 1998 &
Oct 2001
Sep 1997
Dec 1998
Jan 2004
Oct 1998
Jul 2002
Dec 2002
Dec 2002
Dec 1998
Jul 1998
Jun 1997
May 1997
Jul 1998
Jun 1997
Jun 2002
May 1997
May 1997
Jul 1997
Jul 1997
Jun 1997
Jul 1998
Jul 2006
Jul 2006
Jul 2006
Jul 2006
Jul 2006
Jul 2006
Dec 2006
Dec 2006
Dec 2006
Dec 2006
Dec 2006
1 This site comprises, Lot 1 Boundary Road which was externally valued at 31 December 2007 for $20 million and two remaining lots which were internally
valued at 30 June 2008 for $61.4 million.
98 DEXUS PROPERTY GROUP FINANCIAL REPORTS 2008
COST INCLUDING
ALL ADDITIONS
$’000
INDEPENDENT
VALUATION DATE
INDEPENDENT
VALUATION AMOUNT
$’000
INDEPENDENT
VALUER
CONSOLIDATED BOOK
VALUE 30 JUNE 2008
$’000
CONSOLIDATED BOOK
VALUE 30 JUNE 2007
$’000
38,373
46,896
23,446
34,851
34,876
24,457
28,803
39,286
73,885
36,758
12,164
72,160
7,668
74,520
33,808
20,282
19,267
11,367
11,167
12,428
8,108
11,023
135,236
36,878
5,117
6,867
15,748
13,291
9,740
12,604
23,919
22,723
18,236
31,687
10,872
25,319
20,972
13,168
8,492
16,654
Jun 2007
Jun 2008
Jun 2007
Jun 2007
Jun 2006
Dec 2007
Jun 2007
Jun 2008
Jun 2008
Dec 2006
Jun 2008
Dec 2007
Dec 2007
Dec 2007
Jun 2008
Dec 2006
Dec 2007
Jun 2008
Sep 2006
Jun 2006
Jun 2008
Dec 2006
Jun 2008
Dec 2007
Jun 2006
Jun 2006
Jun 2006
Jun 2008
Jun 2008
Jun 2008
Jun 2008
Jun 2008
Jun 2008
Jun 2008
Jun 2008
Jun 2008
Jun 2008
Jun 2008
Jun 2008
Jun 2008
45,250
54,800
31,000
35,000
45,500
37,900
53,000
48,000
102,700
47,000
18,350
81,550
10,000
85,900
44,750
25,500
35,600
13,500
10,250
17,850
9,650
16,000
160,000
50,000
6,450
8,750
12,800
22,700
17,500
10,417
18,389
16,913
13,533
21,867
7,923
23,376
19,537
12,156
6,611
17,520
(a)
(f)
(d)
(d)
(f)
(i)
(e)
(a)
(d)
(f)
(i)
(g)
(a)
(i)
(a)
(d)
(e)
(f)
(d)
(f)
(a)
(a)
(f)
(i)
(f)
(a)
(i)
(e)
(i)
(d)
(d)
(d)
(d)
(d)
(d)
(d)
(d)
(d)
(d)
(d)
47,281
44,800
28,800
33,000
51,500
35,000
55,000
48,000
102,700
48,000
18,350
91,486
9,100
81,400
44,750
25,800
35,800
13,500
11,100
19,044
9,650
15,000
160,000
48,200
6,800
8,100
16,200
22,700
17,500
10,417
18,389
16,913
13,533
21,867
7,923
23,376
19,537
12,156
6,611
17,520
45,250
54,700
31,000
35,000
52,900
36,900
53,000
48,055
98,438
47,425
18,500
74,000
9,300
26,900
43,700
25,500
28,000
14,000
10,800
19,000
9,228
16,065
152,000
47,583
7,100
8,797
12,800
20,650
10,800
12,629
19,343
15,845
15,160
33,038
10,917
25,319
20,972
13,168
8,492
16,654
DEXUS PROPERTY GROUP FINANCIAL REPORTS 2008 99
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 JUNE 2008
Note 13. Non-current assets – investment properties (continued)
(a) Properties (continued)
OWNERSHIP
ACQUISITION
DATE
Other consolidated investment properties – non-current (continued)
Carl–Leverkus–Straße 3–5, Winkelsweg 182–184, Langenfeld
Schneiderstraße 82, Langenfeld 3
Über der Dingelstelle, Langenweddingen
Nordstraße 1, Löbau
Former Straße 6, Unna
Niedesheimer Straße 24, Worms
Liverpooler–/ Kopenhagener–/ Osloer Straße, Duisburg
Bremer Ring, Hansestraße, Berlin–Wustermark
TheodorStraße, Düsseldorf
13201 South Orange Avenue, Orlando
8574 Boston Church Road, Milton, Ontario
Governor Phillip Tower & Governor Macquarie Tower Office Complex, 1 Farrer Place, Sydney, NSW2
45 Clarence Street, Sydney, NSW
309–321 Kent Street, Sydney, NSW2
1 Margaret Street, Sydney, NSW
Victoria Cross 60 Miller Street, North Sydney, NSW
The Zenith, 821–843 Pacific Highway, Chatswood, NSW2
Woodside Plaza, 240 St Georges Terrace, Perth, WA
30 The Bond, 30–34 Hickson Road, Sydney, NSW
Southgate Complex, 3 Southgate Avenue, Southgate, VIC
O’Connell House, 15–19 Bent Street, Sydney, NSW
201–217 Elizabeth Street, Sydney, NSW2
Garema Court, 140–180 City Walk, Civic, ACT**
Australia Square Complex, 264–278 George St, Sydney, NSW2
Lumley Centre, 88 Shortland St, Auckland, New Zealand1
Westfield Hurstville, 262–264 Forest Road and 292 Forest Road, Hustville, NSW2
3765 Atlanta Industrial Drive, Atlanta
7100 Highlands Parkway, Atlanta
Town Park Drive, Atlanta
Williams Drive, Atlanta
Stone Mountain, Atlanta
MD Food Park, Baltimore
West Nursery, Baltimore
Cabot Techs, Baltimore
9112 Guildford Road, Baltimore
8155 Stayton Drive, Baltimore
Patuxent Range Road, Baltimore
Bristol Court, Baltimore
NE Baltimore, Baltimore
1181 Portal, 1831 Portal and 6615 Tributary, Baltimore
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
50%
100%
50%
100%
100%
50%
100%
100%
100%
–
50%
100%
50%
100%
–
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
Dec 2006
Dec 2006
Dec 2006
Dec 2006
Dec 2006
Dec 2006
Dec 2006
Dec 2006
Dec 2006
Jun 2007
Dec 2007
Dec 1998
Dec 1998
Dec 1998
Dec 1998
Dec 1998
Dec 1998
Jan 2001
May 2002
Aug 2000
Aug 2000
Aug 2000
Aug 2000
Aug 2000
Sep 2005
May 2005
Sep 2004
Sep 2004
Sep 2004
Sep 2004
Sep 2004
Sep 2004
Sep 2004
Sep 2004
Sep 2004
Sep 2004
Sep 2004
Sep 2004
Sep 2004
Jun 2005
1 The property was externally valued at NZ$155,000,000 at 30 June 2008. This valuation has been translated in to Australian dollars at the spot rate on 30 June 2008.
2 The valuation reflects 50% of the independent valuation amount.
The title to all properties is freehold, with the exception of the properties marked ** which are leasehold.
100 DEXUS PROPERTY GROUP FINANCIAL REPORTS 2008
COST INCLUDING
ALL ADDITIONS
$’000
INDEPENDENT
VALUATION DATE
INDEPENDENT
VALUATION AMOUNT
$’000
INDEPENDENT
VALUER
CONSOLIDATED BOOK
VALUE 30 JUNE 2008
$’000
CONSOLIDATED BOOK
VALUE 30 JUNE 2007
$’000
16,675
9,564
12,112
2,045
27,708
6,582
32,840
17,747
27,152
23,629
73,237
490,555
221,398
170,258
144,078
95,068
108,402
240,091
117,986
363,638
–
119,221
43,970
210,683
89,726
–
5,475
15,300
6,848
10,440
7,601
20,569
8,308
21,704
8,502
7,282
12,477
11,345
7,786
10,980
Jun 2008
Jun 2008
Jun 2008
Jun 2008
Jun 2008
Jun 2008
Jun 2008
Jun 2008
Jun 2008
Jun 2008
Jun 2008
Dec 2006
Jun 2007
Dec 2006
Dec 2007
Dec 2005
Jun 2007
Jun 2008
Jun 2006
Jun 2007
Sep 2004
Jun 2007
Jun 2008
Dec 2007
Jun 2008
n/a
Jun 2008
Jun 2008
Jun 2008
Jun 2008
Jun 2008
Jun 2008
Jun 2008
Jun 2008
Jun 2008
Jun 2008
Jun 2008
Jun 2008
Jun 2008
Jun 2008
15,059
8,809
10,728
1,427
27,297
6,578
33,153
17,142
25,509
30,646
70,304
638,750
265,000
183,500
200,000
90,000
130,000
446,500
150,000
380,000
–
158,750
60,000
312,500
122,928
–
4,571
13,401
8,934
10,285
6,233
24,102
9,038
30,646
9,557
9,038
13,609
12,466
9,038
12,258
(d)
(d)
(d)
(d)
(d)
(d)
(d)
(d)
(d)
(c)
(c)
(f)
(e)
(a)
(a)
(f)
(a)
(i)
(e)
(i)
(e)
(d)
(i)
(e)
(i)
–
(c)
(c)
(c)
(c)
(c)
(c)
(c)
(c)
(c)
(c)
(c)
(c)
(c)
(c)
15,059
8,809
10,728
1,427
27,297
6,578
33,153
17,142
25,509
30,646
70,304
744,993
290,163
210,483
194,000
110,068
130,000
446,500
179,036
370,000
–
164,130
60,000
303,000
122,928
–
4,571
13,401
8,934
10,285
6,233
24,102
9,038
30,646
9,557
9,038
13,609
12,466
9,038
12,258
16,675
9,564
12,112
2,045
27,708
6,582
32,840
17,747
27,152
29,867
–
646,710
265,000
194,000
181,000
103,101
130,000
390,000
170,000
380,000
54,464
158,750
63,500
261,739
131,519
307,500
5,302
18,735
10,015
13,904
7,305
31,187
10,015
32,874
12,608
9,780
15,789
13,197
10,487
13,786
DEXUS PROPERTY GROUP FINANCIAL REPORTS 2008 101
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 JUNE 2008
Note 13. Non-current assets – investment properties (continued)
(a) Properties (continued)
Other consolidated investment properties – non-current (continued)
OWNERSHIP
ACQUISITION
DATE
10 Kenwood Circle, Boston
Commerce Park, Charlotte
9900 Brookford Street, Charlotte
Westinghouse, Charlotte
Airport Exchange, Cincinnati
Empire Drive, Cincinnati
International Way, Cincinnati
Kentucky Drive, Cincinnati
Spiral Drive, Cincinnati
Turfway Road, Cincinnati
124 Commerce, Cincinnati
Kenwood Road, Cincinnati
Lake Forest Drive, Cincinnati
World Park, Cincinnati
Equity/Westbelt/Dividend, Columbus
2700 International Street, Columbus
3800 Twin Creeks Drive, Columbus
SE Columbus, Columbus
Arlington, Dallas
1900 Diplomat Drive, Dallas
2055 Diplomat Drive, Dallas
1413 Bradley Lane, Dallas
North Lake, Dallas
555 Airline Drive, Dallas
455 Airline Drive, Dallas
Hillguard, Dallas
11011 Regency Crest Drive, Dallas
East Collins, Dallas
3601 East Plano/1000 Shiloh, Dallas
East Plano Parkway, Dallas
820–860 Avenue F, Dallas
10th Street, Dallas
Capital Avenue Dallas
CTC @ Valwood, Dallas
Brackbill, Harrisburg
Mechanicsburg, Harrisburg
181 Fulling Mill Road, Harrisburg
Glendale, Los Angeles
14489 Industry Circle, Los Angeles
14555 Alondra/6530 Altura, Los Angeles
San Fernando Valley, Los Angeles
Memphis Industrial, Memphis
102 DEXUS PROPERTY GROUP FINANCIAL REPORTS 2008
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
Sep 2004
Sep 2004
Sep 2004
Sep 2004
Sep 2004
Sep 2004
Sep 2004
Sep 2004
Sep 2004
Sep 2004
Sep 2004
Sep 2004
Sep 2004
Sep 2004
Sep 2004
Sep 2004
Sep 2004
Sep 2004
Sep 2004
Sep 2004
Sep 2004
Sep 2004
Sep 2004
Sep 2004
Sep 2004
Sep 2004
Sep 2004
Sep 2004
Sep 2004
Sep 2004
Sep 2004
Sep 2004
Sep 2004
Sep 2004
Sep 2004
Sep 2004
Sep 2004
Sep 2004
Sep 2004
Sep 2004
Sep 2004
Sep 2004
COST INCLUDING
ALL ADDITIONS
$’000
INDEPENDENT
VALUATION DATE
INDEPENDENT
VALUATION AMOUNT
$’000
INDEPENDENT
VALUER
CONSOLIDATED BOOK
VALUE 30 JUNE 2008
$’000
CONSOLIDATED BOOK
VALUE 30 JUNE 2007
$’000
11,156
7,744
4,266
21,360
4,554
6,544
10,829
11,680
6,272
5,528
2,435
19,524
12,662
13,174
39,135
4,663
4,899
14,196
9,096
4,756
3,779
3,216
10,129
6,739
3,229
9,125
7,498
3,707
13,567
22,085
7,099
10,135
6,445
3,553
23,256
18,896
9,382
53,226
7,492
18,171
15,168
9,793
Jun 2008
Jun 2008
Jun 2008
Jun 2008
Jun 2008
Jun 2008
Jun 2008
Jun 2008
Jun 2008
Jun 2008
Jun 2008
Jun 2008
Jun 2008
Jun 2008
Jun 2008
Jun 2008
Jun 2008
Jun 2008
Jun 2008
Jun 2008
Jun 2008
Jun 2008
Jun 2008
Jun 2008
Jun 2008
Jun 2008
Jun 2008
Jun 2008
Jun 2008
Jun 2008
Jun 2008
Jun 2008
Jun 2008
Jun 2008
Jun 2008
Jun 2008
Jun 2008
Jun 2008
Jun 2008
Jun 2008
Jun 2008
Jun 2008
10,596
9,246
4,571
25,660
3,532
6,960
12,258
15,791
6,233
5,298
2,597
21,816
14,648
13,245
41,554
5,194
5,714
12,155
9,350
4,259
3,013
2,805
12,466
6,649
3,532
10,077
8,207
3,740
18,439
25,452
6,233
11,116
6,545
4,155
21,623
19,946
10,103
73,759
12,523
24,413
25,971
6,441
(c)
(c)
(c)
(c)
(c)
(c)
(c)
(c)
(c)
(c)
(c)
(c)
(c)
(c)
(c)
(c)
(c)
(c)
(c)
(c)
(c)
(c)
(c)
(c)
(c)
(c)
(c)
(c)
(c)
(c)
(c)
(c)
(c)
(c)
(c)
(c)
(c)
(c)
(c)
(c)
(c)
(c)
10,596
9,246
4,571
25,660
3,532
6,960
12,258
15,791
6,233
5,298
2,597
21,816
14,648
13,245
41,554
5,194
5,714
12,155
9,350
4,259
3,013
2,805
12,466
6,649
3,532
10,077
8,207
3,740
18,439
25,452
6,233
11,116
6,545
4,155
21,623
19,946
10,103
73,759
12,523
24,413
25,971
6,441
14,774
10,251
5,302
28,541
4,566
7,070
13,668
15,612
6,716
6,245
3,181
22,387
16,025
15,435
48,780
4,961
5,950
14,139
10,840
5,420
4,507
3,535
15,671
8,012
4,595
10,958
8,955
4,419
18,282
27,807
7,729
11,841
7,859
5,184
28,632
23,801
11,311
85,425
13,079
33,109
28,868
11,429
DEXUS PROPERTY GROUP FINANCIAL REPORTS 2008 103
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 JUNE 2008
Note 13. Non-current assets – investment properties (continued)
(a) Properties (continued)
Other consolidated investment properties – non-current (continued)
OWNERSHIP
ACQUISITION
DATE
2950 Lexington Avenue S, Minneapolis
Mounds View, Minneapolis
6105 Trenton Lane, Minneapolis
8575 Monticello Lane, Minneapolis
7401 Cahill Road, Minneapolis
CTC @ Dulles, Northern Virginia
Alexandria, Northern Virginia
Nokes Boulevard, Northern Virginia
Guildford, Northern Virginia
Beaumeade Telecom, Northern Virginia
Orlando Central Park, Orlando
7500 Exchange Drive, Orlando
105–107 South 41st Avenue, Phoenix
1429–1439 South 40th Avenue, Phoenix
10397 West Van Buren Street, Phoenix
844 44th Avenue, Phoenix
220 South 9th Street, Phoenix
431 North 47th Avenue, Phoenix
601 South 55th Avenue, Phoenix
1000 South Priest Drive, Phoenix
1120–1150 W. Alameda Drive, Phoenix
1858 East Encanto Drive, Phoenix
3802–3922 East University Drive, Phoenix
Chino, Riverside
Mira Loma, Riverside
Ontario, Riverside
4190 East Santa Ana Street, Riverside
Rancho Cucamonga, Riverside
12000 Jersey Court, Riverside
Airway Road, San Diego
5823 Newton Drive, San Diego
2210 Oak Ridge Way, San Diego
Kent West, Seattle
26507 79th Avenue – South, Seattle
8005 S. 266th Street, Seattle
West Palm Beach, South Florida
Calvert/Murry’s, Northern Virginia
Turnpike Distribution Center
7700 68th Avenue, Brooklyn Park
7500 West 78th Street, Bloomington
1285 & 1301 Corporate Center Drive, 1230 & 1270 Eagan Industrial Road, Eagan
104 DEXUS PROPERTY GROUP FINANCIAL REPORTS 2008
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
Sep 2004
Sep 2004
Sep 2004
Sep 2004
Sep 2004
Sep 2004
Sep 2004
Sep 2004
Sep 2004
Sep 2004
Sep 2004
Sep 2004
Sep 2004
Sep 2004
Sep 2004
Sep 2004
Sep 2004
Sep 2004
Sep 2004
Sep 2004
Sep 2004
Sep 2004
Sep 2004
Sep 2004
Sep 2004
Sep 2004
Sep 2004
Sep 2004
Sep 2004
Sep 2004
Sep 2004
Sep 2004
Sep 2004
Sep 2004
Sep 2004
Sep 2004
Sep 2004
Sep 2005
Nov 2005
Nov 2005
Nov 2005
COST INCLUDING
ALL ADDITIONS
$’000
INDEPENDENT
VALUATION DATE
INDEPENDENT
VALUATION AMOUNT
$’000
INDEPENDENT
VALUER
CONSOLIDATED BOOK
VALUE 30 JUNE 2008
$’000
CONSOLIDATED BOOK
VALUE 30 JUNE 2007
$’000
9,234
21,961
8,153
1,796
3,562
25,508
47,362
20,831
18,187
33,682
62,553
5,669
14,550
10,470
8,849
6,623
7,338
6,255
4,781
5,174
8,223
4,471
10,060
6,356
10,843
30,046
5,053
22,442
4,345
9,612
17,065
5,185
29,466
2,745
7,243
22,034
5,494
22,840
5,791
5,244
19,542
Jun 2008
Jun 2008
Jun 2008
Jun 2008
Jun 2008
Jun 2008
Jun 2008
Jun 2008
Jun 2008
Jun 2008
Jun 2008
Jun 2008
Jun 2008
Jun 2008
Jun 2008
Jun 2008
Jun 2008
Jun 2008
Jun 2008
Jun 2008
Jun 2008
Jun 2008
Jun 2008
Jun 2008
Jun 2008
Jun 2008
Jun 2008
Jun 2008
Jun 2008
Jun 2008
Jun 2008
Jun 2008
Jun 2008
Jun 2008
Jun 2008
Jun 2008
Jun 2008
Jun 2008
Jun 2008
Jun 2008
Jun 2008
9,360
22,024
8,207
2,182
3,272
30,646
54,153
48,203
22,231
45,710
76,252
7,376
22,173
15,063
15,375
8,415
10,492
9,246
5,921
6,233
10,389
6,649
11,947
9,661
20,777
50,384
9,350
37,918
7,688
10,389
23,998
6,732
36,360
3,740
9,038
21,296
5,090
29,919
4,467
5,402
16,102
(c)
(c)
(c)
(c)
(c)
(c)
(c)
(c)
(c)
(c)
(c)
(c)
(c)
(c)
(c)
(c)
(c)
(c)
(c)
(c)
(c)
(c)
(c)
(c)
(c)
(c)
(c)
(c)
(c)
(c)
(c)
(c)
(c)
(c)
(c)
(c)
(c)
(c)
(c)
(c)
(c)
9,360
22,024
8,207
2,182
3,272
30,646
54,153
48,203
22,231
45,710
76,252
7,376
22,173
15,063
15,375
8,415
10,492
9,246
5,921
6,233
10,389
6,649
11,947
9,661
20,777
50,384
9,350
37,918
7,688
10,389
23,998
6,732
36,360
3,740
9,038
21,296
5,090
29,919
4,467
5,402
16,102
12,496
26,255
9,544
2,828
3,653
37,704
69,384
40,061
30,635
49,487
88,962
8,248
22,479
15,612
16,142
9,780
10,958
10,015
6,775
8,248
12,608
6,952
12,254
11,783
24,979
61,624
11,488
46,660
9,132
15,612
31,224
8,484
41,829
4,124
10,133
30,753
7,470
30,635
6,007
7,116
20,178
DEXUS PROPERTY GROUP FINANCIAL REPORTS 2008 105
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 JUNE 2008
Note 13. Non-current assets – investment properties (continued)
(a) Properties (continued)
Other consolidated investment properties – non-current (continued)
850 E Devon Avenue 1260 N Ellis St 371 Meyer Road
Bensenville, Chicago (O’Hare)
3722 Redlands Avenue, Perris, Riverside County
8151 and 8161 Interchange Parkway, San Antonio
Cornerstone I and II, 5411 Interstate 10 East and 1228 Cornerway Boulevarde, San Antonio
302 and 402 Tayman Road, Port of San Antonio
1803 Grandstand Avenue, Alamo Downs, San Antonio
Total other consolidated investment properties – non-current
Total investment properties – non-current
OWNERSHIP
ACQUISITION
DATE
100%
100%
100%
100%
100%
100%
Dec 2007
Jan 2008
Jul 2007
Aug 2007
Oct 2007
Aug 2007
US$128.6 million (AUD$145.4 million). Acquisition of the remaining
facilities will occur following construction completion and occupancy
by Whirlpool Corporation. DDF sold its interest in DEXUS US
Properties, LLC to DIT in June 2007 and accordingly, DDF is no
longer an investor in this program.
San Antonio, Texas, USA
In July 2007, US REIT entered into a contract to acquire and develop
certain real property commonly known as The Titan Industrial
Portfolio (Titan Portfolio). Since July 2007, US REIT acquired seven
stabilised assets as shown below:
PROPERTY
Cornerstone I and II, 5411 Interstate 10 East and
1228 Cornerway Boulevarde, San Antonio
302 and 402 Tayman Road, Port of San Antonio
PURCHASE
PRICE
AUD $’000
16,068
15,801
1803 Grandstand Avenue, Alamo Downs, San Antonio
13,063
8151 and 8161 Interchange Parkway, San Antonio
18,700
63,632
Chicago, Illinois, USA
In December 2007, DEXUS Industrial, LLC (formerly DB RREEF
Industrial, LLC) acquired a three building industrial portfolio totalling
255,387 square feet located in the O’Hare submarket of Chicago.
The portfolio is comprised of newly constructed distribution facilities
developed by Seefried Properties. The acquisition price was
US$29.5 million (AUD$34.5 million).
(a) Colliers International
(b) Landmark White
(c) Cushman & Wakefield
(d) Jones Lang LaSalle
(e) Knight Frank Valuations
(f) FPD Savills
(g) M3 Property
(h) Weiser Realty Advisors (USA)
(i) CB Richard Ellis
Valuation basis
The basis of valuation of investment properties is fair value, being the
amounts for which the assets could be exchanged between
knowledgeable willing parties in an arm’s length transaction, based
on current prices in an active market for similar properties in the
same location and condition and subject to similar leases. Properties
independently valued in the last 12 months were based on
independent assessments by a member of the Australian Property
Institute, the New Zealand Institute of Valuers, the Appraisal Institute
in the United States of America, the French Real Estate Valuation
Institution, the Society of Property Researchers, Germany or the
Appraisal Institute in Canada.
Acquisitions
On 22 August 2006, DIT, DDF and DEXUS US Properties, LLC
(formerly DB RREEF US Properties, LLC) (collectively, the Investor)
entered into an investor agreement with Whirlpool Corporation.
Under this agreement, the Investor or its affiliate has committed to
investing up to US$415.0 million (AUD$489.0 million) to acquire
certain facilities across the US, Canada and Europe, to be built over
the subsequent three years and leased long-term to Whirlpool
Corporation or its affiliates. The acquisition of the first facility in
Orlando, Florida was completed in June 2007 with a purchase price
of US$24.3 million (AUD$28.6 million). The acquisition of the
second facility in Toronto, Canada was completed in December 2007
with a purchase price of CAD$71.4 million (AUD$79.9 million).
The acquisition of the third facility in Perris, Southern California
was completed on 17 January 2008 with a purchase price of
106 DEXUS PROPERTY GROUP FINANCIAL REPORTS 2008
COST INCLUDING
ALL ADDITIONS
$’000
INDEPENDENT
VALUATION DATE
INDEPENDENT
VALUATION AMOUNT
$’000
INDEPENDENT
VALUER
CONSOLIDATED BOOK
VALUE 30 JUNE 2008
$’000
CONSOLIDATED BOOK
VALUE 30 JUNE 2007
$’000
Jun 2008
Jun 2008
Jun 2008
Jun 2008
Jun 2008
Jun 2008
31,499
134,085
16,857
14,404
17,456
11,192
5,204,392
6,399,147
30,646
131,934
16,102
13,920
19,842
11,115
6,404,521
8,022,671
(c)
(c)
(c)
(c)
(c)
(c)
30,646
131,934
16,102
13,920
19,842
11,115
6,593,206
8,182,295
–
–
–
–
–
–
6,598,669
8,585,703
Developments
Pound Road West, Dandenong, VIC
The development at Lot 17, Pound Road West consists of office and
warehouse of some 4,965 square metres. Construction of this
building was completed in April 2008 for a total cost of $9.5 million.
Redwood Garden, Dingley, VIC
The development consists of an office/warehouse facility for Sperian
Protection Australia totalling some 3,400 square metres.
Construction of this building is expected to be completed by October
2008 with an estimated cost to complete of $3.7 million.
60 Miller Street, North Sydney, NSW
The development consists of a new 4,532 square metres annex
building at 60 Miller Street, North Sydney. Development costs are
estimated to be $24.2 million and completion is expected in May 2009.
(b) Reconciliation
105 Phillip Street, Parramatta, NSW
Development approval has been received to construct a 13 level
office tower with approximately 20,380 square metres of floor space
at 105 Phillip Street Parramatta, a site at the rear of the existing
building at 130 George Street Parramatta. No decision has been
made to proceed with the development at this stage, however the
manager is marketing the potential development to tenants.
Development costs are estimated to be $88.6 million.
Disposals
50% interest in shopping centres
On 17 October 2007, DDF sold its 50% interest in West Lakes
Shopping Centre, North Lakes Shopping Centre, Plenty Valley Town
Centre and Westfield Hurstville to DWPF for $735.2 million.
Carrying amount at the beginning of the year
8,585,703
7,558,945
1,987,034
1,673,804
CONSOLIDATED
PARENT ENTITY
2008
$’000
2007
$’000
2008
$’000
2007
$’000
Additions
Acquisitions
Transfer from/(to) property plant and equipment
Lease incentives
Amortisation of lease incentives
Rent straightlining
Disposals
Transfer to equity accounted investment1
Net gain from fair value adjustments
112,923
317,765
(2,376)
49,962
132,438
396,178
30,328
59,655
(42,034)
(37,661)
3,536
9,986
44,594
2,800
(44,416)
4,023
(5,822)
–
(737,457)
(165,918)
(429,857)
(54,478)
–
–
94,638
–
–
6,965
(6,220)
–
–
–
184,444
831,330
30,733
217,847
Foreign exchange differences on foreign currency translation
(235,693)
(229,578)
–
–
Carrying amount at the end of the year
8,182,295
8,585,703
1,589,089
1,987,034
1 On 15 October 2007, the Bent Street Trust was transferred to equity accounted investments due to the sale of 31.8% DWPF.
DEXUS PROPERTY GROUP FINANCIAL REPORTS 2008 107
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 JUNE 2008
Note 14. Non-current assets – property plant and equipment
(a) Property plant and equipment
CONSOLIDATED
PARENT ENTITY
CONSTRUCTION
IN PROGRESS
$’000
LAND AND
FREEHOLD
BUILDINGS
$’000
IT AND
OFFICE
TOTAL
CONSTRUCTION
IN PROGRESS
$’000
$’000
$’000
LAND AND
FREEHOLD
BUILDINGS
$’000
IT AND
OFFICE
TOTAL
$’000
$’000
30 JUNE 2008
Opening balance as at
1 July 2007
Foreign exchange differences
on foreign currency translation
Depreciation charge
Disposal of interest
Transfer (to)/from investment
properties
Closing balance as at
30 June 2008
–
–
–
–
–
–
–
–
Additions
141,436
43,177
6,686
191,299
18,228
181,919
132,102
–
314,021
–
(9,227)
–
–
(9,227)
–
(2,211)
(585)
(2,796)
(49,222)
(2,818)
(44,844)
47,220
–
–
(52,040)
220,062
217,470
6,101
443,633
2,376
3,116
41,300
21,344
21,344
–
41,300
41,300
–
Cost
220,062
223,192
6,686
449,940
Accumulated depreciation
–
(5,722)
(585)
(6,307)
Net book value as at
30 June 2008
220,062
217,470
6,101
443,633
21,344
41,300
CONSOLIDATED
PARENT ENTITY
30 JUNE 2007
CONSTRUCTION
IN PROGRESS
–
–
–
–
–
–
–
–
–
–
–
18,228
–
–
–
44,416
62,644
62,644
–
62,644
Opening balance as at
1 July 2006
Additions
Foreign exchange differences
on foreign currency translation
Depreciation charge
Transfer to investment
properties
Closing balance as at
30 June 2007
Cost
LAND AND
FREEHOLD
BUILDINGS
$’000
69,278
65,312
$’000
104,190
114,937
(6,880)
–
–
(2,488)
(30,328)
–
181,919
132,102
181,919
135,613
IT AND
OFFICE
TOTAL
CONSTRUCTION
IN PROGRESS
$’000
$’000
$’000
LAND AND
FREEHOLD
BUILDINGS
$’000
IT AND
OFFICE
TOTAL
$’000
$’000
–
–
–
–
–
–
–
–
–
173,468
180,249
(6,880)
(2,488)
(30,328)
314,021
317,532
(3,511)
314,021
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
Accumulated depreciation
–
(3,511)
Net book value as at
30 June 2007
181,919
132,102
108 DEXUS PROPERTY GROUP FINANCIAL REPORTS 2008
(b) Non-current assets pledged as security
Beaumeade, Ashburn, Virginia
The development of this land consists of two buildings comprising
137,131 square feet in Ashburn, Virginia. The total budgeted cost for
the project is US$20.1 million (AUD$20.9 million). Market conditions
have recently weakened. As a result, it is anticipated that once
entitlements are obtained later in 2008, further development will not
commence until a tenant has been identified or market conditions
improve to warrant speculative development.
Summit Oaks, Valencia, California
The development of this land consists of a five-storey office building
comprising 139,392 square feet in Santa Clarita, California. The total
budgeted cost for the project is US$45.2 million (AUD$47.0 million).
The current plan calls for construction completion by the end of July
2008 with stabilisation occurring approximately 12-15 months
thereafter.
123 Albert Street, Brisbane, QLD
On 11 December 2007, approval was obtained from Brisbane
City Council to build a 38,667 square metre office tower at
123 Albert Street, Brisbane. Development costs are estimated
to be $347.9 million and completion is expected in December 2010.
Rio Tinto have entered into an agreement for lease over 26,245
square metres of the building. This asset was previously known as
Albert and Charlotte Streets Carpark and has been transferred from
investment properties in June 2008.
Norwest Estate, Brookhollow Road, NSW
Norwest Estate includes vacant land capable of accommodating
some 23,083 square metres of lettable area. Negotiations are under
way with a number of tenants for a potential business park
developments.
Disposals
Boundary Road, North Laverton, VIC
In May 2007, DIT entered into an agreement for the sale of
50% of the Coles Myer development at Boundary Road, Laverton
North for $58.0 million. Settlement occurred on 18 December 2007.
The remaining 50% has been transferred to investment properties at
31 December 2007.
Refer to note 21 for information on non-current assets pledged as
security by the parent entity and its controlled entities.
(c) Acquisitions and developments
Acquisitions
San Antonio, Texas
In July 2007, eight parcels of land were acquired in San Antonio,
Texas for US$6.6 million (AUD$7.6 million).
Southern Employment Lands, Greystanes Estate, NSW
On 21 December 2007, settlement occurred for the acquisition
of a site at Greystanes. $23.6 million was paid on settlement and
a further $50.2 million prior to 30 June 2008. The remaining
$91.0 million to be paid upon completion of each of the four stages
of site improvement being undertaken by Boral. As a fully completed
development, costs are expected to total approximately $327 million.
Developments
Boundary Road, North Laverton, VIC
In August 2006, DIT entered into an agreement to lease and build a
distribution centre for Fosters Limited. Practical completion was
achieved on 6 July 2007 with a development cost of $32.9 million.
In October 2007, DIT entered into an agreement to lease and build
an office warehouse facility for Best Bar (VIC) Pty Ltd. Completion is
estimated to occur during August 2008. The total budgeted cost for
the project is $12.3 million.
144 Wicks Road, North Ryde, NSW
In November 2006, DOT (through its sub-trust Wicks Road Trust),
acquired a 50% ownership interest in the former Peter Board High
School site, 144 Wicks Road, North Ryde, NSW for a consideration
of $25.9 million. The DA for stage 1 (estimated 24,000 square metre
net lettable area) was lodged in August 2008 with Ryde City Council.
Atlantic Corporate Park, Sterling, Virginia (formerly Dulles
Town Crossing)
The development consists of two four-storey office buildings
comprising 219,982 square feet in Virginia. The total budgeted cost
for the project is US$47.6 million (AUD$49.4 million). The current
plan calls for construction completion by end of August 2008 with
stabilisation occurring approximately 12-15 months thereafter.
Titan Development Properties, San Antonio, Texas
The development of the Titan properties acquired in the initial phase
consists of eight warehouse and office buildings comprising 659,580
square feet in San Antonio, Texas. Total budgeted cost for this
project is US$43.3 million (AUD$45.0 million). The current plan
calls for construction completion by March 2010 with stabilisation
occurring approximately 12-15 months thereafter.
DEXUS PROPERTY GROUP FINANCIAL REPORTS 2008 109
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 JUNE 2008
Note 15. Non-current assets – other financial assets at fair value through profit or loss
Investments are adjusted to their fair value through the Income Statements.
NAME OF ENTITY
PRINCIPAL ACTIVITY
OWNERSHIP INTEREST
PARENT ENTITY
Controlled Entities
DEXUS Hurstville Trust1
DEXUS Industrial Trust2
DEXUS Office Trust2
Retail property investment
Industrial property investment
Commercial property investment
DEXUS Operations Trust2
DEXUS Finance Pty Limited3
Financial services
Financial services
Total non-current assets – other financial assets at fair value through profit and loss
RECONCILIATION
2008
%
–
100.0
100.0
100.0
25.0
2007
%
100.0
100.0
100.0
100.0
–
Opening balance as at 1 July 2007
Acquisitions
Fair value (loss)/gain
Disposal
Closing balance as at 30 June 2008
2008
$’000
2007
$’000
–
–
–
–
–
–
294,901
–
–
–
–
294,901
PARENT ENTITY
2008
$’000
2007
$’000
294,901
247,172
96
–
(6,596)
47,729
(288,401)
–
–
294,901
All controlled entities are wholly owned by the Trust. Both the parent entity and the controlled entities were formed in Australia.
1 DEXUS Hurstville Trust (formerly DB RREEF Hurstville Trust) was sold to DWPF on 17 October 2007.
2 In accordance with AASB Interpretation 1002, DDF is the deemed acquirer of DIT, DOT and DXO and therefore they are reflected in the financial statements as controlled
entities of DDF.
3 On 27 June 2008, DEXUS Finance Pty Limited (formerly DB RREEF Finance Pty Limited) (DXF) issued 3 additional units to DDF, DIT and DOT for $96,400 each.
Prior to this date, the entity was wholly owned and therefore consolidated by DXO.
Note 16. Non-current assets – investments accounted for using the equity method
Investments are accounted for in the Consolidated Financial Statements using the equity method of accounting (refer note 1).
Information relating to these entities is set out below.
NAME OF ENTITY
PRINCIPAL ACTIVITY
OWNERSHIP INTEREST
CONSOLIDATED
PARENT ENTITY
2008
%
2007
%
2008
$‘000
2007
$‘000
2008
$‘000
2007
$‘000
Held by parent entity
Mt Druitt Shopping
Centre Trust1
DEXUS Industrial
Properties, Inc.2
Held by controlled entities
Retail property investment
–
50.0
Asset, property and funds
management
50.0
50.0
2 O’Connell Street Trust
Commercial property investment
4 O’Connell Street Trust
Commercial property investment
Bligh Street Trust
Commercial property investment
–
–
–
50.0
50.0
50.0
–
–
–
–
–
Bent Street Trust3
Commercial property investment
68.2
100.0
107,734
–
DEXUS Holdings
Pty Limited4
Asset, property and funds
management
100.0
50.0
–
17,886
Total
107,734
270,155
314,989
481,712
These entities were formed in Australia with the exception of DEXUS Industrial Properties, Inc. (formerly DB RREEF Industrial Properties, Inc.) which was formed in
the United States.
1 On 17 October 2007, Mt Druitt Shopping Centre Trust was sold to DWPF for a settlement price of $215.2 million.
2 The remaining 50% of this entity is owned by DIT. As a result, this entity is classed as controlled on a DDF consolidated basis.
3 On 15 October 2007, the Bent Street Trust was transferred from investment properties due to the sale of 31.8% to DWPF. Both the Trusts and DWPF have joint control over
the Bent Street Trust.
4 On 21 February 2008, DXO purchased the remaining 50% interest in DXH from First Australian Property Group Holdings Pty Limited. From this date DXH became a wholly
owned subsidiary of DXO and is now consolidated.
110 DEXUS PROPERTY GROUP FINANCIAL REPORTS 2008
211,517
–
211,517
–
314,989
270,195
8,565
16,054
16,133
–
–
–
–
–
–
–
–
–
–
MOVEMENTS IN CARRYING AMOUNTS OF INVESTMENTS
ACCOUNTED FOR USING THE EQUITY METHOD
Opening balance as at 1 July 2007
Interest acquired during the year
Transfer from investment properties
Share of net profits after tax
Distributions/Dividends received
Transfer to other financial assets
Disposal of investment
Wind up of investment
Closing balance as at 30 June 2008
Results attributable to associates
Operating profits before income tax
Income tax expense
Operating profits after income tax
Less: Distributions/Dividends received
Undistributed income attributable to associates as at 1 July 2007
Undistributed income attributable to associates as at 30 June 2008
CONSOLIDATED
2008
$’000
2007
$’000
270,155
235,062
62,858
54,478
2,467
(12,587)
(18,054)
(210,768)
(40,815)
2,053
–
52,715
(19,675)
–
–
–
107,734
270,155
3,744
(1,277)
2,467
(12,587)
(10,120)
46,339
36,219
55,550
(2,835)
52,715
(19,675)
33,040
13,299
46,339
Summary of the performance and financial position of investments accounted for using the equity method
The Trusts’ share of aggregate profits, assets and liabilities of investments accounted for using the equity method are:
Profits from ordinary activities after income tax expense
Assets
Liabilities
CONSOLIDATED
2008
$’000
2,467
117,024
9,296
2007
$’000
52,715
534,997
190,754
Share of associates’ expenditure commitments
Capital commitments
191,742
–
Note 17. Non-current assets – deferred tax assets
The balance comprises temporary differences attributable to:
Derivative financial instruments
Tax losses
Employee provision
Other
Net deferred tax assets
Movements
Opening balance at 1 July 2007
Acquisition
Credited to the Income Statements
Closing balance at 30 June 2008
CONSOLIDATED
PARENT ENTITY
2008
$’000
2007
$’000
2008
$’000
2007
$’000
4,103
2,552
6,849
1,378
14,882
3,921
4,811
6,150
14,882
2,140
1,497
–
284
3,921
116
–
3,805
3,921
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
DEXUS PROPERTY GROUP FINANCIAL REPORTS 2008 111
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 JUNE 2008
Note 18. Intangible assets
MANAGEMENT RIGHTS
CONSOLIDATED
PARENT ENTITY
Opening balance as at 1 July 2007
Additions
Amortisation charge
Closing balance as at 30 June 2008
Cost
Accumulated amortisation
Total management rights
2008
$’000
–
252,382
(206)
252,176
2007
$’000
2008
$’000
2007
$’000
–
–
–
–
–
–
–
–
–
–
–
–
CONSOLIDATED
PARENT ENTITY
2008
$’000
252,382
(206)
252,176
2007
$’000
2008
$’000
2007
$’000
–
–
–
–
–
–
–
–
–
Management rights represent the asset management rights owned by DXH which entitle it to management fee revenue from both finite life trusts
($9,790,648) and infinite life trusts ($242,385,471). Those rights that are deemed to have a finite useful life, are measured at cost and
amortised using the straight-line method over their estimated useful lives which vary from six to 22 years.
GOODWILL
CONSOLIDATED
PARENT ENTITY
Opening balance as at 1 July 2007
Additions
Impairment
Closing balance as at 30 June 2008
Cost
Accumulated impairment
Total goodwill
Total intangibles
Note 19. Non-current assets – other
Tenant and other bonds
Other
Total non-current assets – other
2008
$’000
–
2,998
(61)
2,937
2007
$’000
2008
$’000
2007
$’000
–
–
–
–
–
–
–
–
–
–
–
–
CONSOLIDATED
PARENT ENTITY
2008
$’000
2,998
(61)
2,937
255,113
2007
$’000
2008
$’000
2007
$’000
–
–
–
–
–
–
–
–
–
–
–
–
CONSOLIDATED
PARENT ENTITY
2008
$’000
1,240
3,549
4,789
2007
$’000
2,631
7,276
9,907
2008
$’000
566
–
566
2007
$’000
803
–
803
112 DEXUS PROPERTY GROUP FINANCIAL REPORTS 2008
Note 20. Current liabilities – payables
CONSOLIDATED
PARENT ENTITY
Trade creditors
Accruals
Amount payable to other minority interest
Accrued capital expenditure
Prepaid income
Responsible Entity fee payable
GST payable
Accrued interest
2008
$’000
51,383
8,052
4,631
13,419
7,218
–
1,554
32,139
2007
$’000
41,554
9,646
3,978
24,284
4,944
3,375
2,797
33,931
Total current liabilities – payables
118,396
124,509
Note 21. Interest bearing liabilities
2008
$’000
7,015
1,840
–
500
2,118
505
158
1,832
13,968
2007
$’000
6,423
879
–
13,204
690
1,342
–
1,591
24,129
CONSOLIDATED
PARENT ENTITY
NOTES
2008
$’000
2007
$’000
2008
$’000
2007
$’000
Current
Secured
Commercial mortgage backed securities
Bank loans
Total secured
Unsecured
Bank loans
Total unsecured
Deferred borrowing costs
(a)
(d)
500,000
79,208
579,208
–
–
(3,077)
–
12,828
12,828
7,070
7,070
(1,455)
Total current liabilities – interest bearing liabilities
576,131
18,443
Non-current
Secured
Commercial paper
Commercial mortgage backed securities
Bank loans
Total secured
Unsecured
US senior notes
Bank loans
Medium term notes
Preference shares
Total unsecured
Deferred borrowing costs
–
–
(d), (e)
235,725
344,500
684,693
357,195
235,725
1,386,388
415,541
471,309
(b), (c)
1,328,060
1,026,957
455,425
456,153
(f)
96
109
2,199,122
1,954,528
(4,059)
(6,032)
Total non-current liabilities – interest bearing liabilities
2,430,788
3,334,884
Total interest bearing liabilities
3,006,919
3,353,327
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
DEXUS PROPERTY GROUP FINANCIAL REPORTS 2008 113
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 JUNE 2008
Note 21. Interest bearing liabilities (continued)
FINANCING ARRANGEMENTS
CONSOLIDATED
TYPE OF FACILITY
NOTES
CURRENCY
SECURITY MATURITY DATE
UTILISED
2008
$’000
2008
$’000
FACILITY
LIMIT
Commercial mortgage backed securities
(a)
US senior notes
Medium term notes
AUD
USD
AUD
USD
Secured
Apr-09
500,000
500,000
Unsecured
Feb-11 to Mar-17
415,542
415,542
Unsecured
Feb-10 to Feb-11
450,000
450,000
Unsecured
Sep-10
5,425
5,425
Multi-option revolving credit facilities
Syndicated revolving credit facility
Bank debt – secured
(b)
(c)
(d)
(e)
Multi currency
Unsecured Dec-10 to Dec-13
861,521
1,307,162
Multi currency
Unsecured Mar-10 to Sep 10
466,539
518,159
USD
USD
Secured Mar-09 to Jan-15
81,191
81,191
Secured
Sep-11
233,742
233,742
Total
Bank guarantee utilised
Unused at balance date
3,013,960
3,511,221
6,621
490,640
Each of the Trust’s unsecured borrowing facilities are supported by the Trusts’ guarantee arrangements, and have negative pledge provisions
which limit the amount and type of encumbrances that the Trusts’ can have over their assets and ensures that all senior unsecured debt ranks
pari-pasu.
The current debt facilities will be refinanced as at/or prior to their maturity.
(a) Commercial mortgage backed securities and commercial paper
The commercial mortgage backed securities (CMBS) are secured by mortgages over seven investment properties of DOT with a total value
of $2,065.2 million as at 30 June 2008. The mortgage over one of the investment properties (St Georges Terrace, Perth WA) was removed
during the period.
During the period, $344.5 million (facility limit of $346.0 million) of asset backed commercial paper (CP) was repaid and the associated standby
and liquidity facilities were cancelled.
A US$156.7 million (AUD$162.8 million) CMBS issue was repaid during the period and associated mortgages cancelled.
(b) Multi-option revolving credit facilities
This includes 12 facilities maturing between December 2010 and December 2013 with a weighted average maturity of June 2012. Of the total
facility limit, $4.3 million and US$2.2 million (AUD$2.3 million) are utilised as bank guarantees for developments.
(c) Syndicated revolving credit facility
Consists of a $300 million facility and a US$210 million (AUD$218.2 million) facility, maturing in March 2010 and September 2010 respectively.
AUD$300 million facility with a maturity date of September 2008 was refinanced in May 2008 with new multi-option facilities.
(d) Bank loans – secured
The facilities include a total of US$78.2 million (AUD$81.2 million) of secured bank debt facilities that amortise through monthly principal and
interest payments with a weighted average maturity date of March 2009. These facilities are secured by mortgages over investment properties
totalling US$222.0 million (AUD$230.6 million) as at 30 June 2008.
(e) Bank loans – secured
A US$225.0 million (AUD$233.7 million) secured interest only bank loan maturing in September 2011 (maximum assuming a two year
extension option is executed). This facility is secured by mortgages over investment properties totalling US$561.9 million (AUD$583.8 million)
as at 30 June 2008.
(f) Preferred shares
US REIT has issued US$92,550 (AUD$96,146) of preferred shares as part of the requirement to be classified as a Real Estate Investment Trust
(REIT) under US tax legislation. These preferred shares will remain on issue until such time that the Board decides that it is no longer in the
company’s interest to qualify as a REIT.
114 DEXUS PROPERTY GROUP FINANCIAL REPORTS 2008
Note 22. Provisions
CURRENT
Provision for distribution
Provision for employee benefits
CONSOLIDATED
PARENT ENTITY
2008
$’000
2007
$’000
2008
$’000
2007
$’000
182,388
164,992
102,300
68,470
11,926
–
–
–
194,314
164,992
102,300
68,470
Movements in each class of provision during the financial year, other than employee benefits, are set out below:
PROVISION FOR DISTRIBUTION
Opening balance as at 1 July 2007
Additional provisions
CONSOLIDATED
PARENT ENTITY
2008
$’000
164,992
355,380
2007
$’000
155,523
324,638
2008
$’000
68,470
219,175
2007
$’000
54,178
131,505
Payments and reinvestment of distributions
(337,984)
(315,169)
(185,345)
(117,213)
Closing balance as at 30 June 2008
182,388
164,992
102,300
68,470
Provision for distribution
Provision is made for distributions to be paid for the period ended 30 June 2008 payable on 29 August 2008.
NON-CURRENT
Provision for employee benefits
Note 23. Current liabilities – other
Tenant bonds
Other borrowing costs
Total current liabilities – other
Note 24. Non-current liabilities – deferred tax liabilities
The balance comprises temporary differences attributable to:
Derivative financial instruments
Goodwill
Investment properties
Other
Total non-current liabilities – deferred tax liabilities
Movements
Opening balance at 1 July 2007
Acquisition
Credited to income tax benefit
(Debited)/credited to withholding tax expense
Closing balance at 30 June 2008
CONSOLIDATED
PARENT ENTITY
2008
$’000
9,818
9,818
2007
$’000
–
–
2008
$’000
–
–
2007
$’000
–
–
CONSOLIDATED
PARENT ENTITY
2008
$’000
–
1,799
1,799
2007
$’000
13
3,137
3,150
2008
$’000
2007
$’000
–
–
–
–
–
–
CONSOLIDATED
PARENT ENTITY
2008
$’000
2007
$’000
2008
$’000
2007
$’000
352
2,937
72,326
928
76,543
73,809
3,390
3,344
(4,000)
76,543
–
–
73,360
449
73,809
48,726
–
378
24,705
73,809
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
DEXUS PROPERTY GROUP FINANCIAL REPORTS 2008 115
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 JUNE 2008
Note 25. Non-current liabilities – financial liabilities with minority interest
US REIT owned 80% of DEXUS Industrial, LLC, (formerly DB RREEF Industrial LLC) a joint venture with Calwest Industrial Properties,
LLC (Calwest), the 20% owner. The joint venture agreement entitled Calwest to receive 40% of certain cash flows arising from the joint venture,
rather than the 20% that it would be entitled to in terms of its ownership interest, up until 30 June 2014, after which time the rights to the cash
flows revert to the ownership percentages. This additional entitlement is known as the “special interest” or “Calwest promote”.
The joint venture agreement entitles US REIT to purchase the special interest from Calwest at any time up until 30 June 2014 at an agreed
predetermined price (which increases over time) (the agreed price). Calwest has a right to sell the special interest to the US REIT, from
1 July 2009 to 30 June 2014, at a price not exceeding the agreed price.
The agreed price at 30 June 2007 was $28,305,000, which was the value recognised in the financial statements.
On 30 September 2007, US REIT purchased Calwest’s 20% interest in DEXUS Industrial, LLC (formerly DB RREEF Industrial LLC)
and purchased the Calwest promote.
Note 26. Non-current liabilities – other
Tenant bonds
Other borrowing costs
Other
CONSOLIDATED
PARENT ENTITY
2008
$’000
7,543
441
64
2007
$’000
7,975
2,541
22
2008
$’000
959
–
–
2007
$’000
1,210
–
–
Total non-current liabilities – other
8,048
10,538
959
1,210
Note 27. Contributed equity
(a) Contributed equity of equity holders of the parent entity
Opening balance as at 1 July 2007
Distributions reinvested
Closing balance as at 30 June 2008
CONSOLIDATED
PARENT ENTITY
2008
$’000
2007
$’000
2008
$’000
2007
$’000
1,151,526
1,094,144
1,151,526
1,094,144
146,305
57,382
146,305
57,382
1,297,831
1,151,526
1,297,831
1,151,526
(b) Contributed equity of equity holders of other entities stapled to DDF (minority interest)
Opening balance as at 1 July 2007
Distributions reinvested
Cost of issuing units
Closing balance as at 30 June 2008
(c) Number of securities on issue
CONSOLIDATED
PARENT ENTITY
2008
$’000
2007
$’000
2008
$’000
2007
$’000
2,182,833
2,094,887
97,373
(154)
87,946
–
2,280,052
2,182,833
–
–
–
–
–
–
–
–
CONSOLIDATED
PARENT ENTITY
2008
NO. OF
SECURITIES
2007
NO. OF
SECURITIES
2008
NO. OF
UNITS
2007
NO. OF
UNITS
Opening balance as at 1 July 2007
2,894,600,006
2,802,209,393
2,894,600,006
2,802,209,393
Distributions reinvested
145,419,481
92,390,613
145,419,481
92,390,613
Closing balance as at 30 June 2008
3,040,019,487 2,894,600,006
3,040,019,487 2,894,600,006
Terms and conditions
Each stapled security ranks equally with all other stapled securities for the purposes of distributions and on termination of the Trust.
Each stapled security entitles the holder to one vote, either in person or by proxy, at a meeting of each of the Trusts.
116 DEXUS PROPERTY GROUP FINANCIAL REPORTS 2008
Distribution reinvestment plan
Under the distribution reinvestment plan (DRP), stapled security holders may elect to have all or part of their distribution entitlements satisfied
by the issue of new stapled securities, rather than being paid in cash.
On 29 August 2007, 37,466,012 units were issued at a unit price of $1.8867 in relation to the June 2007 distribution period.
On 29 February 2008, 107,953,469 units were issued at a unit price of $1.6021 in relation to the December 2007 distribution period.
Note 28. Reserves and undistributed income
(a) Reserves
Foreign currency translation reserve
Asset revaluation reserve
Total reserves
CONSOLIDATED
PARENT ENTITY
2008
$’000
(12,357)
63,294
50,937
2007
$’000
2,129
–
2,129
2008
$’000
2007
$’000
–
–
–
–
–
–
MOVEMENTS:
CONSOLIDATED
PARENT ENTITY
Foreign currency translation reserve
Opening balance as at 1 July 2007
Exchange difference arising from the translation of the financial
statements of foreign operations
Total movement in foreign currency translation reserve
Closing balance as at 30 June 2008
2008
$’000
2007
$’000
2008
$’000
2007
$’000
2,129
178
(14,486)
(14,486)
(12,357)
1,951
1,951
2,129
–
–
–
–
–
–
–
–
MOVEMENTS:
CONSOLIDATED
PARENT ENTITY
Asset revaluation reserve
Opening balance as at 1 July 2007
Revaluation increment on investment
Total movement in asset revaluation reserve
Closing balance as at 30 June 2008
(b) Nature and purpose of reserves
Foreign currency translation reserve
2008
$’000
2007
$’000
2008
$’000
2007
$’000
–
63,294
63,294
63,294
–
–
–
–
–
–
–
–
–
–
–
–
The foreign currency translation reserve is used to record exchange differences arising from the translation of the financial statements of
foreign operations.
Asset revaluation reserve
The asset revaluation reserve is used to record increments and decrements on the revaluation of non-current assets.
(c) Undistributed income
Undistributed income as at 1 July 2007
Net profit attributable to security holders
Transfer of capital reserve of minority interest
Acquisition of investment
Distributions provided for or paid
CONSOLIDATED
PARENT ENTITY
2008
$’000
2007
$’000
1,930,282
1,098,453
438,277
1,168,819
(13,346)
(12,352)
402
–
2008
$’000
838,162
85,804
–
–
2007
$’000
525,810
443,857
–
–
(355,380)
(324,638)
(219,175)
(131,505)
Undistributed income as at 30 June 2008
2,000,235
1,930,282
704,791
838,162
DEXUS PROPERTY GROUP FINANCIAL REPORTS 2008 117
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 JUNE 2008
Note 29. Other minority interests
CONSOLIDATED
PARENT ENTITY
INTEREST IN
Contributed equity
Reserves
Undistributed income
2008
$’000
200,019
41,352
(35,373)
2007
$’000
348,062
(1,119)
91,230
Total other minority interests
205,998
438,173
2008
$’000
2007
$’000
–
–
–
–
–
–
–
–
Note 30. Distributions paid and payable
(a) Distribution to security holders
31 December (paid 29 February 2008)
30 June (payable 29 August 2008)
(b) Distribution to other minority interests
DEXUS Industrial Holdings, LLC (paid)
DEXUS RENTS Trust (paid 16 October 2007)
DEXUS RENTS Trust (paid 16 January 2008)
DEXUS RENTS Trust (paid 15 April 2008)
DEXUS RENTS Trust (payable 15 July 2008)
Total distributions
(c) Distribution rate
31 December (paid 29 February 2008)
30 June (payable 29 August 2008)
Total distributions
CONSOLIDATED
PARENT ENTITY
2008
$’000
172,992
182,388
2007
$’000
159,646
164,992
355,380
324,638
2008
$’000
116,875
102,300
219,175
2007
$’000
63,035
68,470
131,505
421
3,978
4,202
4,304
4,631
3,599
3,737
3,856
3,876
3,977
17,536
19,045
–
–
–
–
–
–
–
–
–
–
–
–
372,916
343,683
219,175
131,505
CONSOLIDATED
PARENT ENTITY
2008
CENTS PER
SECURITY
2007
CENTS PER
SECURITY
2008
CENTS PER
UNIT
2007
CENTS PER
UNIT
5.90
6.00
11.90
5.60
5.70
11.30
3.99
3.37
7.36
2.21
2.37
4.58
118 DEXUS PROPERTY GROUP FINANCIAL REPORTS 2008
(d) Franked dividends
The franked portions of the final dividends recommended after 30 June 2008 will be franked out of existing franking credits or out of franking
credits arising from the payment of income tax in the year ended 30 June 2008.
FRANKING CREDITS
CONSOLIDATED
PARENT ENTITY
Opening balance as at 1 July 2007
Franking credits arising during the year on payment of tax at 30%
Franking debits arising from payment of interim dividend
Franking credits arising on receipt of dividend
Franking credits on acquisition
Closing balance as at 30 June 2008
2008
$’000
3,512
4,694
(5,296)
5,024
6,205
14,139
2007
$’000
744
3,261
(493)
–
–
3,512
2008
$’000
2007
$’000
–
–
–
–
–
–
–
–
–
–
–
–
Note 31. Financial risk management
To ensure the effective and prudent management of the Trust’s capital and financial risks, DXS has a well established framework consisting of a
Board Finance Committee and a Capital Markets Committee. The Board Finance Committee is accountable to and primarily acts as an advisory
body to the DXFM Board and includes three Directors of the DXFM Board. Its responsibilities include reviewing and recommending for approval
financial risk management polices and funding strategies.
The Capital Markets Committee is a management committee that is accountable to both the Board Finance Committee and the DXS Executive
Committee. It convenes at least quarterly and conducts a review of financial risk management exposures including liquidity, funding strategies
and hedging. It is also responsible for the development of funding strategies for recommendation to the Board Finance Committee, and the
approval of treasury transactions within delegated limits and powers.
Further information on the Trusts’ governance structure, including terms of reference, is available at www.dexus.com
(1) Capital risk management
The Trust manages its capital to ensure that entities within the Trust will be able to continue as a going concern while maximising the return to
stakeholders through the optimisation of the debt and equity balance.
The capital structure of the Trust consists of debt (see note 21), cash and cash equivalents, and equity attributable to unitholders (including
hybrids securities). The capital structure is monitored and managed in consideration of a range of factors including:
(cid:132)
the cost of capital and the financial risks associated with each class of capital;
(cid:132)
gearing levels and other covenants;
(cid:132)
potential impacts on the Trust’s rating; and
(cid:132)
other market factors and circumstances.
The Trust has a stated target gearing range of between 40% and 45%. On a look through basis, the gearing ratio at 30 June 2008 was 33.2%,
which is below the stated gearing range.
GEARING RATIO
CONSOLIDATED
PARENT ENTITY
Total net debt1
Total tangible assets2
Gearing ratio %
2008
$’000
2007
$’000
2008
$’000
2007
$’000
2,914,841
3,301,211
–
694,346
8,788,492
9,277,775
2,096,547
2,786,384
33.2%
35.6%
0.0%
24.9%
1 Total net debt comprises Interest bearing liabilities less cash and cash equivalents as reported internally to management.
2 Total tangible assets comprise total tangible assets less cash and cash equivalents, derivatives and deferred and current tax balances as reported internally to management.
The Trust has been rated BBB+ by Standard and Poor’s since its first rating in July 2006. The Trust considers potential impacts upon the rating
when assessing the strategy and activities of the Trust.
The Responsible Entity (DXFM) for the managed investment schemes that are stapled to form DXS has been issued with an Australian Financial
Services Licence (AFSL). The licence is subject to certain capital requirements including the requirement to hold minimum net tangible assets
(of $5 million), and maintaining a minimum level of surplus liquid funds. Furthermore, the Responsible Entity maintains trigger points in
accordance with the requirements of the licence. These trigger points maintain a headroom value above the AFSL requirements and the entity
has in place a number of processes and procedures should a trigger point be reached.
DWPL, a wholly owned controlled entity, has also been issued with an AFSL as it is the Responsible Entity for DEXUS Wholesale Property Fund.
It is subject to the same requirements.
During the period, both responsible entities have complied with the AFSL requirements.
DEXUS PROPERTY GROUP FINANCIAL REPORTS 2008 119
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 JUNE 2008
Note 31. Financial risk management (continued)
(2) Financial risk management
The Trust’s activities expose it to a variety of financial risks: credit
risk, market risk (including currency risk, interest rate risk and price
risk), and liquidity risk. The Trust’s overall risk management program
focuses on the unpredictability of financial markets and seeks to
minimise potential adverse effects on the financial performance of
the Trust.
Accordingly, the Trust enters into various derivative financial
instruments such as interest rate swaps and foreign exchange
contracts to manage its exposure to certain risks. The Trust does not
trade in derivative instruments for speculative purposes. The Trust
uses different methods to measure the different types of risks to
which it is exposed, including monitoring the levels of exposure and
conducting sensitivity analysis in the case of interest rate, foreign
exchange and other price risks.
Risk management is implemented by a centralised treasury
department (Group Treasury) whose members act under written
policies approved by the Board of Directors of the Responsible Entity.
Group Treasury identifies, evaluates and hedges financial risks in
close cooperation with the Trust’s business units. The treasury
policies approved by the Board of Directors cover overall risk
management, as well as policies and limits covering specific areas
such as liquidity risk, interest rate risk, foreign exchange risk, credit
risk and the use of derivatives and other financial instruments. In
conjunction with its advisers, the Responsible Entity continually
reviews the Trust’s exposures and updates its treasury policies and
procedures.
(a) Liquidity risk
Liquidity risk is the risk that the Trust will not have sufficient available
funds to meet financial obligations in an orderly manner when they
fall due or at an acceptable cost.
The Trust identifies and manages liquidity risk across short, medium
and long-term categories:
(cid:132)
(cid:132)
Short-term liquidity management includes continuously monitoring
forecast and actual cash flows;
Medium-term liquidity management includes maintaining a level of
committed borrowing facilities that include a headroom value
above the forecast committed debt requirements. Committed debt
includes future expenditure that has been approved by the Board
or Investment Committee (as required within delegated limits), and
may also include projects that have a very high probability of
proceeding and in consideration of other risk factors such as the
level of regulatory approval, tenant pre-commitments and portfolio
considerations; and
(cid:132)
Long-term liquidity risk is managed through ensuring an adequate
spread of maturities of borrowing facilities so that refinancing risk
is not concentrated, and ensuring an adequate diversification of
funding sources.
Refinancing risk
A key liquidity risk is the Trust’s ability to refinance its current debt
facilities. As the Trust’s debt facilities mature, they are usually
required to be refinanced with a replacement facility or alternative
form of capital. The Trust’s policy is to distribute the majority of its
realised operating income and therefore is not available to be used
for funding requirements. The refinancing of existing facilities or the
requirement to raise new debt may also result in margin price risk,
whereby market conditions may result in an unfavourable change in
credit margins on the new or refinanced facilities.
The Trust’s key risk management strategy for refinancing risk is to
spread the maturities of debt facilities over different time periods to
reduce the volume of facilities to be refinanced and the exposure to
unfavourable market conditions in any one period.
An analysis of the contractual maturities of the Trust’s interest
bearing liabilities and derivative financial instruments are shown in
the table below. The amounts in the table represent undiscounted
cash flows.
MATURITY PROFILE
CONSOLIDATED 30 JUNE 2008
CONSOLIDATED 30 JUNE 2007
EXPIRING
WITHIN ONE
YEAR
$’000
EXPIRING
BETWEEN ONE
AND FIVE YEARS
$’000
EXPIRING
AFTER FIVE
YEARS
$’000
EXPIRING
WITHIN ONE
YEAR
$’000
EXPIRING
BETWEEN ONE
AND FIVE YEARS
$’000
EXPIRING
AFTER FIVE
YEARS
$’000
40,669
118,396
(77,727)
–
–
–
–
–
–
36,389
124,509
(88,120)
–
–
–
–
–
–
234,208
900,215
190,893
12,828
1,155,287
266,805
Receivables
Payables
Interest bearing liabilities
– Fixed interest bearing
liabilities
– Floating interest bearing
liabilities
Total interest bearing liabilities1
579,208
1,928,586
345,000
1,028,371
315,272
506,165
536,263
549,091
1,268,269
2,423,556
121,253
388,058
Derivative financial instruments
– Derivative assets
– Derivative liabilities
Total net derivative financial
instruments2
606,517
557,309
223,022
160,311
22,976
11,178
51,992
38,081
83,472
58,581
7,863
3,919
49,208
62,711
11,798
13,911
24,891
3,944
1 Refer to note 21 (interest bearing liabilities). Excludes deferred borrowing costs and preference shares.
2 The notional maturities on derivatives is only shown for cross currency interest rate swaps (refer foreign exchange rate risk) and forward foreign exchange contracts as they
are the only instruments where a principal amount is exchanged, and therefore are exposed to liquidity risk. For interest rate swaps, only the net interest cash flows (not the
notional principal) are included.
120 DEXUS PROPERTY GROUP FINANCIAL REPORTS 2008
PARENT ENTITY 30 JUNE 2008
PARENT ENTITY 30 JUNE 2007
EXPIRING
WITHIN ONE
YEAR
$’000
EXPIRING
BETWEEN ONE
AND FIVE YEARS
$’000
EXPIRING
AFTER FIVE
YEARS
$’000
EXPIRING
WITHIN ONE
YEAR
$’000
EXPIRING
BETWEEN ONE
AND FIVE YEARS
$’000
EXPIRING
AFTER FIVE
YEARS
$’000
8,419
13,968
(5,549)
–
–
–
–
–
520,595
478,687
55,892
60,287
–
–
–
119,533
4,313
4,567
19,495
24,129
(4,634)
–
17,335
11,740
–
–
–
–
–
–
–
(702,914)
26,905
21,899
358
1,529
41,907
(4,395)
(254)
5,595
5,006
(1,171)
Receivables
Payables
Loans with related parties
Derivative financial instruments
– Derivative assets
– Derivative liabilities
Total net derivative financial
instruments1
1 The notional maturities on derivatives is only shown for cross currency interest rate swaps (refer foreign exchange rate risk) and forward foreign exchange contracts as they
are the only instruments where a principal amount is exchanged, and therefore are exposed to liquidity risk. For interest rate swaps, only the net interest cash flows (not the
notional principal) are included.
(b) Market risk
Market risk is the risk that the fair value or future cash flows of the Trust’s financial instruments will fluctuate because of changes in market
prices. The market risks that Trust is exposed to are detailed further below.
(i) Interest rate risk
Interest rate risk is the risk that fluctuating interest rates will cause an adverse impact on interest payable (or receivable), or an adverse change
on the capital value (present market value) of long-term fixed rate instruments.
Interest rate risk for the Trust arises from interest bearing financial assets and liabilities that the Trust holds. Borrowings issued at variable rates
expose the Trust to cash flow interest rate risk. Borrowings issued at fixed rates expose the Trust to fair value interest rate risk.
The primary objective of the Trust’s risk management policy for interest rate risk is to minimise the effects of interest rate movements on the
Trust’s portfolio of financial assets and liabilities and financial performance. The policy sets out the minimum and maximum hedging amounts
for the Trust which is managed on a portfolio basis.
Cash flow interest rate risk on borrowings is managed through the use of interest rate swaps, whereby a floating interest rate exposure
is converted to a fixed interest rate exposure. Fair value interest rate risk on borrowings is also managed through the use of interest rate
swaps, whereby a fixed interest exposure is converted to a floating interest rate exposure. The mix of fixed and floating rate exposures is
monitored regularly to ensure that the interest rate exposure on the Trust’s cash flows is managed within the parameters defined by the
Group Treasury Policy.
As at 30 June 2008, 85% (2007: 89%) of the financial assets and liabilities (including DEXUS RENTS Trust) of the Trust have an effective
fixed interest rate.
The Trust holds borrowings in multiple currencies with both fixed and floating rate exposures and is exposed to interest rate risk related
to each particular currency.
The net notional amount of fixed rate debt and interest rate swaps in place in each year and the weighted average effective hedge rate
per currency is set out in the next table.
DEXUS PROPERTY GROUP FINANCIAL REPORTS 2008 121
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 JUNE 2008
Note 31. Financial risk management (continued)
(2) Financial risk management (continued)
(b) Market risk (continued)
(i) Interest rate risk (continued)
CONSOLIDATED 30 JUNE 2008
JUN 2009
JUN 2010
JUN 2011
JUN 2012
JUN 2013
> JUN 2013
Fixed rate debt
AUDm fixed rate debt1
USDm fixed rate debt1
Interest rate swaps
AUDm hedged1
AUD hedge rate (%)2
USDm hedged1
USD hedge rate (%)2
EURm hedged1
EUR hedge rate (%)2
NZDm hedged1
NZD hedge rate (%)2
CADm hedged1
CAD hedge rate (%)2
566,250
345,833
116,667
–
–
–
668,155
617,131
569,446
289,495
208,837
103,116
49,700
4.54%
254,967
494,467
488,200
494,167
278,000
4.30%
4.81%
4.64%
5.13%
5.98%
908,185
956,770
934,738
1,187,596
1,175,315
500,086
4.75%
4.87%
4.91%
4.88%
4.89%
180,000
180,000
177,500
167,500
145,000
3.96%
3.96%
3.97%
3.97%
3.98%
–
N/A
70,000
4.77%
–
N/A
70,000
4.77%
–
N/A
70,000
4.77%
–
N/A
70,000
4.77%
–
N/A
70,000
4.77%
4.99%
52,000
4.00%
–
N/A
61,833
4.77%
Combined fixed debt and swaps
(A$ Equivalent)
2,620,865
2,603,181
2,536,987
2,369,505
2,242,012
1,053,588
Hedge rate (%)
4.61%
4.63%
4.77%
4.72%
4.84%
5.16%
1 Average amounts for the period. Hedged amounts above do not include potential hedges that are cancellable at the counterparty’s option.
2 The above hedge rates do not include margins payable on borrowings.
Sensitivity on interest expense
The table below shows the impact on net interest expense of a 25bps increase or decrease in market interest rates. The sensitivity on cash flow
arises due to the impact that a change in interest rates will have on the Trust’s floating rate debt and derivative cash flows.
+/– 0.25% (25 basis points)
+/– 0.25% (25 basis points)
+/– 0.25% (25 basis points)
+/– 0.25% (25 basis points)
Total A$ Equivalent
AUD
USD
EUR
CAD
CONSOLIDATED
PARENT ENTITY
2008
(+/–) ‘000s
2007
(+/–) ‘000s
2008
(+/–) ‘000s
2007
(+/–) ‘000s
237
402
26
–
698
(176)
256
76
–
247
255
(308)
–
–
(80)
4
–
–
(66)
(75)
The sensitivity on A$ interest expense for 30 June 2007 is shown as a negative as it reflects the sensitivity of floating rate debt and does not take
into consideration the exposure to floating interest rates associated with RENTS securities.
The increase or decrease in interest expense is proportional to the increase or decrease in interest rates.
122 DEXUS PROPERTY GROUP FINANCIAL REPORTS 2008
Sensitivity on fair value
The table below shows the impact on the Income Statements for changes in the fair value of interest rate swaps for a 25bps increase and
decrease in market rates. The sensitivity on the fair value arises from the impact that changes in market rates will have on the mark-to-market
valuation of the interest rate swaps. Although interest rate swaps are transacted for the purpose of providing the Trust with an economic hedge,
the Trust has elected not to apply hedge accounting to its interest rate derivatives. Accordingly, gains or losses arising from changes in the fair
value are reflected in the Income Statements.
+/– 0.25% (25 basis points)
+/– 0.25% (25 basis points)
+/– 0.25% (25 basis points)
+/– 0.25% (25 basis points)
AUD
USD
EUR
CAD
Total A$ Equivalent
(ii) Foreign exchange risk
CONSOLIDATED
PARENT ENTITY
2008
(+/–) ‘000s
2007
(+/–) ‘000s
2008
(+/–) ‘000s
2007
(+/–) ‘000s
4,153
16,448
2,297
1,352
10,454
8,061
2,520
–
(4,505)
4,215
–
–
2,967
1,147
–
–
26,399
23,944
(126)
4,319
Foreign exchange risk is the risk that movements in exchange rates used to convert foreign currency revenues, expenses, assets, or liabilities to
the Trust’s functional currency will have an adverse effect on the Trust.
The Trust’s foreign exchange risk primarily arises from:
(cid:132)
Translation of investments in foreign operations;
(cid:132)
Borrowings denominated in foreign currencies; and
(cid:132)
Earnings distributions and other transactions denominated in foreign currencies.
The Trust operates internationally with investments in the United States, New Zealand, France, Germany and Canada and is exposed to the
relative functional currency of each country. The foreign exchange risk is measured using cash flow forecasting and sensitivity analysis.
When hedging its exposures to foreign investments, the Trust adopts a strategy that combines the use of both natural hedges and derivative
financial instruments. Natural hedges occur when foreign debt is used to generate foreign denominated interest expense, which offsets
foreign denominated income and foreign denominated net operating assets. The Trust uses derivative financial instruments to supplement
its natural hedges.
Foreign exchange risk on cash flows is hedged to ensure that movements in exchange rates have a minimal adverse impact on the Trust’s cash
flows and foreign earnings.
DEXUS PROPERTY GROUP FINANCIAL REPORTS 2008 123
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 JUNE 2008
Note 31. Financial risk management (continued)
(2) Financial risk management (continued)
(b) Market risk (continued)
(ii) Foreign exchange risk (continued)
Foreign currency assets and liabilities
Exposure to foreign exchange risk is minimised by the way the Trust manages its borrowing arrangements. The Trust predominantly matches the
currency of its debt with the currency of its investment to form a natural hedge against movements in exchange rates. Where the borrowing is in
Australian dollars, foreign currency derivatives are used to manage the foreign exchange risk. The Trust’s net foreign currency exposures for net
investments in foreign operations and hedging instruments are as follows:
USD net assets1
USD net borrowings2
USD cross currency swaps3
USD denominated net investment
% hedged
EUR net assets1
EUR net borrowings2
EUR denominated net investment
% hedged
CAD net assets1
CAD cross currency swaps3
CAD denominated net investment
% hedged
NZD net assets1
NZD denominated net investment
% hedged
CONSOLIDATED
PARENT ENTITY
2008
$’000
2007
$’000
2008
$’000
2007
$’000
783,161
545,247
312,905
259,578
(311,200)
(417,500)
86,926
(202,609)
(420,000)
–
(420,000)
–
51,961
127,747
(20,169)
56,969
97%
92%
103%
92%
161,400
222,491
(163,500)
(220,500)
(2,100)
101%
68,300
(70,000)
(1,700)
102%
1,991
99%
–
–
–
157,509
142,824
157,509
142,824
0%
0%
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
1 Net assets excludes working capital and cash as reported internally to management.
2 Net borrowings is equal to interest bearing liabilities less cash.
3 Cross currency swap amounts comprise the foreign currency denominated leg of the cross currency swaps. The US$420 million cross currency swap was transacted for cash
flow management purposes, with the exchange of the principal amount at commencement and maturity. The maturity date is matched to the maturity of the A$500 million
CMBS (refer note 21). The CAD70 million cross currency swap was transacted for balance sheet management purposes, and has an exchange of principal at commencement
and maturity.
The Trust transacts cross currency swaps which are used to:
(cid:132)
manage the currency impacts that arise from cash flows denominated in different currencies; and
(cid:132)
swap Australian dollar borrowings into foreign currency borrowings and vice versa.
In each case, the Trust has committed foreign currency borrowing capacity in place that can replace the foreign currency amounts that are due
under the cross currency swaps.
Sensitivity on fair value of cross currency swaps
The table below shows the impact on the Income Statements for changes in the fair value of cross currency swaps for a 10% increase and
decrease in market rates. The sensitivity on the fair value arises from the impact that changes in market rates will have on the mark-to-market
valuation of the cross currency swaps. The Trust has elected not to apply hedge accounting to its cross currency swaps. Accordingly, gains or
losses arising from changes in the fair value are reflected in the Income Statements.
CONSOLIDATED
PARENT ENTITY
2008
(+/–) ‘000s
2007
(+/–) ‘000s
2008
(+/–) ‘000s
2007
(+/–) ‘000s
1,545
347
–
–
1,545
–
–
–
+/– 10% (9.6 cents)
USD (AUD equivalent)
+/– 10% (9.7 cents)
CAD (AUD equivalent)
124 DEXUS PROPERTY GROUP FINANCIAL REPORTS 2008
Net foreign currency denominated cash flows
Foreign exchange risk exists in relation to net cash flows and transactions with foreign operations that are denominated in foreign currencies.
This risk is managed through the use of forward foreign exchange contracts (after taking into account the natural hedging through foreign
denominated interest expense).
Forward foreign exchange contracts outstanding at 30 June 2008 are as follows:
CONTRACTS TO RECEIVE A$ AND PAY US$ AT AN AGREED EXCHANGE RATE:
2008
TO PAY US$
MILLION
2008
TO RECEIVE
A$ MILLION
1 year or less
Over 1 and less than 2 years
More than 2 years
9.5
5.2
17.2
13.9
7.7
25.0
2008
WEIGHTED
AVERAGE
EXCHANGE
RATE
0.6844
0.6725
0.6868
2007
TO PAY US$
MILLION
2007
TO RECEIVE
A$ MILLION
12.8
13.6
19.6
18.4
19.5
27.3
CONTRACTS TO RECEIVE A$ AND PAY NZ$ AT AN AGREED EXCHANGE RATE:
2008
TO PAY NZ$
MILLION
2008
TO RECEIVE
A$ MILLION
1 year or less
Over 1 and less than 2 years
More than 2 years
7.5
4.0
2.0
6.6
3.4
1.7
CONTRACTS TO RECEIVE A$ AND PAY € AT AN AGREED EXCHANGE RATE:
2008
TO PAY €
MILLION
2008
TO RECEIVE
A$ MILLION
2007
TO PAY NZ$
MILLION
2007
TO RECEIVE
A$ MILLION
7.9
–
–
6.9
–
–
2007
TO PAY €
MILLION
2007
TO RECEIVE
A$ MILLION
2008
WEIGHTED
AVERAGE
EXCHANGE
RATE
1.1311
1.1780
1.1847
2008
WEIGHTED
AVERAGE
EXCHANGE
RATE
1 year or less
Over 1 and less than 2 years
More than 2 years
–
–
–
–
–
–
–
–
–
2.7
1.7
2.6
4.8
3.1
4.8
2007
WEIGHTED
AVERAGE
EXCHANGE
RATE
0.6957
0.6971
0.7170
2007
WEIGHTED
AVERAGE
EXCHANGE
RATE
1.1417
–
–
2007
WEIGHTED
AVERAGE
EXCHANGE
RATE
0.5702
0.5560
0.5370
Sensitivity on fair value of foreign exchange contracts
The table below shows the impact on the Income Statements for changes in the fair value of forward foreign exchange contracts for a 10%
increase and decrease in market rates. The sensitivity on the fair value arises from the impact that changes in market rates will have on the
mark-to-market valuation of the forward foreign exchange contracts.
Although forward foreign exchange contracts are transacted for the purpose of providing the Trust with an economic hedge, the Trust has
elected not to apply hedge accounting to its forward foreign exchange contracts. Accordingly, gains or losses arising from changes in the fair
value are reflected in the Income Statements.
+/– 10% (9.6 cents)
USD (AUD equivalent)
+/– 10% (12.6 cents)
NZD (AUD equivalent)
+/– 10% (6.1 cents)
EUR (AUD equivalent)
Total (AUD equivalent)
CONSOLIDATED
PARENT ENTITY
2008
(+/–) ‘000s
2007
(+/–) ‘000s
2008
(+/–) ‘000s
2007
(+/–) ‘000s
2,945
959
–
3,904
4,769
665
1,006
6,440
1,444
2,384
–
–
–
–
1,444
2,384
The increase or decrease in cash flow is proportional to the movement in the exchange rate.
DEXUS PROPERTY GROUP FINANCIAL REPORTS 2008 125
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 JUNE 2008
For the consolidated entity, the ageing analysis of loans and
receivables at 30 June 2008 is ($’000): 36,226.9 (0-30 days),
1,313.1 (31-60 days), 702.6 (61-90 days), 2,456.4 (91+ days). The
ageing analysis of loans and receivables at 30 June 2007 is ($’000):
27,906.1 (0-30 days), 2,047.1 (31-60 days), 1,618.7 (61-90 days),
4,817.1 (91+ days). Amounts over 31 days are past due, however, no
receivables are impaired.
For the parent entity, the ageing analysis for loans and receivables at
30 June 2008 is ($’000): 8,124.3 (0-30 days), 123.7 (31-60 days),
37.6 (61-90 days), 133.4 (91+ days). The ageing analysis of loans
and receivables for the parent entity at 30 June 2007 is ($’000):
17,435.5 (0-30 days), 517.8 (31-60 days), –39.6 (61-90 days),
1,581.3 (91+ days). Amounts over 31 days are past due, however,
no receivables are impaired.
The credit quality of financial assets that are neither past due nor
impaired is consistently monitored to ensure that there are no
adverse changes in credit quality.
Financial instrument transactions are spread amongst a number
of approved financial institutions within specified credit limits to
minimise the Trust’s exposure to any one counterparty. As a result,
there are no significant concentrations of credit risk for financial
instruments.
Fair value of financial instruments
Fair value interest rate risk is the risk of an adverse change in the
net fair (or market) value of an asset or liability due to movements
in interest rates.
Note 31. Financial risk management (continued)
(2) Financial risk management (continued)
(b) Market risk (continued)
(iii) Price risk
The Trust is exposed to equity securities price risk from equity
securities and derivative financial instruments that the Trust
transacts. Equity securities price risk is subject to a number
of risks, the key risk variable is the quoted market price of equity
securities which are affected by a number of factors which are
largely out of the control of the Trust. The Trust does not use
financial instruments to hedge the price risk.
As at 30 June 2008, the Trust does not have a material exposure
to price risk.
(c) Credit risk
Credit risk is the risk of loss to the Trust in the event of non-
performance by the Trust’s financial instrument counterparties.
Credit risk arises from cash and cash equivalents, loans and
receivables, and derivative financial instruments. The Trust and
parent entity have exposure to credit risk on all financial assets.
The Trust manages this risk by:
(cid:132)
(cid:132)
(cid:132)
(cid:132)
adopting a process for determining an approved counterparty, with
consideration of qualitative factors as well as the counterparty’s
rating;
regularly monitoring counterparty exposure within approved credit
limits that are based on a S&P credit rating range. The exposure
includes the current market value of in-the-money contracts as
well as potential exposure, which is measured with reference to
credit conversion factors as per APRA guidelines;
entering into ISDA Master Agreements once a financial institution
counterparty is approved;
ensuring tenants, together with approved credit limits, are
approved and ensuring that leases are undertaken with a large
number of tenants;
(cid:132)
for some trade receivables, obtaining collateral where necessary in
the form of bank guarantees and tenant bonds; and
(cid:132)
regularly monitoring loans and receivables on an ongoing basis.
A minimum S&P rating of A– is required to become or remain an
approved counterparty. As at 30 June 2008, the lowest rating of
counterparties the Trust is exposed to was A–.
The maximum exposure to credit risk at 30 June 2008 is the
carrying amounts of financial assets recognised on the Balance
Sheets of the Trust and parent entity.
As at 30 June 2008, the Trust and the parent have no significant
concentrations of credit risk for trade receivables. Trade receivable
balances and the credit quality of trade debtors are consistently
monitored on an ongoing basis. As a result, the Trust and parent
entity’s exposure to bad debts is not significant.
126 DEXUS PROPERTY GROUP FINANCIAL REPORTS 2008
At 30 June 2008, the carrying amounts and fair values of financial assets and liabilities are shown as follows:
Financial assets
Cash and cash equivalents
Loans and receivables (current)
Derivative assets
Total financial assets
Financial liabilities
Trade payables
Derivative liabilities
Interest bearing liabilities
Multi-option facility
Multi-option syndicated facility
US private placements
Commercial paper
Commercial mortgage backed securities
Medium term notes
Other
Intercompany loans
Preference shares
Total financial liabilities
Financial assets
Cash and cash equivalents
Loans and receivables (current)
Derivative assets
Intercompany loans
Total financial assets
Financial liabilities
Trade payables
Derivative liabilities
Intercompany loans
Total financial liabilities
CONSOLIDATED
CONSOLIDATED
2008
CARRYING AMOUNT1
$’000
2008
FAIR VALUE2
$’000
2007
CARRYING AMOUNT1
$’000
2007
FAIR VALUE2
$’000
99,214
40,669
191,162
331,045
118,396
97,078
861,521
466,539
415,542
–
500,000
455,425
314,933
–
96
99,214
40,669
191,162
331,045
118,396
97,078
861,521
466,539
438,050
–
494,108
445,510
318,913
–
96
59,603
36,389
145,425
241,417
124,509
21,333
253,561
780,465
471,309
344,500
684,693
456,153
370,024
–
109
59,603
36,389
145,425
241,417
124,509
21,333
253,561
780,465
460,740
344,500
683,511
451,185
355,823
–
109
3,229,530
3,240,211
3,506,656
3,475,736
PARENT ENTITY
PARENT ENTITY
2008
CARRYING AMOUNT1
$’000
2008
FAIR VALUE2
$’000
2007
CARRYING AMOUNT1
$’000
2007
FAIR VALUE2
$’000
31,004
8,419
70,059
119,533
229,015
13,968
43,429
34,332
91,729
31,004
8,419
70,059
119,533
229,015
13,968
43,429
34,332
91,729
9,096
19,495
33,124
–
9,096
19,495
33,124
–
61,715
61,715
24,129
7,861
24,129
7,861
702,914
702,914
734,904
734,904
1 Carrying value is equal to the value of the financial instruments on the balance sheet.
2 Fair value is the amount for which the financial instrument could be exchanged, or a liability settled, between knowledgeable, willing parties in an arm’s length transaction,
however, not recognised on the balance sheet.
The fair values of fixed rate interest bearing liabilities have been determined by discounting the expected future cash flows by the relevant
market rates. The discount rates applied range from 3.11% to 4.60% for USD and 7.81% to 7.93% for AUD. The fair values of floating rate
interest bearing liabilities have been determined by adjusting for transaction costs where appropriate. Refer note 1(u) for fair value methodology
for financial assets and liabilities.
DEXUS PROPERTY GROUP FINANCIAL REPORTS 2008 127
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 JUNE 2008
Note 32. Contingent liabilities
DETAILS AND ESTIMATES OF MAXIMUM AMOUNTS OF CONTINGENT
LIABILITIES ARE AS FOLLOWS:
CONSOLIDATED
PARENT ENTITY
Bank guarantees by the Trusts in respect of variations and other financial
risks associated with the development of:
Coles Myer development at Boundary Road, Laverton, VIC
60 Miller Street, North Sydney, NSW
Atlantic Corporate Park, Sterling, Virginia (formerly Dulles Town Crossing)
The Titan Industrial Portfolio
Bligh Street, Sydney, NSW
Total contingent liabilities
2008
$’000
2007
$’000
2008
$’000
2007
$’000
–
496
1,596
709
3,820
6,621
1,000
496
1,810
–
–
3,306
–
–
–
–
–
–
–
–
–
–
–
–
The Trusts are also guarantors of a AUD$300 million and USD$210 million syndicated bank debt facility and a total of AUD$1,182.5 million and
USD$120 million (AUD$124.7 million) of bank bi-lateral facilities, a total of $450 million of medium term notes and a total of USD$400 million
(AUD$415.6 million) of privately placed notes, which have all been negotiated to finance the Trusts. The guarantees have been given in support
of debt outstanding and drawn against these facilities.
The guarantees are issued in respect of the Trusts and do not constitute an additional liability to those already existing in interest bearing
liabilities on the Balance Sheet.
The Directors of the Responsible Entity are not aware of any other contingent liabilities in relation to the Trusts, other than those disclosed
in the Financial Statements, which should be brought to the attention of security holders as at the date of completion of this report.
Note 33. Commitments
(a) Capital commitments
The following amounts represent capital expenditure on investment properties contracted at the reporting date but not recognised as
liabilities payable:
CAPITAL EXPENDITURE COMMITMENTS IN RELATION
TO DEVELOPMENT WORKS:
CONSOLIDATED
PARENT ENTITY
2008
$’000
2007
$’000
2008
$’000
2007
$’000
Not longer than one year
Plenty Valley Town Centre, 330–464 McDonald’s Road, South Morang, VIC
North Lakes Shopping Centre, Mango Hill, QLD
3 Brookhollow Avenue, Norwest, NSW
10–16 South Street Rydalmere, NSW
5–13 Rosebery Avenue, Rosebery, NSW
Egerton Street, Silverwater, NSW
Boundary Road, Laverton North, VIC
Pound Road West, Dandenong, VIC
114 Fairbank Road, Clayton, VIC
21 rue du Chemin Blanc, Champlan
32 avenue de L’Oceanie, Villejust
201 Elizabeth Street, Sydney, NSW
Governor Phillip Tower & Governor Macquarie Tower Office
Complex 1 Farrer Place, Sydney, NSW
309–321 Kent Street, Sydney, NSW
Australia Square, 264 George Street, Sydney, NSW
Southgate Complex, 3 Southgate Avenue, Southgate, VIC
Williams Drive, Atlanta
Westinghouse Boulevard, Charlotte
O’Hare, Chicago
128 DEXUS PROPERTY GROUP FINANCIAL REPORTS 2008
–
–
227
189
200
475
6,890
1,257
–
–
–
–
39
163
–
203
–
87
347
81,576
48,398
–
–
–
–
3,547
8,539
3,170
339
157
215
2,446
2,323
3,115
20
124
471
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
81,576
48,398
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
CAPITAL EXPENDITURE COMMITMENTS IN RELATION TO DEVELOPMENT
WORKS:
CONSOLIDATED
PARENT ENTITY
2008
$’000
2007
$’000
2008
$’000
2007
$’000
Kenwood Road, Cincinnati
Turfway Road, Cincinnati
Airport Exchange Boulevard, Cincinnati
SE, Columbus
Regency Crest Drive, Dallas
E Plano/Shiloh, Dallas
Capital Avenue, Dallas
Avenue F, Dallas
Mechanicsburg, Harrisburg
Glendale, Los Angeles
Memphis Industrial, Memphis
Lexington Avenue, Minneapolis
Mounds View, Minneapolis
Trenton Lane, Minneapolis
Braemar Ridge, Minneapolis
Eagandale Business Campus, Minneapolis
Alexandria, North Virginia
West Alameda Drive, Phoenix
44th Avenue, Phoenix
South Priest Drive, Phoenix
East University, Phoenix
South 41st Avenue, Phoenix
South 40th Avenue, Phoenix
Southern Employment Lands, Greystanes
Kent West, Seattle
189 Flinders Lane, Melbourne, VIC
8 Nicholson Street, Melbourne, VIC
The Zenith, 821–843 Pacific Highway, Chatswood, NSW
60 Miller Street, North Ryde, NSW
144 Wicks Road, North Ryde, NSW
123 Albert Street, Brisbane QLD
203
141
–
460
26
–
31
222
–
264
–
126
856
557
17
114
838
96
73
105
348
205
208
63,848
277
340
255
1,191
10,921
325
57,293
42
–
390
–
474
219
231
–
149
340
13
–
229
906
277
2,355
–
196
274
–
–
–
–
–
571
–
–
–
–
–
–
Later than one year but not later than five years
Governor Phillip Tower & Governor Macquarie Tower Office Complex
1 Farrer Place, Sydney, NSW
7,664
11,037
149,417
161,106
Australia Square, 264 George Street, Sydney, NSW
North Lake Drive, Dallas
10th Street, Dallas
Eq/West/Div, Columbus
Southern Employment Lands, Greystanes
123 Albert Street, Brisbane, QLD
Later than five years
Australia Square, 264 George Street, Sydney, NSW
–
–
–
–
27,174
148,767
183,605
176
118
295
353
–
–
11,979
148,767
–
–
836
836
–
–
Total capital commitments
333,023
173,921
206,655
129,974
DEXUS PROPERTY GROUP FINANCIAL REPORTS 2008 129
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
340
255
–
–
–
57,293
57,888
–
–
–
–
–
–
148,767
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
129,974
–
–
–
–
–
–
–
–
–
–
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 JUNE 2008
Note 33. Commitments (continued)
(b) Lease payable commitments
COMMITMENTS IN RELATION TO LEASES CONTRACTED FOR AT THE
REPORTING DATE BUT NOT RECOGNISED AS LIABILITIES PAYABLE:
CONSOLIDATED
PARENT ENTITY
Within one year
Later than one year but not later than five years
Later than five years
Total lease payable commitments
2008
$’000
290
1,162
6,970
8,422
2007
$’000
290
1,162
7,260
8,712
2008
$’000
290
1,162
6,970
8,422
2007
$’000
290
1,162
7,260
8,712
Payments made under operating leases are expensed on a straight line basis over the term of the lease, except where an alternative basis
is more representative of the pattern of benefits to be derived from the leased property.
The Trust has a commitment for ground rent payable in respect of a leasehold property included in property investments. An amount of
$290,356 was paid in respect of the year ended 30 June 2008 (2007: $290,356). This commitment was reviewed in 2003 and annual lease
payments were increased by a CPI factor as per the lease agreement. This commitment is next subject for review in 2012 and expires in 2037.
No provisions have been recognised in respect of non-cancellable operating leases.
(c) Lease receivable commitments
THE FUTURE MINIMUM LEASE PAYMENTS RECEIVABLE BY
THE TRUSTS ARE:
CONSOLIDATED
PARENT ENTITY
Within one year
Later than one year but not later than five years
Later than five years
2008
$’000
2007
$’000
457,594
572,632
1,447,477
1,677,318
666,413
1,018,754
2008
$’000
90,728
291,568
187,665
2007
$’000
173,502
549,873
435,658
Total lease receivable commitments
2,571,484
3,268,704
569,961
1,159,033
Note 34. Related parties
Responsible Entity
DXFM is the Responsible Entity of the Trusts.
On 21 February 2008, DXO purchased the remaining 50% interest in DXH (the parent entity of DXFM) from FAP, a subsidiary of Deutsche Bank.
DXFM is also the Responsible Entity of Abbotsford Property Trust, Abbotsford Property Investment Trust, Gordon Property Trust, Gordon
Property Investment Trust, Northgate Property Trust and Northgate Property Investment Trust (collectively known as “the Syndicates”).
DXH is the parent entity of DEXUS Wholesale Property Limited (formerly DB RREEF Wholesale Property Limited) (DWPL), the Responsible Entity
for DWPF.
Responsible Entity fees
Under the terms of the Trusts’ Constitutions, the Responsible Entities are entitled to receive fees in relation to the management of the Trusts.
DXH is entitled to be reimbursed for administration expenses incurred on behalf of the Trusts. DEXUS Property Services Pty Limited (DXPS),
a wholly owned subsidiary of DXH is entitled to property management fees from the Trusts.
Related party transactions
Prior to DXO’s acquisition of the remaining 50% interest in DXH on 21 February 2008, all related party transactions were conducted on normal
commercial terms and conditions unless otherwise stated. Following the acquisition, Responsible Entity fees in relation to DXS assets moved to
cost recovery. All agreements with third party funds remain unchanged.
Investments
On 21 February 2008, DXO purchased the remaining 50% interest in DXH from FAP. Deutsche Bank ceased to be a related party on this date.
130 DEXUS PROPERTY GROUP FINANCIAL REPORTS 2008
DEXUS Funds Management Limited and its related entities
There were a number of transactions and balances between the Trust and the Responsible Entity and its related entities as detailed below:
CONSOLIDATED
PARENT ENTITY
2008
$
2007
$
2008
$
2007
$
Responsible Entity fees paid and payable1
21,869,324
33,147,164
9,397,076
11,961,394
Loan note interest earned from DXH
Property management fees to DXPS
Recovery of administration expenses paid to DXH
Aggregate amounts payable to the Responsible Entity
at reporting date
3,693,880
8,400,054
4,952,925
5,461,329
9,273,393
8,510,965
–
–
736,069
728,000
1,188,892
2,516,480
–
3,374,190
504,613
1,342,379
DEXUS Wholesale Property Fund (formerly DB RREEF Wholesale Property Fund)2
Responsible Entity fee income
Property management fee income
Recovery of administration expenses
Aggregate amount receivable at reporting date
The Syndicates2
Responsible Entity fee income
Property management fee income
Recovery of administration expenses
Aggregate amount receivable at reporting date
Bent Street Trust2
Property management fee income
Recovery of administration expenses
Aggregate amount receivable at reporting date
CONSOLIDATED
PARENT ENTITY
2008
$
6,200,512
993,255
797,068
1,853,954
2007
$
2008
$
2007
$
–
–
–
–
–
–
–
–
–
–
–
–
CONSOLIDATED
PARENT ENTITY
2007
$
2008
$
2007
$
2008
$
742,994
235,080
300,100
329,230
–
–
–
–
–
–
–
–
CONSOLIDATED
PARENT ENTITY
2008
$
6,400,740
18,286
3,446,957
2007
$
–
–
–
2008
$
–
–
–
–
–
–
–
2007
$
–
–
–
1 Amounts in 2008 reflect transactions from 1 July 2007 to 20 February 2008.
2 Amounts in 2008 reflect transactions between 21 February 2008 and 30 June 2008.
DEXUS PROPERTY GROUP FINANCIAL REPORTS 2008 131
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 JUNE 2008
Note 34. Related parties (continued)
RREEF1
RREEF (a subsidiary of Deustche Bank AG), as fund manager of the DEXUS Industrial Properties, Inc. (formerly DB RREEF Industrial Properties, Inc)
is entitled to the following fees:
Investment management fee
Asset management fee
Acquisition fee
Property management fees
Construction supervision fee
Development fees
Leasing commissions
Performance fees
Deutsche Bank AG1
CONSOLIDATED
PARENT ENTITY
2008
$
2,174,822
229,230
3,245,899
3,081,512
622,598
1,444,421
1,772,242
64,411
2007
$
1,561,000
343,761
3,549,000
4,901,006
791,821
917,705
2,841,166
(10,121)
2008
$
2007
$
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
Dealings with the bank include, not only transactions in its capacity as part owner of the Responsible Entity, but also in the provision
of financial services.
There were a number of transactions and balances between the Trust and the Responsible Entity and related entities as detailed below:
CONSOLIDATED
PARENT ENTITY
2008
$
2007
$
2008
$
2007
$
Deutsche Bank AG in its capacity as a financier:
Interest paid on swaps for whom the counterparty
was Deutsche Bank AG
9,955,000
14,826,000
226,271
(294,922)
Interest and financing fees on borrowings to Deutsche Bank AG
431,000
601,000
Borrowings from Deutsche Bank AG
–
13,034,000
Proceeds from Borrowings from Deutsche Bank AG
7,033,000
14,688,000
Loan repayment to Deutsche Bank AG
10,650,755
11,757,000
–
–
–
–
Interest received on swaps for whom the counterparty
was Deutsche Bank AG
Other transactions with Deutsche Bank AG:
10,315,000
16,890,000
870,762
Interest paid and payable to FAP
814,000
233,724
Purchase of DXH shares
Redemption of loan notes
Dividends paid
79,829,700
51,936,300
5,974,000
–
–
–
–
–
–
–
1 Amounts in 2008 reflect transactions between 1 July 2007 and 20 February 2008.
–
–
–
–
–
–
–
–
–
132 DEXUS PROPERTY GROUP FINANCIAL REPORTS 2008
The following persons were directors or alternate directors of DXFM during the whole of the financial year and up to the date of this report,
unless otherwise stated:
DIRECTORS
C T Beare, BSc, BE (Hons), MBA, PhD, FAICD1,4,5
E A Alexander AM, BComm, FCA, FAICD, FCPA1,2,3,5,6,7
B R Brownjohn, BComm1,2,5,6,7
S F Ewen OAM, FILE1,4
V P Hoog Antink, BCom, MBA, FCA, FAPI, FRICS, MAICD
C B Leitner III, BA
B E Scullin, BEc1,2,3,4,6,7
A J Fay, BAg.Ec (Hons), ASIA (Alternate to C B Leitner) 8
1 Independent Director
2 Audit and Risk Committee Member (Committee ceased on 30 September 2007)
3 Compliance Committee Member
4 Nomination and Remuneration Committee Member
5 Finance Committee Member
6 Audit Committee Member (Committee commenced on 1 October 2007)
7 Risk Committee Member (Committee commenced on 1 October 2007)
8 Nomination & Remuneration Committee Member from 1 July 2007 to 21 February 2008
No directors held an interest in the Trust as at 30 June 2008 or at the date of this report.
Other key management personnel
In addition to the directors listed above the following persons were deemed by the Board Nomination and Remuneration Committee to be key
management personnel during all or part of the financial year and up to the date of this report:
NAME
POSITION
QUALIFICATION DATE OF OTHER KEY
MANAGEMENT PERSONNEL DURING THE
12 MONTHS ENDED 30 JUNE 2008
Victor P Hoog Antink
Tanya L Cox
Pat A Daniels
John C Easy
Ben J Lehmann
Louise J Martin
Craig D Mitchell
Paul G Say
Mark F Turner
Chief Executive Officer
Chief Operating Officer
Head of Human Resources
Qualified 14 January 2008
General Counsel
Fund Manager, DEXUS Property Group
Ceased to qualify 27 March 2008
Head of Office
Chief Financial Officer
Head of Corporate Development
Head of Unlisted Funds
Qualified 27 March 2008
Qualified 17 September 2007
Andrew P Whiteside
Head of Industrial
Qualified 28 April 2008
No key management personnel or their related parties held an interest in the Trust for the years ended 30 June 2007 and 30 June 2008 or at
the date of this report.
There were no loans or other transactions with key management personnel or their related parties during the years ended 30 June 2007 and
30 June 2008 or at the date of this report.
COMPENSATION
Short-term employee benefits
Post-employment benefits
Other long-term benefits
2008
$
2007
$
6,891,605
4,753,130
400,153
3,450,000
10,741,758
998,514
1,265,000
7,016,644
The Trust has shown the detailed remuneration disclosures in the Directors’ Report. The relevant information can be found in section 3 of the
Directors’ Report on pages 67 to 72.
DEXUS PROPERTY GROUP FINANCIAL REPORTS 2008 133
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 JUNE 2008
Note 35. Business Combinations
(a) Summary of acquisition
On 21 February 2008, DXO acquired the remaining 50% interest in DXH.
Prior to this acquisition DXO held a 50% share in DXH and accounted for DXH on an equity accounting basis. The acquisition of the remaining
50% has resulted in DXO effectively controlling DXH and thus this acquisition was accounted for as a ‘business combination achieved in stages’
as described in AASB 3 Business Combinations. The acquisition resulted in goodwill of $2.998 million.
The acquired business contributed revenues of $37.428 million and net profit of $2.278 million to the Trusts for the period from 21 February 2008
to 30 June 2008. If the acquisition had occurred on 1 July 2007, consolidated revenue and consolidated profit for the year ended 30 June 2008
would have been $943.197 million and $441.169 million respectively. These amounts have been calculated using the Trusts’ accounting policies.
Purchase consideration (refer to (b) below):
Cash paid1
Direct costs related to acquisition
Total purchase price
Fair value of net identifiable assets acquired (refer below)
Goodwill
(b) Purchase consideration
Outflow of cash to acquire subsidiary, net of cash acquired
Cash consideration
Less: Cash balances acquired
Outflow of cash
(c) Assets and liabilities acquired
The assets and liabilities arising from the acquisition are as follows:
$’000
79,830
768
80,598
77,600
2,998
CONSOLIDATED
PARENT ENTITY
2008
$’000
79,830
12,486
67,344
2007
$’000
2008
$’000
2007
$’000
–
–
–
–
–
–
–
–
–
Property plant and equipment
Deferred tax assets
Intangible assets – management rights
Other non-current assets
Cash and cash equivalents
Receivables
Other current assets
Provisions
Payables
Interest bearing liabilities
Net assets
Identifiable net assets acquired
ACQUIREE’S CARRYING AMOUNT
FAIR VALUE
$’000
4,529
1,467
125,796
40
12,486
22,688
877
(14,556)
(13,360)
(111,353)
28,614
$’000
4,529
1,467
252,382
40
12,486
22,688
877
(14,556)
(13,360)
(111,353)
155,200
77,600
1 Represents consideration for the remaining 50% of DXH shares. In addition to this $51,936,300 of loan notes were repaid resulting in total cash outlay
of $131,766,000.
134 DEXUS PROPERTY GROUP FINANCIAL REPORTS 2008
Note 36. Events occurring after reporting date
Refinance of Commercial Mortgage Backed Securities
Subsequent to the reporting date, a commitment has been received for a $250.0 million, three year facility to partially refinance the $500.0
million Commercial Mortgage Backed Securities due to mature in April 2009. The facility is subject to the execution of legal documentation that
is to be in a form and substance satisfactory to the financier. There are market standard conditions precedent to signing of the documentation.
Since 30 June 2008, other than the matter discussed above, the directors of the Responsible Entity are not aware of any matter or circumstance
not otherwise dealt with in their report or the financial statements that has significantly or may significantly affect the operations of the Trust, the
results of those operations, or state of the Trust’s affairs.
Note 37. Segment information
Business segments
The Trusts operate in the following segments:
Retail – investment in the retail property sector;
Office and car park – investment in the commercial and car park property sectors; and
Industrial – investment in the industrial property sector.
2008
Property revenue
Interest revenue
Management fees
Share of net profits/(losses)
of associates accounted for
using the equity method
Net (loss)/gain on sale of investment
properties
Net fair value gain/(loss) of investment
properties
Net fair value (loss) of derivatives
Net foreign exchange gain
Other income
Total segment income
Segment result
Segment assets
Segment liabilities
Investments accounted for using the
equity method
Acquisition of investment properties
Additions to property plant and
equipment
Incentive amortisation expense
Other non-cash expenses
RETAIL
$’000
35,673
136
–
3,629
39,438
COMMERCIAL &
CAR PARK
$’000
323,501
1,034
–
(4,055)
INDUSTRIAL
$’000
306,304
4,634
–
–
320,480
310,938
ELIMINATIONS/
UNALLOCATED
$’000
CONSOLIDATED
$’000
(647)
664,831
2,330
26,760
2,893
31,336
8,134
26,760
2,467
702,192
(3,114)
(476)
5,887
–
2,297
3,058
268,356
(86,695)
–
–
–
–
–
4
–
–
129
39,382
24,013
588,364
509,152
230,259
46,933
(275)
(3,503)
3,442
1,120
32,120
(141,821)
184,444
(3,503)
3,442
1,253
890,125
438,277
281,958
4,736,899
4,096,314
233,816
9,348,987
2,295
1,249,601
2,424,004
(161,966)
3,513,934
–
–
–
952
–
107,734
2,800
22,368
29,404
2,796
–
314,965
162,245
11,678
–
–
–
6,686
–
267
107,734
317,765
191,299
42,034
3,063
DEXUS PROPERTY GROUP FINANCIAL REPORTS 2008 135
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 JUNE 2008
Note 37. Segment information (continued)
2007
Property revenue
Interest revenue
Share of net profits of associates accounted
for using the equity method
Net gain on sale of investment properties
Net fair value (loss)/gain of investment
properties
RETAIL
$’000
66,079
264
40,656
106,999
–
–
318,122
1,159
5,717
324,998
–
(105)
Net fair value gain of investment properties
184,424
448,406
Net fair value gain of derivatives
Net foreign exchange (loss)/gain
Other income
Total segment income
Segment result
Segment assets
Segment liabilities
Investments accounted for using the equity
method
Acquisition of investment properties
Additions to property plant and equipment
Incentive amortisation expense
Other non-cash expenses
Geographical segments
–
–
–
291,423
309,610
1,229,217
4,006
211,517
–
–
2,174
–
–
(166)
1,508
774,641
625,653
4,104,675
938,666
40,750
–
31,495
24,585
2,488
COMMERCIAL &
CAR PARK
$’000
INDUSTRIAL
$’000
ELIMINATIONS/
UNALLOCATED
$’000
CONSOLIDATED
$’000
309,229
2,094
–
311,323
3,959
3,460
198,500
–
1,515
–
518,757
284,482
3,931,679
2,273,561
–
4,589
6,342
10,931
–
–
–
727
–
164
693,430
8,106
52,715
754,251
3,959
3,355
831,330
727
1,349
1,672
11,822
1,596,643
(50,926)
1,168,819
221,265
565,660
9,486,836
3,781,893
–
17,888
396,178
148,754
10,902
–
–
–
–
–
270,155
396,178
180,249
37,661
2,488
The Trusts’ investments are located in Australia, New Zealand, the United States of America, France, Germany and Canada.
2008
Rental and other
property income
AUSTRALIA
NEW ZEALAND
$’000
$’000
UNITED STATES
OF AMERICA
$’000
FRANCE
GERMANY
CANADA
CONSOLIDATED
$’000
$’000
$’000
$’000
478,574
9,807
146,570
9,396
17,887
2,597
664,831
Segment assets
6,844,831
124,484
1,968,077
99,390
231,065
81,140
9,348,987
Acquisitions of
investment properties
Additions to property
plant and equipment
–
120,813
–
–
241,175
70,486
–
–
–
–
76,590
317,765
–
191,299
136 DEXUS PROPERTY GROUP FINANCIAL REPORTS 2008
2007
AUSTRALIA
NEW ZEALAND
$’000
$’000
UNITED STATES
OF AMERICA
$’000
FRANCE
GERMANY
CANADA
CONSOLIDATED
$’000
$’000
$’000
$’000
Rental and other
property income
Segment assets
Acquisitions of
investment properties
Additions to property
plant and equipment
515,435
7,692,110
–
148,632
10,041
133,617
150,173
9,583
8,198
1,303,064
112,441
245,604
–
–
29,867
118,856
247,455
31,617
–
–
–
–
–
–
693,430
9,486,836
396,178
180,249
Note 38. Reconciliation of net profit to net cash inflow from operating activities
(a) Reconciliation
Net profit
Capitalised interest
Depreciation and amortisation
Impairment of goodwill
CONSOLIDATED
PARENT ENTITY
2008
$’000
2007
$’000
445,261
1,210,791
2008
$’000
85,804
2007
$’000
443,857
(17,949)
(14,639)
(6,141)
(3,746)
3,002
61
2,488
–
–
–
–
–
Net increment on revaluation of investments
(184,444)
(831,330)
65,784
(307,406)
Share of net profits of associates accounted
for using the equity method
Net fair value loss/(gain) of derivatives
Net gain on sale of investment properties
Profit on sale of inventories
Net foreign exchange loss/(gain)
Provision for doubtful debts
Change in operating assets and liabilities
Decrease/(increase) in receivables
(Increase)/decrease in prepaid expenses
Decrease/(increase) in other non-current assets – investments
(Increase)/decrease in other current assets
Decrease in other non-current assets
Increase/(decrease) in payables
(Decrease) in other current liabilities
Increase in other non-current liabilities
Increase in deferred tax liabilities
(2,467)
3,503
(2,297)
–
30,597
(290)
(52,715)
(727)
(3,355)
(481)
(1,027)
640
460
(120,872)
(3,554)
147,936
23,758
(85,989)
1,282
(1,853)
75,941
113
30,115
768
(21,785)
(49,795)
31,624
5,736
43,620
32,053
–
2,203
5,743
–
–
(838)
(15)
–
(9,515)
(32,301)
–
408
11,078
1,132
(13,693)
–
237
2,544
(3,569)
8,775
–
2,203
(1,212)
21,867
–
(53)
(4,748)
(7,422)
24,647
–
Net cash inflow from operating activities
374,445
319,735
150,382
135,241
(b) Capital expenditure on investment properties
Payment for capital expenditure on investment properties includes $90.8 million of maintenance and incentive capital expenditure.
DEXUS PROPERTY GROUP FINANCIAL REPORTS 2008 137
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 JUNE 2008
Note 39. Non-cash financing and investing activities
CONSOLIDATED
PARENT ENTITY
NOTE
27
2008
$’000
243,678
2007
$’000
145,328
2008
$’000
146,305
2007
$’000
57,382
Distributions reinvested
Note 40. Earnings per unit
(a) Basic earnings per unit on profit attributable to equity holders of the parent entity
CONSOLIDATED
PARENT ENTITY
2008
CENTS
2.82
2007
CENTS
15.62
2008
CENTS
2.90
2007
CENTS
15.53
(b) Diluted earnings per unit on profit attributable to equity holders of the parent entity
CONSOLIDATED
PARENT ENTITY
2008
CENTS
2.82
2007
CENTS
15.62
2008
CENTS
2.90
2007
CENTS
15.53
(c) Basic earnings per unit on profit attributable to stapled security holders
CONSOLIDATED
2008
CENTS
14.80
2007
CENTS
40.90
(d) Diluted earnings per unit on profit attributable to stapled security holders
CONSOLIDATED
2008
CENTS
14.80
2007
CENTS
40.90
(e) Reconciliation of earnings used in calculating earnings per unit
Net profit
Net profit attributable to equity holders of other entities
stapled to DDF (minority interests)
Net profit attributable to other minority interests
Net profit attributable to the unitholders of the Trust in
calculating basic and diluted earnings per unit
CONSOLIDATED
PARENT ENTITY
2008
$’000
2007
$’000
445,261
1,210,791
(354,807)
(6,984)
(722,441)
(41,972)
2008
$’000
85,804
–
–
2007
$’000
443,857
–
–
83,470
446,378
85,804
443,857
(f) Weighted average number of units used as a denominator
Weighted average number of units outstanding used in the calculation of basic and diluted earnings per unit
CONSOLIDATED
PARENT ENTITY
2008
UNITS
2007
UNITS
2008
UNITS
2007
UNITS
2,962,305,859
2,857,716,193
2,962,305,859
2,857,716,193
138 DEXUS PROPERTY GROUP FINANCIAL REPORTS 2008
DIRECTORS’ DECLARATION
FOR THE YEAR ENDED 30 JUNE 2008
The Directors of DEXUS Funds Management Limited as Responsible Entity of DEXUS Diversified Trust (the Trust) declare that the Financial
Statements and notes set out on pages 80 to 138:
(i) comply with applicable Australian Equivalents to International Financial Reporting Standards, the Corporations Regulations 2001 and other
mandatory professional reporting requirements; and
(ii) give a true and fair view of the Trust’s and consolidated entity’s financial position as at 30 June 2008 and of their performance, as
represented by the results of their operations and their cash flows, for the year ended on that date.
In the Directors’ opinion:
(a) the financial statements and notes are in accordance with the Corporations Act 2001;
(b) there are reasonable grounds to believe that the Trust and its consolidated entities will be able to pay their debts as and when they become
due and payable; and the Trust has operated in accordance with the provisions of the Constitution dated 15 August 1984 (as amended) during
the year ended 30 June 2008.
The Directors have been given the declarations by the Chief Executive Officer and Chief Financial Officer required by section 295A of the
Corporations Act 2001.
This declaration is made in accordance with a resolution of the Directors.
Christopher T Beare
Chair
Sydney
20 August 2008
DEXUS PROPERTY GROUP FINANCIAL REPORTS 2008 139
INDEPENDENT AUDITOR’S REPORT
FOR THE YEAR ENDED 30 JUNE 2008
140 DEXUS PROPERTY GROUP FINANCIAL REPORTS 2008
DEXUS PROPERTY GROUP FINANCIAL REPORTS 2008 141
INVESTOR INFORMATION
Concierge, 1 Farrer Place, Sydney
142 DEXUS PROPERTY GROUP ANNUAL REPORT 2008
DEXUS Property Group is listed on the Australian Stock
Exchange (ASX). The ASX code is DXS.
Security holders will need to use the services of a stockbroker
or online broking facility to be able to trade your DEXUS
Property Group securities.
DEXUS Property Group information
Investors and other interested people may obtain information
on various aspects of DEXUS Property Group’s activities via
our website at www.dexus.com/Investor-Centre/DXS.aspx
Information available includes:
(cid:132)
Property information;
(cid:132)
ASX announcements;
(cid:132)
Periodic reports and presentations;
(cid:132)
Distribution and tax information;
(cid:132)
Corporate responsibility and sustainability;
(cid:132)
Corporate governance; and
(cid:132)
Research.
Website
Information relating to the DEXUS Property Group can be
found at www.dexus.com The website contains information
on our funds, property portfolio and corporate information.
The site also provides access to your investment details, fund
reports and ASX announcements.
Stock exchange listing
The stapled security (ASX: DXS) is included in the top 200
listed entities in Australia in terms of market capitalisation and
currently forms part of the following indices:
(cid:132)
All Ordinaries;
(cid:132)
All Industrials;
(cid:132)
Listed Property Trusts; and
(cid:132)
The S&P/ASX200.
Complaints handling
Any security holder wishing to lodge a complaint should do so
in writing and forward it to DEXUS Funds Management
Limited at the address shown in the Directory. DEXUS Funds
Management Limited is a member of Financial Ombudsman
Service (FOS), an independent dispute resolution scheme
who may be contacted at:
Financial Ombudsman Service
GPO Box 3
Melbourne VIC 3001
Phone: 1300 780 808
Fax: +61 3 9613 6399
Email: info@fos.org.au
Website: www.fos.org.au
Distribution payments
Distributions are paid for the six months to December and
June each year. You can receive your distribution by direct
credit into your nominated bank account or receive additional
DEXUS securities via the distribution reinvestment plan
(DRP). If you wish to change your method of payment or your
DRP participation, you should contact the DEXUS Infoline on
1800 819 675.
Distribution reinvestment plan
DEXUS Property Group has a distribution reinvestment plan
available to security holders providing them the opportunity
to purchase additional stapled securities by reinvesting all
or part of their income distributions. The amount to be
reinvested will be applied to acquire fully paid stapled
securities in DEXUS Property Group. Where the amount to
be realised does not equal a whole multiple of the DXS issue
price, the residual money will be carried forward and added
to the next reinvestment amount. For further information on
the DRP please go to our website at www.dexus.com/
Investor-Centre/DXS/Investor-Information/Distributions.aspx
DEXUS PROPERTY GROUP ANNUAL REPORT 2008 143
INVESTOR INFORMATION (CONTINUED)
Distribution history and timetable
Distribution history schedules for DEXUS Property Group can be downloaded by visiting our
website www.dexus.com/Investor-Centre/DXS/Investor-Information/Distributions.aspx
The timetable below shows the anticipated distribution, banking and mailing dates for the next two distributions. Please note that
these dates are indicative and may change.
DISTRIBUTION PERIOD
ANNOUNCEMENT
DATED
EX-DISTRIBUTION
DATE
RECORD DATE
ANTICIPATED
PAYMENT DATE
1 July 2008 to 31 December 2008
18 December 2008
23 December 2008
31 December 2008
27 February 2009
1 January 2009 to 30 June 2009
19 June 2009
24 June 2009
30 June 2009
28 August 2009
Unpresented cheques and unclaimed funds
DEXUS Property Group has a number of security holders who have unpresented cheques and/or unclaimed funds. If you believe
you have unpresented cheques or unclaimed funds, please contact our Security Registry, Link Market Services on 1800 819
675. Link Market Services will complete a search for you and assist you in recovering your funds for up to a seven year period.
For outstanding monies after that time, you should contact the NSW Office of State Revenue on 1300 366 016 or go to their
website at www.osr.nsw.gov.au and use their search facility for unclaimed monies.
Tax file number
You are not required by law to provide your tax file number, Australian Business Number (ABN) or Exemption. However if you do
not provide your TFN, ABN or Exemption, withholding tax at the highest marginal rate, currently 46.5%, may be deducted from
income distributions paid to you. If you have not supplied this information and wish to do so, please advise the registry or your
sponsoring broker.
Annual tax statement
Each financial year security holders will receive a tax statement. This statement summarises the distributions paid to you during
the year and includes information required to complete your tax return.
Apportionment percentages
Apportionment percentages for DEXUS Property Group stapled securities since stapling can be found on the tax information
page on our website at www.dexus.com/dxs/tax.aspx or by contacting the Infoline on 1800 819 675.
Capital gains taxation cost base information
A brochure called ‘Capital Gains Taxation Information’ has been prepared for DEXUS Property Group stapled security
holders. This will assist holders to determine the capital gains tax cost base of the DEXUS Property Group securities and
any capital gains on the disposal of their securities. Security holders may obtain a copy of this brochure by visiting our website
at www.dexus.com/dxs/tax.aspx
144 DEXUS PROPERTY GROUP ANNUAL REPORT 2008
Registry information
Top 20 stapled security holders as at 26 August 2008
RANK
INVESTOR
CURRENT BALANCE
% OF ISSUED CAPITAL
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
HSBC Custody Nominees (Australia) Limited
JP Morgan Nominees Australia Limited
National Nominees Limited
Citicorp Nominees Pty Limited
Merrill Lynch (Australia) Nominees Pty Limited
RBC Dexia Investor Services Australia Nominees Pty Limited
ANZ Nominees Limited
Citicorp Nominees Pty Limited
Cogent Nominees Pty Limited
ANZ Nominees Limited
Bond Street Custodians Limited
AMP Life Limited
Questor Financial Services Limited
Citicorp Nominees Pty Limited
Cogent Nominees Pty Limited
Citicorp Nominees Pty Limited
UBS Nominees Pty Ltd
Queensland Investment Corporation
Bond Street Custodians Limited
Citicorp Nominees Pty Limited
Total top 20 holders
Total other holders
Total units on issue
805,095,796
456,499,375
447,890,993
205,328,325
117,556,727
91,611,464
72,093,520
55,439,331
47,154,708
43,300,514
34,188,654
27,237,593
27,234,033
19,785,538
19,392,652
16,993,681
15,246,709
12,299,102
11,204,379
10,601,041
2,536,154,135
503,865,352
3,040,019,487
26.48
15.02
14.73
6.75
3.87
3.01
2.37
1.82
1.55
1.42
1.12
0.90
0.90
0.65
0.64
0.56
0.50
0.40
0.37
0.35
83.43
16.57
100.00
Substantial holders as at 26 August 2008
The names of substantial holders, who at 26 August 2008, have notified the Responsible Entity in accordance with Section 671B
of the Corporations Act 2001 are:
NAME
Barclays Group
NUMBER OF STAPLED
SECURITIES
% VOTING
249,591,755
8.22
Class of securities
DEXUS Property Group has one class of stapled security trading on the ASX with 21,927 investors holding 3,040,019,487 stapled
securities at 26 August 2008.
Spread of stapled securities at 26 August 2008
RANGES
1 to 1,000
1,001 to 5,000
5,001 to 10,000
10,001 to 50,000
50,001 to 100,000
100,001 and over
Total
INVESTORS
SECURITIES
% OF ISSUED CAPITAL
1,342
4,309
5,569
9,645
734
328
21,927
525,627
13,943,358
42,440,193
200,655,436
49,715,272
2,732,739,603
3,040,019,487
0.02
0.46
1.40
6.60
1.64
89.89
100.00
DEXUS PROPERTY GROUP ANNUAL REPORT 2008 145
INVESTOR INFORMATION (CONTINUED)
At 26 August 2008, the number of security investors holding
less then a marketable parcel of 338 securities ($500) is 684
and they hold 74,160 securities.
Voting rights
At meetings of the security holders of DEXUS Diversified
Trust, DEXUS Industrial Trust, DEXUS Office Trust and
DEXUS Operations Trust, being the Trusts that comprise
DEXUS Property Group, on a show of hands, each security
holder of each Trust has one vote. On a poll, each security
holder of each Trust has one vote for each dollar of the value
of the total interests they have in the Trust.
The number and class of securities that are
restricted or subject to voluntary escrow
There are no stapled securities that are restricted or subject
to voluntary escrow.
On-market buy-back
DEXUS Property Group has no on-market buy-back currently
in place.
146 DEXUS PROPERTY GROUP ANNUAL REPORT 2008
Flinders Street Car Park, Flinders Street, Melbourne
DEXUS PROPERTY GROUP ANNUAL REPORT 2008 147
DIRECTORY
DEXUS Diversified Trust
ARSN 089 324 541
DEXUS Industrial Trust
ARSN 090 879 137
DEXUS Office Trust
ARSN 090 768 531
DEXUS Operations Trust
ARSN 110 521 223
Responsible Entity
DEXUS Funds Management Limited
ABN 24 060 920 783
Registered office of Responsible Entity
Level 9, 343 George Street
Sydney NSW 2000
PO Box R1822
Royal Exchange
Sydney NSW 1225
Phone: +61 2 9017 1100
Fax: +61 2 9017 1101
Directors of the Responsible Entity
Christopher T Beare, Chair
Elizabeth A Alexander AM
Barry R Brownjohn
Stewart F Ewen OAM
Victor P Hoog Antink
Charles B Leitner III (Alternate Andrew J Fay)
Brian E Scullin
Secretaries of the Responsible Entity
Tanya L Cox
John C Easy
Investor enquiries
Registry Infoline: 1800 819 675 or +61 2 8280 7126
Investor Relations: 02 9017 1330
Email: ir@dexus.com
Website: www.dexus.com/Investor-Centre/DXS.aspx
Auditors
PricewaterhouseCoopers
Chartered Accountants
201 Sussex Street
Sydney NSW 2000
Security registry
Link Market Services Limited
Level 12, 680 George Street
Sydney NSW 2000
Locked Bag A14
Sydney South NSW 1235
Registry Infoline: 1800 819 675 or +61 2 8280 7126
Fax: +61 2 9287 0303
Email: registrars@linkmarketservices.com.au
Website: www.linkmarketservices.com.au
For enquiries regarding your holding you can either contact
the Security Registry, or access your holding details via the
Investor Centre on our website www.dexus.com/Investor-
Centre/DXS.aspx and look for the blue Investor Login box.
Australian Stock Exchange
ASX Code: DXS
Infoline: 1800 819 675, Monday to Friday
between 8.30am and 5.30pm (Sydney time).
148 DEXUS PROPERTY GROUP ANNUAL REPORT 2008
www.dexus.com