Dexus (ASX: DXS)
ASX release
17 August 2021
2021 Annual Report
Dexus releases its 2021 Annual Report, which will be mailed to Security holders who have elected to
receive a hard copy in mid-September 2021.
Authorised by the Board of Dexus Funds Management Limited
For further information please contact:
Investors
Rowena Causley
Senior Manager, Investor Relations
+61 2 9017 1390
+61 416 122 383
rowena.causley@dexus.com
Media
Louise Murray
Senior Manager, Corporate Communications
+61 2 9017 1446
+61 403 260 754
louise.murray@dexus.com
About Dexus
Dexus (ASX: DXS) is one of Australia’s leading fully integrated real estate groups, managing a high-quality Australian
property portfolio valued at $42.5 billion. We believe that the strength and quality of our relationships will always be
central to our success and are deeply committed to working with our customers to provide spaces that engage and
inspire. We invest only in Australia, and directly own $17.5 billion of office, industrial and healthcare properties, and
investments. We manage a further $25.0 billion of office, retail, industrial and healthcare properties for third party clients.
The group’s $14.6 billion development pipeline provides the opportunity to grow both portfolios and enhance future
returns. Sustainability is integrated across our business, and our sustainability approach is the lens we use to manage
emerging ESG risks and opportunities for all our stakeholders. Dexus is a Top 50 entity by market capitalisation listed
on the Australian Securities Exchange and is supported by more than 30,000 investors from 23 countries. With over 35
years of expertise in property investment, funds management, asset management and development, we have a proven
track record in capital and risk management and delivering superior risk-adjusted returns for investors.
www.dexus.com
Dexus Funds Management Ltd ABN 24 060 920 783, AFSL 238163, as Responsible Entity for Dexus (ASX: DXS)
Level 25, 264 George Street, Sydney NSW 2000
Annual Report
2021
Creating spaces
where people thrive
Annual Report
2021
Creating spaces
where people thrive
Dexus is one of
Australia’s leading fully
integrated real estate
groups, managing a
high-quality Australian
property portfolio valued
at $42.5 billion.
Our vision is to be globally recognised
as Australia’s leading real estate
company
Our purpose is to create spaces where
people thrive
Our values
– Openness and trust
– Empowerment
– Integrity
Our strategy is to deliver superior
risk-adjusted returns for investors from
high quality real estate in Australia’s
major cities
How we create value
The framework that outlines how we
create value for all stakeholders
→ Page 12
2021 Dexus Annual Reporting Suite
Annual Report
2021
Creating spaces
where people thrive
Financial Statements
2021
Sustainability Report
2021
Creating spaces
where people thrive
Annual Results
Presentation
2021
Corporate Governance
Statement
2021
Modern Slavery
Statement
2021
Annual Results
Presentation
2021
Annual Report 2021
Financial
Statements 2021
Sustainability
Report 2021
Annual Results
Presentation 2021
Corporate
Governance
Statement 2021
Modern Slavery
Statement 2021
Front cover: Artist impression: Atlassian, Sydney NSW
Inside cover: 25 Martin Place, Sydney NSW
About this report
The 2021 report is a consolidated summary of Dexus’s
performance for the financial year ended
30 June 2021. It should be read in conjunction with
the reports that comprise the 2021 Annual Reporting
Suite available from www.dexus.com/investor-centre.
In this report, unless otherwise stated, references to
‘Dexus’ ‘the group’, ‘we’, ‘us’ and ‘our’ refer to Dexus
comprising the ASX listed entity and the funds
management business. Any reference in this report to
a ‘year’ relates to the financial year ended
30 June 2021. All dollar figures are expressed in
Australian dollars unless otherwise stated.
The Board acknowledges its responsibility for the
2021 Annual Report and has been involved in its
development and direction from the beginning. The
Board reviewed, considered and provided feedback
during the production process and approved the
Annual Report at its August 2021 meeting.
This Annual Report has been prepared in accordance
with the content elements of the 2021 International
Framework, which we use to identify material
issues from an enterprise value perspective and
clearly articulate how we deliver sustained value for
all stakeholders. An index is provided on page 180
of this report. PwC has been engaged to provide
limited assurance as to whether Content Elements
of the Integrated Reporting Framework have been
addressed in the report as described in this Index.
This assurance is focused on whether these Content
Elements have been included in this report but does
not extend to assessing the accuracy or validity of
any statement made throughout this report.
We have also used the GRI Standards to understand
material issues from a stakeholder impact
perspective, as disclosed across our 2021 Annual
Reporting Suite, which is prepared in accordance with
the GRI Standards: Core option (GRI Content Index
and is provided in our 2021 Sustainability Report).
PwC has provided limited assurance over select
environmental and social data, within the annual
reporting suite covering the 12 months to
30 June 2021 (assurance statement provided in our
2021 Sustainability Report).
Report scope
The Annual Report covers financial performance
at all locations. Environmental data only includes
properties under the Group’s operational control as
defined under the National Greenhouse and Energy
Reporting System (NGER Act). Additional information
on financial, people, customer, community, supplier
and environmental datasets is provided in our
2021 Sustainability Report.
Overview
FY21 highlights
About Dexus
Chair and CEO review
Approach
How we create value
Megatrends
Strategy
Key resources
Key business activities
Key risks
Performance
Financial
Properties
People and capabilities
Customers and communities
Environment
Future commitments
Governance
Governance
Board of Directors
Group Management Committee
Directors’ report
Remuneration report
Directors’ report
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→ Page 42
→ Page 50
→ Page 54
→ Page 62
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Financial report
Financial report
→ Page 114
Investor information
Integrated Reporting Content
Elements Index
Investor information
→ Page 180
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Dexus 2021 Annual Report
1
OverviewApproachGovernanceDirectors’ reportFinancial reportInvestor informationPerformance
Financial
→ Page 28
Maintaining strong financial
performance by delivering on our
strategy
Properties
→ Page 42
Developing, managing and
transacting properties to create
a high-quality portfolio across
Australia’s key cities
People and
capabilities
→ Page 50
Attracting, retaining and developing
an engaged and capable workforce
that delivers on our strategy
Customers
and
communities
→ Page 54
Environment
→ Page 62
Supporting the success of our
customers, the wellbeing of building
occupants, the strength of our local
communities and the capabilities of
our suppliers
Assessing the efficiency and resilience
of our portfolio to minimise our
environmental footprint and ensure
it is positioned to thrive in a climate-
affected future
FY21
Highlights
Throughout the
year, we maintained
momentum on
maximising property
portfolio income
and performance
while growing and
diversifying our
funds management
business.
2
Overview – FY21 Highlights
51.8cents
Distribution per security
51.8cents
AFFO per security
8.3%
Return on Contributed Equity
FY20: 50.3 cents
FY20: 50.3 cents
FY20: 9.0%
$42.5bn
Value of group property portfolio1
95.2%
Dexus office portfolio occupancy
$14.6bn
Group development pipeline
+43Employee Net Promoter Score
FY20: +61
35%
Females in senior and
executive management roles
FY20: 36%
+46Customer Net Promoter Score
>$0.8m
Community investment value
FY20: +50
FY20: $1.1m
31%
Of electricity sourced from
on-site and off-site renewable
sources in FY21 across the
group managed portfolio
4.7star
Average NABERS Indoor
Environment rating across
the group office portfolio
1 Prior to circa $2bn of redemptions to existing AMP Capital Diversified Property Fund (ADPF) unitholders and proforma for the acquisition of
APN Property Group which was approved on 27 July 2021 as well as settlement of Mercatus Dexus Australian Partnership’s (MDAP’s)
33.3% interest in 1 Bligh Street, Sydney which occurred on 8 July 2021.
Dexus 2021 Annual Report
3
OverviewApproachGovernanceDirectors’ reportFinancial reportInvestor informationPerformance
About
Dexus
Dexus is one of
Australia’s leading fully
integrated real estate
groups, managing a
high-quality Australian
property portfolio
valued at $42.5 billion.
$17.5bn
Directly owned office, industrial
and healthcare properties and
investments
$25.0bn
Of office, retail, industrial and
healthcare properties in our
funds management business
4 Overview – About Dexus
Artist impression:
Central Place, Sydney NSW
Dexus is a Top 50 entity by market
capitalisation listed on the Australian
Securities Exchange (trading code: DXS)
and is supported by more than
30,000 investors from 23 countries.
We believe the strength and quality
of our relationships will always be
central to our success and we are
deeply committed to working with
our customers to provide spaces that
engage and inspire.
With more than 35 years of expertise in
property investment, development and
asset management, Dexus has a proven
track record in managing capital and
risk and delivering superior risk-adjusted
returns for its investors.
We invest only in Australia, and directly
own $17.5 billion of office, industrial and
healthcare properties and investments.
We manage a further $25.0 billion of
office, retail, industrial and healthcare
properties in our funds management
business, which provides wholesale
investors with exposure to quality
sector specific and diversified real
estate investment products. The funds
within this business have a strong track
record of delivering outperformance
and benefit from Dexus’s capabilities.
The group’s $14.6 billion development
pipeline provides the opportunity to
grow both portfolios and enhance future
returns.
We consider sustainability to be an
integral part of our business with
the objectives of Leading Cities,
Future Enabled Customers, Strong
Communities, Thriving People and an
Enriched Environment supporting our
overarching goal of Sustained Value.
About
Dexus
$42.5bn
Total funds under
management1
Dexus
$17.5bn
$2.6bn
$0.3bn
Dexus Office
Partner
Mercatus Dexus
Australia Partner
$0.6bn
$1.4bn
Dexus Australian
Commercial Trust
Dexus Australian
Logistics Partner
$16.0bn
$0.7bn
Dexus Wholesale
Property Fund2
Dexus Healthcare
$0.2bn
$0.5bn
Dexus Industrial
Partner
Australian
Property Fund
Industrial Partner
$2.7bn
APN Property
Group3
Group portfolio composition
Perth
Adelaide
Townsville
Brisbane
Sydney
Melbourne
$ 26.0bn
$ 7.8bn
$ 6.2bn
$ 1.2bn
$ 1.3bn
Industrial
1
0
Retail
2
0
Healthcare
3
0
Office
0
Real estate
securities
4
0
5
0
1 Prior to circa $2bn of redemptions to existing ADPF unitholders and proforma for the
acquisition of APN Property Group which was approved on 27 July 2021 as well as settlement
of MDAP’s 33.3% interest in 1 Bligh Street, Sydney which occurred on 8 July 2021.
2 Prior to circa $2bn of redemptions to existing ADPF unitholders.
3. Representing external funds under management at 31 December 2020.
Dexus 2021 Annual Report
5
$42.5bn
Total funds under
management
182
Properties
5.7m
Square metres
across the group
$11.5bn
Market capitalisation
as at 30 June 2021
Top 50
Entity on ASX
559
Employees
OverviewApproachGovernanceDirectors’ reportFinancial reportInvestor informationPerformance
Chair
and CEO
review
Dexus’s purpose of
creating spaces where
people thrive has never
been more important
than during the 2021
financial year.
2021 was a year where the COVID-19
pandemic continued to create
unprecedented challenges in our
operating environment through
unanticipated lockdowns that varied in
their level of impact across Australian
cities. Despite this disruption, Australia’s
economic activity has been resilient
supported by government stimulus
and historically low interest rates,
with growing employment numbers,
increasing house prices and strong
business and consumer confidence.
In this environment, we maintained
our focus on maximising property
portfolio income and performance,
while also supporting our small business
customers impacted by the lockdowns
and growing and diversifying the funds
management business.
This result is particularly pleasing
given our initial market guidance
for a distribution consistent with
FY20 (50.3 cents) and demonstrates
the commitment of our people
in responding to the challenging
environment.
During the year we implemented
major strategic initiatives which grew
the funds management business and
positioned it for growth including
securing approval for the merger of AMP
Capital Diversified Property Fund (ADPF)
with Dexus Wholesale Property Fund
(DWPF), simplifying the Dexus corporate
structure, and entering into a proposal
to acquire APN Property Group. We
also took the opportunity to selectively
recycle assets and make investments
to support growth which involved
$6.4 billion of healthcare, industrial and
office transactions across the group.
Despite the ongoing challenges
presented by the pandemic, Dexus
achieved 3% growth in Adjusted Funds
From Operations (AFFO) and distribution
per security (51.8 cents).
Resilient independent asset valuations
contributed to an increase in net
tangible asset backing per security
to $11.42, reinforcing the quality of our
property portfolio while increasing our
confidence to allocate capital towards
new investment opportunities that
offered strong growth prospects.
Today the Dexus platform comprises a
$17.5 billion investment property portfolio,
a $25.0 billion funds management
business, and an embedded $14.6 billion
group development pipeline. We have
significant scale and capability across
the office, industrial, healthcare and
retail property sectors and believe this
capability, along with our engaged
workforce, will enable us to create
spaces where people thrive.
6
Overview – Chair and CEO review
Despite the ongoing
challenges presented
by the pandemic, Dexus
achieved 3% growth in
Adjusted Funds From
Operations and distribution
per security (51.8 cents).
Optimising our property portfolio
composition
We maintained a strong balance sheet
and provided capacity for future growth
via the recycling of circa $2 billion of
office assets (predominantly those with
short-dated lease expiry). We also
made new investments in the industrial
and healthcare property sectors
while establishing a new healthcare
relationship with Australian Unity
Healthcare Property Trust. Post 30 June
2021, Dexus acquired a 49% interest in
Capital Square Tower 1 in Perth as well
as entered into agreements to enable
Dexus to develop, own and manage
Atlassian’s new headquarters in Sydney,
further strengthening our focus on
delivering workspaces of the future.
Achievement against FY21
priorities
Despite the complex operating
environment over the past year, our
people have delivered on the initiatives
we set out in our Annual Report last
year. This activity involved focusing
on our immediate priorities while
maintaining our balance sheet strength.
It included:
Assisting in returning Australian
businesses safely to their
workplaces
Accelerating opportunities to
expand our funds management
platform
We helped our customers and
employees to return to work safely,
continuing our strong engagement
through timely communications and
remaining true to our purpose of
creating spaces where people thrive.
Our property management teams
were agile in responding to changing
restrictions across various jurisdictions
on the ground. We also worked with
the Property Council of Australia and
local stakeholders on a program of
activations encouraging people back
to Australian central business districts
(CBDs).
We secured approval for the merger of
ADPF and DWPF, established two new
funds, and expanded the portfolios of
two existing funds. Dexus Healthcare
Property Fund (DHPF) grew its portfolio
through acquisitions and the completion
of North Shore Health Hub. Post 30 June
2021 we received approval for the
acquisition of APN Property Group.
We also simplified the Dexus stapled
corporate structure, enabling the
group to generate further operational
efficiencies while improving optionality
for potential future funds growth
initiatives (see page 31).
Continuing to work with our
customers on the future of
workspace
Through our workspace and change
consultancy business, Six Ideas by
Dexus, we worked with 12 major
organisations across an estimated
14,000 employees on their future
workspace with the aim of gaining a
competitive advantage as employers
of choice. We continued to meet
customer demand for flexibility
through evolving our Dexus Place and
SuiteX offer and investing in amenity,
systems and processes that make our
customers’ experience simple and
easy.
Progressing our city-shaping
development pipeline
We progressed our development
pipeline, receiving planning approval
for Waterfront Brisbane and
progressing through Stage 3 of the
Unsolicited Proposal (USP) process
for Central Place Sydney. We also
lodged a development application
for Central Place, Sydney and a
planning amendment application
for 60 Collins Street, Melbourne. We
continued to build out our industrial
pipeline, expanding our development
site at Horizon 3023, Ravenhall, and
post 30 June 2021 we entered into
agreements that will enable us to
fund, develop and invest in Atlassian’s
headquarters within the NSW State
Government-led Tech Central precinct.
Dexus 2021 Annual Report
7
OverviewApproachGovernanceDirectors’ reportFinancial reportInvestor informationPerformance
Chair and CEO review continued
Flexible working and Dexus’s
response
The adoption of flexible working has
been accelerated by the pandemic,
and, enabled by technology, our
customers’ workforces now have a
choice of being able to work anywhere.
We have been preparing for increased
flexibility through our own offering for
many years, for example with Dexus
Place and SuiteX. The shift to a blended
workplace is exciting and through our
investment in Taronga Ventures and
our workplace consulting business Six
Ideas by Dexus, we are working even
closer with our customers to help them
navigate the future of working.
We are fortunate that Dexus has a
diversified set of capabilities with the
ability to invest in real estate sectors
with tailwinds while responding to the
challenges and opportunities brought
about by the broader adoption of
flexible working by our office customer
base.
We are confident that office workspace
will remain a core part of our customers’
needs, playing an important role in
building culture, enabling collaboration
and driving innovation. We believe
quality office buildings with quality
workspaces and amenities located
in key CBD locations will continue to
attract talented workforces, remaining
leading destinations for work and
entertainment. 25 Martin Place, Sydney
and 80 Collins Street, Melbourne are
prime examples of this in our portfolio.
We expect that once the rollout of
vaccinations is further advanced and
the current cycle of lockdowns are
eased, there will be a substantial return
to offices, however the timing of this
remains uncertain. We are prepared for
the challenges and are well positioned
to continue to work alongside our
customers and other stakeholders
to enhance the attractiveness of our
portfolio to create spaces where people
thrive.
Strategy
Each year, our strategy review process
stress tests our existing strategy with the
objective of better positioning Dexus
to capitalise on new opportunities and
mitigate challenges. The pandemic has
reinforced the importance of resilience
and having a diversified business model
and strategy that can deliver through
the cycle.
We have built a fully integrated real
estate platform and are focused on
better leveraging our cross-sector
asset management and development
expertise to drive more capital efficient
returns for investors, while remaining true
to our identity as a long-term investor in
high quality Australian real estate.
Throughout the year, we maintained
our focus on the strategic initiatives
of increasing the resilience of portfolio
income streams, expanding and
diversifying the funds management
business and progressing the group
development pipeline. These initiatives
have now been incorporated into
revised strategic objectives that will
guide the next stage of our business
evolution:
– Generating sustainable income
streams: Investing in income streams
that provide resilience through the
cycle
– Being identified as the real estate
investment partner of choice:
Expanding and diversifying the funds
management business
We have invested in having a superior
operating platform and will continue this
focus to build a world-class business.
The size of Dexus’s balance sheet,
deep access to pools of capital and
an agile, solution-based culture are
key enablers of our strategy, supported
by our prudent approach to capital
management and commitment to
sustainability.
Delivering sustained value
Dexus’s activity drove a solid financial
result for the year. From a challenging
starting position during the pandemic,
with no guidance provided in August
2020, the Board was then able to
provide guidance in October 2020 for
a distribution per security amount that
was consistent with FY20. A combination
of better-than-expected outcomes
across the property portfolio, as well as
delayed settlements of asset sales and
other initiatives enabled us in May 2021
to upgrade guidance to 3% growth
in distribution per security. This
guidance was delivered upon, with the
achievement of a full year distribution
of 51.8 cents per security, reflecting
3% growth and resulting in a 5.5%
compound annual growth rate since FY12.
This result was also achieved despite
the ongoing impacts of the pandemic
on our customer base and the extension
of the National Commercial Code
of Conduct in Victoria and Western
Australia remaining in place until the
end of March 2021, which saw rent
relief provided to impacted small and
medium enterprise customers.
Net profit after tax was $1,138.4 million,
up 17% primarily due to an increase in
Dexus’s share of net profits from equity
accounted investments and a favourable
net fair value movement of derivatives
and foreign currency interest bearing
liabilities, partly offset by lower fair value
gains on owned investment properties.
Property revaluation gains primarily
drove the 56 cent or 5.1% increase in NTA
backing per security to $11.42 at 30 June
2021.
Dexus delivered an improved total
Security holder return of 22.0% for the
year, however underperformed the
S&P/ASX 200 Property Accumulation
(A-REIT) Index due to the strong
performance of fund managers and
residential exposed peers. Dexus
maintains its outperformance of the
A-REIT index over three, five and ten-
year time horizons, delivering an annual
compound return of 13.0% over the past
ten years.
8 Overview – Chair and CEO review
Contributing to Leading Cities
As a real estate investor, our high-
quality properties contribute to the
creation of leading cities. Being
concentrated in Australia’s major CBDs,
we are ideally placed to help shape
our cities as leading destinations
to live, work and play. Government
lockdowns in response to the pandemic
have interrupted but not derailed the
recovery of our CBDs, with international
border closures resulting in a
competitive employment market in the
short-term.
We have been working alongside the
Property Council of Australia advocating
for a COVID-safe restoration of
Australia’s net overseas migration to
drive long-term demand. Another
critical ingredient to Australia’s future
prosperity is the reactivation of our CBDs,
the true engine rooms of Australia’s
economic growth. During the year Dexus
worked alongside key industry partners
and city stakeholders to reinvigorate
Australian CBDs and bring to life our
purpose of creating spaces where
people thrive (see page 44).
Notwithstanding the operating
environment, we achieved significant
leasing over the year which increased
office portfolio occupancy to 95.2% and
industrial portfolio occupancy to 97.7%.
Operationally, Underlying Funds From
Operations (excluding trading profits)
was 4.1% lower than the prior year,
impacted by divestments and continued
impacts of the pandemic across the
property portfolio and management
business, partly offset by income from
recently completed developments.
Despite the reduction in Underlying Funds
from Operations, Adjusted Funds From
Operations (AFFO) was $11.2 million or
2.0% higher than the prior year driven by
trading profits of $50.4 million (net of tax)
which were $15.1 million higher than the
prior year, as well as maintenance capex
and incentives which were $24.4 million
lower than the prior year.
We believe AFFO is an important
measure of financial performance and
is aligned to the distributions we pay to
investors. On a per security basis, AFFO
per security was 51.8 cents, 3.0% higher
than the prior year. The distribution
payout ratio remains in line with free
cash flow in accordance with Dexus’s
distribution policy. Dexus achieved a
Return on Contributed Equity (ROCE)
of 8.3% driven largely by AFFO and
revaluation gains from completed
developments at 180 Flinders Street,
Melbourne and our industrial estate at
Ravenhall, Victoria.
We maintained a strong and
conservative balance sheet with
gearing (look-through)1 at 26.7%, well
below our target range of 30-40%, while
maintaining conservative debt maturities
and hedging levels.
Further details in relation to our financial
result can be found from page 28.
History of Dexus distribution per security2
(Cents per security)
60 32.10
36.00
37.56
41.04
43.51
45.47
47.8
50.2
50.3
51.8
Over recent years, buying quality
properties has become increasingly
competitive and we have undertaken
developments as an efficient allocation
of our capital. The group’s $14.6 billion
development pipeline provides the
opportunity to organically grow and
create value enhancing projects by
growing the core property portfolio and
those portfolios managed on behalf of
our third party capital partners.
Further details in relation to our
properties and developments can be
found from page 42.
Developing Thriving People
Our people are responsible for ensuring
our purpose of ‘creating spaces
where people thrive’ comes to life,
and we understand the importance
of attracting and retaining a high-
performing workforce.
Our workforce is made up of people
who have the capabilities and passion
for supporting our customers and
communities who work in and visit our
buildings, and this is reflected in our high
employee Net Promoter Score of +43
(out of a possible range of -100 to +100).
Our commitment to building an inclusive
and diverse workforce ensures we bring
new perspectives to what we do. We
are included among a select group of
Australian companies with an Employer
of Choice for Gender Equality citation
for 2020-21 from the Workplace Gender
Equality Agency, and our support for
LGBTI+ inclusion was reflected through
achieving Bronze employer status in the
Australian Workplace Equality Index.
Our steadfast focus on safety continued
this year and we maintained a score
of 100% on independent external
safety audits conducted across our
corporate and building management
office workspaces and Dexus Place
workspaces.
Further details in relation to our people
can be found from page 50.
FY12
FY13
FY14
FY15
FY16
FY17
FY18
FY19
FY20
FY21
1 Adjusted for cash and debt in equity accounted investments. Excluding the impact of the
contracted divestments of 60 Miller Street, North Sydney which settled on 3 August 2021, and
Grosvenor Place, Sydney which is expected to settle in the first half of FY22.
2 Adjusted for the one-for-six security consolidation completed in FY15.
Dexus 2021 Annual Report
9
50
40
30
OverviewApproachGovernanceDirectors’ reportFinancial reportInvestor informationPerformance
Chair and CEO review continued
Artist impression:
Atlassian, Sydney NSW
Building enduring relationships
with our customers,
communities and suppliers
Developing strong partnerships with
our customers, local communities and
suppliers has a valuable impact on the
people in and around our buildings. Our
customers are at the heart of what we
do, and we invest time in understanding
their needs and delivering solutions to
help them thrive in their workspaces.
Insights from our annual customer
survey help guide our customer strategy
and this year’s survey returned a high
customer Net Promoter Score of +46
(out of a possible range of -100 to
+100), despite the difficult operating
environment and the disruption
caused by embedding a new customer
operating platform.
In response to our customers’ increased
adoption of flexible workplace practices,
we progressed the addition of a new
Dexus Place location in Melbourne
which will include SuiteX and virtual
office services, which will open later
this year. We also progressed healthy
buildings initiatives which are focused
on adopting proven technologies to
enhance the air quality within our
buildings and provide a safe experience
for people using our spaces.
During the year we established two major
community partnerships with the Black
Dog Institute and Planet Ark which align
with the Dexus Sustainability Approach.
Dexus will collaborate with these
organisations to maximise its social impact
in the communities in which it operates.
As a signatory to the UN Global Compact,
we are committed to meeting the
fundamental principles around human
rights, labour, environment and anti-
corruption. We collaborate with our
suppliers to uphold human rights across
our supply chain and our efforts in relation
to preventing modern slavery are detailed
in our 2021 Modern Slavery Statement.
Further details in relation to our customers,
local communities and suppliers can be
found from page 54.
Enriching the environment
Sustainability is integrated across our
entire business. For more than a decade,
we have been focused on energy
efficiency as well as reducing the group’s
emissions and environmental footprint.
We continued to manage our properties
for carbon emissions and energy
consumption, this year achieving 55% and
52% reductions respectively against our
FY08 baseline. We also progressed our
transition to renewable energy, securing
new electricity supply agreements in
Queensland and Victoria.
This forms part of our transition to 100%
renewable electricity across the group-
managed portfolio and plays a key role
in reducing operational emissions.
Leveraging this, we have brought
forward our target to achieve net zero
emissions to 30 June 2022, advancing
our original 2030 goal by eight years.
Our environmental, social and
governance (ESG) performance
continues to be acknowledged by
external benchmarks, including being
recognised as the Global Leader for
Listed Entities for the Dexus Office Trust
by the Global Real Estate Sustainability
Benchmark (GRESB), maintaining our
position on the CDP Climate A List,
and for the second consecutive year
achieving the number 1 ranking for the
real estate industry in the Dow Jones
Sustainability Indices (DJSI).
Further details in relation to how we
support an enriched environment can
be found from page 62.
55%
Reduction in carbon intensity
since FY08 across the group
managed portfolio
10 Overview – Chair and CEO review
Recycling assets over the past year
has enabled us to maintain the
strength of our balance sheet while
allocating capital towards new
investment opportunities that offer
strong growth prospects.
High standard of governance
We instil robust governance practices
and sound risk management at all levels
of our business recognising the growing
importance of ESG principles to all our
stakeholders, including our investors,
customers, our people and the broader
community. We maintain a strong risk
culture across the group and together,
the Board and senior management
remain focused on creating a culture
where every employee has ownership
and responsibility for acting lawfully and
responsibly.
Our Board now comprises seven
non-executive directors and one
executive director. During the year,
Warwick Negus was appointed as a
new non-executive Director, and John
Conde and Peter St George retired as
directors on the Board after more than
11 years of service.
Further details relating to the Board
and our governance practices can be
found from page 72, as well as in the
Corporate Governance Statement
available at www.dexus.com
Summary and outlook
In the face of an uncertain operating
environment, Dexus is well positioned to
continue to deliver on its strategy, with
its growing funds management business,
quality property portfolio and strong
balance sheet.
The continuing cycle of lockdowns
will have an impact on business and
consumer confidence, and we are
prepared for this environment. The
momentum experienced in our CBDs
has been interrupted due to the recent
lockdowns, but we expect activity to
return to previous levels as the restrictions
are eased. We have confidence in the
future of cities and our ability to deliver
sustained value for all our stakeholders
over the long term.
We have demonstrated our ability to
capitalise on opportunities while also
being able to address challenges.
Recycling assets over the past year has
enabled us to maintain the strength of
our balance sheet while allocating capital
towards new investment opportunities
that offer strong growth prospects.
Our ability to deliver long-term
performance beyond the recovery is
underpinned by our scale and capability
across key real estate sectors, our
funds management business which
provides a capital efficient way to
increase our exposure to growth sectors,
and our substantial city-shaping
development pipeline.
In the year ahead, our strategic
objectives of generating sustainable
income streams and being identified
as the real estate investment partner of
choice will see us continue to implement
active leasing strategies to maximise
office portfolio cash flow generation.
1 Bligh Street, Sydney NSW
We will also invest in quality Australian
real estate and developments while
leveraging the funds management and
development businesses to drive an
improved return on capital.
On behalf of the Board and
management, we extend our
appreciation to our people across
Australia for their commitment and
significant contribution to this year’s
result. We also thank our third party
capital partners for entrusting us with
the management of their investments,
and our customers for their loyalty
and commitment across our property
portfolio.
Importantly, we thank you, our investors,
for your continued investment in Dexus
and we look forward to achieving
sustained performance.
Richard Sheppard
Chair
Darren Steinberg
Chief Executive Officer
Dexus 2021 Annual Report
11
OverviewApproachGovernanceDirectors’ reportFinancial reportInvestor informationPerformance
How we create value
How we create value
Our purpose
To create spaces
Our purpose
where people thrive
To create spaces
where people thrive
Our values
Openness, trust,
Our values
empowerment, and
Openness and trust,
integrity
empowerment, integrity
Operating
environment
Our
strategy
p.16
Key
resources
p.18
Key business
activities
p.20
Our sustainability
Value creation
approach
outcomes
Our sustainability
approach is the lens
that we use to effectively
manage emerging ESG
risks and opportunities,
creating sustained value
for our stakeholders
Sustainability
Report 2021
Financial
Properties
g
Investin
M
a
n
a
g
i
n
g
Office
Industrial
Retail
Healthcare
Sustainability
Approach
g
e v elopin
People and
capabilities
T
r
a
n
s
a
c
t
i
n
g
& Trading
D
Customers and
communities
Environment
Sustained
Value
p.28
Superior long-term
performance for our investors
and third party capital
partners, underpinned by
integrating ESG issues into
our business model
VALUE DRIVERS
• Financial performance
• Capital management
• Corporate governance
Leading
Cities
p.42
A high-quality portfolio
that contributes to
economic prosperity and
supports sustainable urban
development across
Australia’s key cities
VALUE DRIVERS
• Portfolio scale and
occupancy
• Economic contribution
• Development pipeline
Thriving
People
p.50
An engaged, capable and
high-performing workforce
that delivers on our strategy
and supports the creation
of sustained value
VALUE DRIVERS
• Employee engagement
• Inclusion and diversity
• Health and safety
Future Enabled
Customers and
Strong
Communities
p.54
A strong network of value
chain partners (customers,
communities and suppliers)
who support Dexus and are
positively impacted by Dexus
VALUE DRIVERS
• Customer experience
• Community contribution
• Supply chain focus
Enriched
Environment
p.62
An efficient and resilient
portfolio that minimises our
environmental footprint and
is positioned to thrive in
a climate-affected future
VALUE DRIVERS
• Resource efficiency
• Climate resilience
• Green buildings
Megatrends
• Urbanisation
• Growth in
pension capital
funds flow
• Social and
demographic
change
• Technological
change
• Climate change
• Growth in
sustainable
investment
p.14
Key risks
Outlines the
key risks and
controls in place
for mitigation
p.22
Vision
To be globally
recognised
as Australia’s
leading real estate
company
Strategy
Delivering
superior risk
adjusted returns
for investors
from high quality
real estate in
Australia’s
major cities
Strategic
objectives
• Generating
sustainable
income streams
• Being identified
as the real estate
investment
partner of choice
12
Approach – How we create value
How we create value
Our purpose
To create spaces
where people thrive
Our values
Openness, trust,
empowerment, and
integrity
Megatrends
Vision
• Urbanisation
• Growth in
pension capital
funds flow
• Social and
demographic
change
• Technological
change
• Climate change
• Growth in
sustainable
investment
p.14
Key risks
Outlines the
key risks and
controls in place
for mitigation
p.22
To be globally
recognised
as Australia’s
leading real estate
company
Strategy
Delivering
superior risk
adjusted returns
for investors
from high quality
real estate in
Australia’s
major cities
Strategic
objectives
• Generating
sustainable
income streams
• Being identified
as the real estate
investment
partner of choice
Properties
g
M
People and
capabilities
Office
Industrial
Retail
Healthcare
Investin
T
r
a
n
s
a
c
t
i
n
g
& Trading
D
a
n
a
g
i
n
g
g
e v elopin
Financial
Customers and
communities
Environment
Operating
environment
Our
strategy
p.16
Key
resources
p.18
Key business
activities
p.20
Our sustainability
approach
Value creation
outcomes
Our sustainability
approach is the lens
that we use to effectively
manage emerging ESG
risks and opportunities,
creating sustained value
for our stakeholders
Sustainability
Report 2021
Sustained
Value
p.28
Superior long-term
performance for our investors
and third party capital
partners, underpinned by
integrating ESG issues into
our business model
VALUE DRIVERS
• Financial performance
• Capital management
• Corporate governance
Leading
Cities
p.42
A high-quality portfolio
that contributes to
economic prosperity and
supports sustainable urban
development across
Australia’s key cities
VALUE DRIVERS
• Portfolio scale and
occupancy
• Economic contribution
• Development pipeline
Sustainability
Approach
Thriving
People
p.50
An engaged, capable and
high-performing workforce
that delivers on our strategy
and supports the creation
of sustained value
VALUE DRIVERS
• Employee engagement
• Inclusion and diversity
• Health and safety
Future Enabled
Customers and
Strong
Communities
p.54
A strong network of value
chain partners (customers,
communities and suppliers)
who support Dexus and are
positively impacted by Dexus
VALUE DRIVERS
• Customer experience
• Community contribution
• Supply chain focus
Enriched
Environment
p.62
An efficient and resilient
portfolio that minimises our
environmental footprint and
is positioned to thrive in
a climate-affected future
VALUE DRIVERS
• Resource efficiency
• Climate resilience
• Green buildings
Dexus 2021 Annual Report
13
OverviewApproachGovernanceFinancial reportInvestor informationPerformanceDirectors’ report
Megatrends
Megatrends shape
our operating
environment,
generating both risks
and opportunities
that impact how we
create value through
our business model.
There are various megatrends that
could impact Dexus’s strategy and
outlook, and we actively review
them as the nature and potential
of these trends can change over
time. Since 2019, we have aligned our
Annual Report with the Integrated
Reporting Framework to meet
increasing market demands to
demonstrate how Dexus leverages
ESG to create long-term value. The
material topics from our materiality
assessment (pages 26-27) define
the ‘value drivers’ within the value
creation framework on page 12
and are aligned to the megatrends
identified.
14 Approach – Megatrends
Description
Connection
to key
resources
Implications
for our
business
model and
how we are
responding
Megatrend
Urbanisation
Urbanisation in major
cities is increasing with
population growth leading to
infrastructure investment and
vibrant communities. This
creates challenges for social
equity, the environment,
transport systems and city
planning.
Growth in pension
capital fund flows
Funds under management
within pension funds are
expected to increase
significantly as populations in
developed nations continue
to age. Real estate is
expected to receive a higher
share of capital allocation
and benefit from cross border
capital flows.
Financial
Properties
Environment
Financial
Properties
An investment in Dexus is
an investment in Australia’s
cities. Our investments in
quality properties in key CBD
locations benefit from the
concentration of knowledge
industries. In addition, we are
undertaking city-shaping
developments to serve vibrant
communities. We work closely
with our third party capital
partners, public authorities,
real estate consultants,
technology providers and
the wider community in
undertaking these activities.
The COVID-19 pandemic
is unlikely to permanently
change the ongoing
megatrend of urbanisation,
however the design of offices
will continue to evolve with
flexible working trends.
Our industrial portfolio stands
to benefit from the logistics of
providing goods to growing
populations.
Dexus is a leading Australian
real estate fund manager.
Our funds management
business provides wholesale
investors with exposure
to quality sector specific
and diversified real estate
investment products. These
funds also have a strong track
record of performance and
benefit from leveraging the
leasing, asset and property
management capabilities
provided by Dexus. We often
invest alongside our third
party capital partners on
acquisition and development
opportunities, enhancing
alignment to our strategy
to generate superior risk-
adjusted returns.
We expect that our funds
management business will
benefit from the megatrend
of the growth in pension
fund capital and cross
border capital flows, through
selectively expanding existing
funds and launching new
investment products where
we believe a competitive
advantage can be obtained.
Social and
demographic
change
Technological change
Climate change
Demographic trends such
Technological advancements in
It is now widely recognised
Sustainable investing is
as the rise of millennials and
artificial intelligence, automation,
that climate change is a
growing at a rapid rate both
the ageing population have
big data and analytics are creating
risk to financial stability
implications for the design
new jobs and driving mobility and
and is intensifying other
of workspaces and the
spending on healthcare.
collaboration in workplaces.
Climate challenges include
address the environmental,
Growth in
sustainable
investment
in Australia and around
the world. To gain access
to sustainable investment
flows, businesses need to
social and governance
issues that are material to
their ability to create value.
environmental challenges
such as resource scarcity.
impacts from extreme
weather and longer-term
climate changes, as well
as the transition to a low
carbon economy.
Customers
& communities
People &
capabilities
Customers
& communities
People &
capabilities
Properties
Financial
Financial
Environment
Environment
Workforce composition is
increasingly diverse, and
expectations for a seamless
experience that enables
collaboration and flexibility
has never been greater. Our
customers are increasingly
Technological advancement
brings opportunities to further
support our customers in their
growth and productivity goals, and
we are implementing innovative
For over a decade, we have
Dexus has welcomed the
enhanced the environmental
increasing interest from its
performance and reduced
the carbon footprint of our
portfolio through targeted
investors and third party
capital partners about how
Dexus is managing ESG
technologies in new developments
improvements to energy and
issues. Our sustainability
to deliver a better customer
water efficiency.
adopting mobile technology
experience and optimise workforce
and focusing on health and
productivity.
Our smart buildings strategy
enables connectivity and flexibility
across workplace locations. The
We are on the journey to
achieve net zero emissions
and have integrated risks
and opportunities from
climate change into our
approach is the lens that we
use to effectively address
emerging ESG risks and
opportunities.
We have integrated the
reporting of our ESG
wellbeing. These customer
trends influence the way we
develop and operate our
investments. They provide
opportunities to develop new
services.
Our focus is on delivering
that reduce pain points
for customers, promote
communities in and around
our properties and enhance
the health and wellbeing of
our customers.
Ageing demographics
will continue to underpin
strong growth in healthcare
spending and demand for
healthcare services such as
hospitals, medical centres
COVID-19 experience has increased
operations. We have brought
performance into our
our focus on touchless and virtual
forward our target to achieve
Annual Report, to enhance
technology and improved air
quality, the adoption of which
net zero emissions across our
communication with our
group-managed portfolio
from 2030 to 30 June 2022,
stakeholders and support
the further integration of
attractive to our customers.
in recognition of the need to
ESG into our business model.
take accelerated action in
addressing the impacts of
We benchmark our ESG
approach using investor
climate change.
surveys and have established
Our active industrial development
pipeline supports the growth in
ecommerce which appears to
be driving significant growth in
demand for industrial premises. Our
commitment and investments in
We focus on supporting the
physical and transitional
resilience of our portfolio
technology have been demonstrated
and work with stakeholders
through our partnership with the
in our value chain to reduce
Taronga Ventures platform and fund.
their impacts through
This will better position Dexus to
waste management and
secure first-mover advantage on next
sustainable procurement.
globally leading positions
according to the Principles
for Responsible Investment,
Global Real Estate
Sustainability Benchmark,
Dow Jones Sustainability
Index, and CDP Climate
Change.
‘simple and easy’ experiences
makes our properties more
and medical office buildings.
generation technology solutions for
our business, customers and investors.
Megatrend
Urbanisation
Growth in pension
capital fund flows
Social and
demographic
change
Technological change
Climate change
Demographic trends such
as the rise of millennials and
the ageing population have
implications for the design
of workspaces and the
spending on healthcare.
Technological advancements in
artificial intelligence, automation,
big data and analytics are creating
new jobs and driving mobility and
collaboration in workplaces.
It is now widely recognised
that climate change is a
risk to financial stability
and is intensifying other
environmental challenges
such as resource scarcity.
Climate challenges include
impacts from extreme
weather and longer-term
climate changes, as well
as the transition to a low
carbon economy.
h
c
a
o
r
p
p
A
Growth in
sustainable
investment
Sustainable investing is
growing at a rapid rate both
in Australia and around
the world. To gain access
to sustainable investment
flows, businesses need to
address the environmental,
social and governance
issues that are material to
their ability to create value.
Customers
& communities
People &
capabilities
Properties
Financial
Financial
Customers
& communities
People &
capabilities
Environment
Environment
Workforce composition is
increasingly diverse, and
expectations for a seamless
experience that enables
collaboration and flexibility
has never been greater. Our
customers are increasingly
adopting mobile technology
and focusing on health and
wellbeing. These customer
trends influence the way we
develop and operate our
investments. They provide
opportunities to develop new
services.
Our focus is on delivering
‘simple and easy’ experiences
that reduce pain points
for customers, promote
communities in and around
our properties and enhance
the health and wellbeing of
our customers.
Ageing demographics
will continue to underpin
strong growth in healthcare
spending and demand for
healthcare services such as
hospitals, medical centres
and medical office buildings.
Technological advancement
brings opportunities to further
support our customers in their
growth and productivity goals, and
we are implementing innovative
technologies in new developments
to deliver a better customer
experience and optimise workforce
productivity.
Our smart buildings strategy
enables connectivity and flexibility
across workplace locations. The
COVID-19 experience has increased
our focus on touchless and virtual
technology and improved air
quality, the adoption of which
makes our properties more
attractive to our customers.
Our active industrial development
pipeline supports the growth in
ecommerce which appears to
be driving significant growth in
demand for industrial premises. Our
commitment and investments in
technology have been demonstrated
through our partnership with the
Taronga Ventures platform and fund.
This will better position Dexus to
secure first-mover advantage on next
generation technology solutions for
our business, customers and investors.
For over a decade, we have
enhanced the environmental
performance and reduced
the carbon footprint of our
portfolio through targeted
improvements to energy and
water efficiency.
We are on the journey to
achieve net zero emissions
and have integrated risks
and opportunities from
climate change into our
operations. We have brought
forward our target to achieve
net zero emissions across our
group-managed portfolio
from 2030 to 30 June 2022,
in recognition of the need to
take accelerated action in
addressing the impacts of
climate change.
We focus on supporting the
physical and transitional
resilience of our portfolio
and work with stakeholders
in our value chain to reduce
their impacts through
waste management and
sustainable procurement.
Dexus has welcomed the
increasing interest from its
investors and third party
capital partners about how
Dexus is managing ESG
issues. Our sustainability
approach is the lens that we
use to effectively address
emerging ESG risks and
opportunities.
We have integrated the
reporting of our ESG
performance into our
Annual Report, to enhance
communication with our
stakeholders and support
the further integration of
ESG into our business model.
We benchmark our ESG
approach using investor
surveys and have established
globally leading positions
according to the Principles
for Responsible Investment,
Global Real Estate
Sustainability Benchmark,
Dow Jones Sustainability
Index, and CDP Climate
Change.
Dexus 2021 Annual Report
15
Description
Connection
to key
resources
Implications
for our
business
model and
how we are
responding
Urbanisation in major
cities is increasing with
Funds under management
within pension funds are
population growth leading to
expected to increase
infrastructure investment and
significantly as populations in
vibrant communities. This
developed nations continue
creates challenges for social
to age. Real estate is
equity, the environment,
expected to receive a higher
transport systems and city
share of capital allocation
planning.
and benefit from cross border
capital flows.
Financial
Properties
Environment
Financial
Properties
An investment in Dexus is
an investment in Australia’s
cities. Our investments in
Dexus is a leading Australian
real estate fund manager.
Our funds management
quality properties in key CBD
business provides wholesale
locations benefit from the
investors with exposure
concentration of knowledge
to quality sector specific
industries. In addition, we are
and diversified real estate
undertaking city-shaping
investment products. These
developments to serve vibrant
funds also have a strong track
communities. We work closely
record of performance and
with our third party capital
partners, public authorities,
real estate consultants,
technology providers and
the wider community in
undertaking these activities.
The COVID-19 pandemic
is unlikely to permanently
change the ongoing
megatrend of urbanisation,
however the design of offices
will continue to evolve with
flexible working trends.
Our industrial portfolio stands
to benefit from the logistics of
providing goods to growing
populations.
benefit from leveraging the
leasing, asset and property
management capabilities
provided by Dexus. We often
invest alongside our third
party capital partners on
acquisition and development
opportunities, enhancing
alignment to our strategy
to generate superior risk-
adjusted returns.
We expect that our funds
management business will
benefit from the megatrend
of the growth in pension
fund capital and cross
border capital flows, through
selectively expanding existing
funds and launching new
investment products where
we believe a competitive
advantage can be obtained.
OverviewApproachGovernanceFinancial reportInvestor informationPerformanceDirectors’ report
Strategy
Our strategy remains
focused on our core
strengths of owning
and managing high
quality real estate in
Australia’s major cities
to deliver superior
risk-adjusted returns
for investors.
Delivering superior risk-adjusted returns
means outperforming the relevant
three and five-year benchmarks in
each market in which Dexus owns or
manages properties while providing
Dexus investors with sustainable and
growing distributions.
We have built a fully integrated real
estate platform and are focused on
better leveraging our cross-sector
asset management and development
expertise to drive more capital efficient
returns for investors, while remaining true
to our identity as a long-term investor in
high quality Australian real estate.
During the year, we maintained our
focus on the strategic initiatives of
increasing the resilience of portfolio
income streams, expanding and
diversifying the funds management
business and progressing the
group development pipeline.
These initiatives have now been
incorporated into revised strategic
objectives that guide the next stage
of our business evolution:
– Generating sustainable income
streams: Investing in income
streams that provide resilience
through the cycle
– Being identified as the real estate
investment partner of choice:
Expanding and diversifying the
funds management business
Our purpose:
To create spaces where people thrive
Our values:
Openness and trust, empowerment,
integrity
Leading
Cities
Our vision:
To be globally recognised
as Australia’s leading real estate
company
Our strategy:
To deliver superior risk-adjusted returns
for investors from high-quality real estate
in Australia’s major cities
Our strategic objectives:
Generating sustainable income streams
Investing in income streams that provide
resilience through the cycle
Being identified as the real estate
investment partner of choice
Expanding and diversifying the funds
management business
Sustained
Value
Vision
Enriched
Environment
Our
Purpose
Strategy
Strategic
objectives
Future Enabled
Customers and Strong
Communities
Thriving
People
16
Approach - Strategy
We have invested in having a superior
operating platform and will continue
this focus to build a world-class
business. The size of Dexus’s balance
sheet, deep access to pools of capital
and an agile, solution-based culture are
key enablers of our strategy, supported
by our prudent approach to capital
management and an embedded
commitment to sustainability.
Our objectives of generating sustainable
income streams and being identified
as the real estate investment partner
of choice complement each other. Our
success has been demonstrated by the
attraction of investment partners in the
office, industrial and healthcare property
sectors, in turn providing the opportunity
to drive investment performance while
obtaining scale in our core markets.
We believe that scale supports
the generation of investment
outperformance for both Dexus
investors and our third party capital
partners through broader customer
insights, provision of a greater range
of workspace solutions and increased
capacity to invest in people, systems
and technologies that enhance our
customers’ experience.
We have a clear goal of shifting
incremental value creation, leveraging
the funds management and
development business to drive an
improved return on capital.
Our sustainability approach is used
as a lens to integrate Environmental,
Social and Governance (ESG) risks and
opportunities into our strategy, asset
management and funds management
activities, creating sustained value
for Dexus investors (including our third
party capital partners), employees,
customers, suppliers and communities.
What sets Dexus apart?
Quality real estate
portfolio located across
key Australian cities
High performing funds
management business with
diverse sources of capital
Globally recognised
leader in sustainability
City-shaping
development pipeline
Superior transaction
and trading capabilities
Talented engaged, inclusive
and diverse workforce
Artist impression:
Waterfront Brisbane QLD
Dexus 2021 Annual Report
17
OverviewApproachGovernanceFinancial reportInvestor informationPerformanceDirectors’ report
Key
resources
We rely on our
key resources or
relationships to
create value now
and into the future.
18 Approach – Key resources
Key resources
Financial
How our key resources are linked
to value creation
Our financial resources are the pool of funds available
to us for deployment, which includes debt and equity
capital, as well as profits retained from our property, funds
management, development and trading activities. This
also includes the financial capital from our third party
capital partners which we invest on their behalf.
Our prudent management of financial capital underpins
the delivery of superior risk adjusted returns to Dexus
investors. Our policy is to pay distributions to Security
holders in line with free cash flow for which AFFO is a proxy.
As a real estate company, our properties are central to
how we create value. We actively manage our property
portfolio to enhance its potential, while unlocking further
value through development to further enhance quality, or
for higher and better uses.
Properties
Our portfolio is concentrated in Australia’s major cities,
which we contribute to shaping as leading destinations to
live, work and play.
People and
capabilities
Customers
and
communities
Environment
Our people’s knowledge and expertise are key inputs to
how we create value.
We are a passionate and agile team who want to make
a difference. We focus on sustaining a high-performing
workforce supported by an inclusive and diverse culture.
Our intellectual capital enables us to instil strong
corporate governance, sound risk management and
maintain a focus on health and safety at all levels of
our business.
Our capacity to create value depends on strong
relationships with our customers, local communities
and suppliers.
We work in partnership with our customers to provide
engaging and productive spaces in our buildings that
satisfy their evolving needs.
We support the communities in which we operate in
recognition of their contribution to the activity and
vibrancy of our spaces.
We partner with our suppliers to deliver our development
projects and manage our properties more efficiently, while
maintaining a proactive focus on health and safety.
The efficient use of natural resources and sound
management of environmental risks supports our
creation of value through delivering cost efficiencies and
operational resilience.
We understand, monitor and manage our environmental
impact, setting short-term and long-term measurable
environmental performance targets.
We prepare for the physical impacts of climate change,
while harnessing opportunities that support the transition
to a low carbon economy.
The value that is created
How we measure value
Superior long-term performance for
our investors and third party capital
– Distribution per security
– Adjusted Funds From Operations (AFFO) per security
partners, underpinned by integrating
– Return on Contributed Equity (ROCE)
ESG issues into our business model.
→ Page 28
A high-quality portfolio that
contributes to economic prosperity
and supports sustainable urban
development across Australia’s
key cities.
– Scale: value of property portfolio
– Customer demand and space use: portfolio occupancy
– Economic contribution: construction jobs supported
and Gross Value Added (GVA) to the economy from
development projects
– Development pipeline: value of group development
pipeline
→ Page 42
An engaged, capable and high-
performing workforce that delivers
on our strategy and supports the
creation of sustained value.
– Employee engagement: employee Net Promoter Score
– Gender diversity: female representation in senior and
executive management roles
– Health and safety: workplace safety audit score
→ Page 50
Satisfied and successful customers
supported by high performing
workspaces and a comprehensive
customer product and service offering.
Well connected, prosperous and
strong communities within and around
our properties.
A network of capable and effective
supplier relationships that ensures
ESG standards are maintained
throughout our supply chain.
– Customer experience: customer Net Promoter Score
– Community contribution: total value contributed
– Supply chain economic contribution: number of
supplier partnerships
→ Page 54
An efficient and resilient portfolio
that minimises our environmental
footprint and is positioned to thrive in
a climate-affected future.
– Resource efficiency: energy and water reductions
and waste management
– Climate resilience: Greenhouse gas emissions
– Performance ratings: NABERS and Green Star ratings
reductions
→ Page 62
Key resources
to value creation
How our key resources are linked
The value that is created
How we measure value
Financial
Our financial resources are the pool of funds available
to us for deployment, which includes debt and equity
capital, as well as profits retained from our property, funds
management, development and trading activities. This
also includes the financial capital from our third party
capital partners which we invest on their behalf.
Our prudent management of financial capital underpins
the delivery of superior risk adjusted returns to Dexus
investors. Our policy is to pay distributions to Security
holders in line with free cash flow for which AFFO is a proxy.
As a real estate company, our properties are central to
how we create value. We actively manage our property
portfolio to enhance its potential, while unlocking further
value through development to further enhance quality, or
for higher and better uses.
Properties
Our portfolio is concentrated in Australia’s major cities,
which we contribute to shaping as leading destinations to
live, work and play.
Our people’s knowledge and expertise are key inputs to
how we create value.
We are a passionate and agile team who want to make
a difference. We focus on sustaining a high-performing
workforce supported by an inclusive and diverse culture.
People and
capabilities
Our intellectual capital enables us to instil strong
corporate governance, sound risk management and
maintain a focus on health and safety at all levels of
our business.
Customers
and
communities
Our capacity to create value depends on strong
relationships with our customers, local communities
and suppliers.
We work in partnership with our customers to provide
engaging and productive spaces in our buildings that
satisfy their evolving needs.
We support the communities in which we operate in
recognition of their contribution to the activity and
vibrancy of our spaces.
We partner with our suppliers to deliver our development
projects and manage our properties more efficiently, while
maintaining a proactive focus on health and safety.
The efficient use of natural resources and sound
management of environmental risks supports our
creation of value through delivering cost efficiencies and
operational resilience.
We understand, monitor and manage our environmental
impact, setting short-term and long-term measurable
We prepare for the physical impacts of climate change,
while harnessing opportunities that support the transition
to a low carbon economy.
Environment
environmental performance targets.
Superior long-term performance for
our investors and third party capital
partners, underpinned by integrating
ESG issues into our business model.
– Distribution per security
– Adjusted Funds From Operations (AFFO) per security
– Return on Contributed Equity (ROCE)
→ Page 28
Sustained
Value
A high-quality portfolio that
contributes to economic prosperity
and supports sustainable urban
development across Australia’s
key cities.
Leading
Cities
– Scale: value of property portfolio
– Customer demand and space use: portfolio occupancy
– Economic contribution: construction jobs supported
and Gross Value Added (GVA) to the economy from
development projects
– Development pipeline: value of group development
pipeline
→ Page 42
An engaged, capable and high-
performing workforce that delivers
on our strategy and supports the
creation of sustained value.
Thriving
People
– Employee engagement: employee Net Promoter Score
– Gender diversity: female representation in senior and
executive management roles
– Health and safety: workplace safety audit score
→ Page 50
Future Enabled
Customers
and Strong
Communities
Satisfied and successful customers
supported by high performing
workspaces and a comprehensive
customer product and service offering.
Well connected, prosperous and
strong communities within and around
our properties.
A network of capable and effective
supplier relationships that ensures
ESG standards are maintained
throughout our supply chain.
– Customer experience: customer Net Promoter Score
– Community contribution: total value contributed
– Supply chain economic contribution: number of
supplier partnerships
→ Page 54
Enriched
Environment
An efficient and resilient portfolio
that minimises our environmental
footprint and is positioned to thrive in
a climate-affected future.
– Resource efficiency: energy and water reductions
and waste management
– Climate resilience: Greenhouse gas emissions
reductions
– Performance ratings: NABERS and Green Star ratings
→ Page 62
Dexus 2021 Annual Report
19
OverviewApproachGovernanceFinancial reportInvestor informationPerformanceDirectors’ report
Key business
activities
We create value for all our
stakeholders through utilising our
investment and asset management,
development, transaction and
trading capabilities.
g
Investin
M
a
n
a
g
i
n
g
g
e v elopin
Office
Industrial
Retail
Healthcare
T
r
a
n
s
a
c
t
i
n
g
& Trading
D
20 Approach – Key business activities
Sustained
Value
p.28
Leading
Cities
p.42
Thriving
People
p.50
Future Enabled
Customers and
Strong
Communities
p.54
Enriched
Environment
p.62
Our current operations comprise four key business activities of investing, managing, developing, transacting and trading
high-quality properties located in Australia’s major cities – each of which seeks to maximise cash flow and unlock value
over the investment lifecycle.
Investing
Dexus invests in a directly held property portfolio, which is the largest driver of financial value (88% of Funds
From Operations (FFO) for the financial year ended 30 June 2021), containing the Dexus owned office,
industrial and healthcare portfolios. At 30 June 2021, Dexus directly owns a portfolio of 133 properties
valued at $17.5 billion and manages a further $25.0 billion portfolio on behalf of third party capital partners.
Our investment track record has enabled Dexus to attract investment partners in the office, industrial
and healthcare property sectors, in turn providing the opportunity to drive investment performance
while obtaining scale in our core markets. We believe that scale supports the generation of investment
outperformance for both Dexus investors and our third-party capital partners through broader customer
insights, the provision of a greater range of workspace solutions and increased capacity to invest in
people, systems and technologies that enhance our customers’ experience
Managing
Dexus manages $42.5 billion of Australian real estate investments across the office, industrial, retail and
healthcare asset classes. We utilise our asset and property management expertise to maximise cash
flow for assets managed across the group. This active approach seeks to add value through leasing to
diversify the customer mix and capitalise on the stage that we are at in the property cycle. Our in-house
project delivery group assists in effectively managing downtime and delivering capital works projects in a
timely manner.
Our ability to attract key strategic capital partners is testament to our experience and leading market
position. We seek to be identified as the real estate investment partner of choice in Australia and
have a strong track record of driving investment performance. We believe this track record positions
us well to continue to attract like-minded third party capital partners and investors into our funds
management business.
Developing
Dexus focuses on development opportunities that will enhance future returns and improve portfolio quality
and diversification through leveraging our integrated real estate platform. At 30 June 2021, the group has
a $14.6 billion group development pipeline. The pipeline includes committed and uncommitted projects
across major Australian cities that support long-term growth for Dexus and our third party capital partners.
Development also delivers on our third party capital partners’ strategies and provides organic growth
in assets under management, and therefore revenue potential to Dexus. Dexus’s direct share of the
development pipeline is $8.1 billion with the remaining $6.5 billion across our funds management portfolio.
Transacting
and trading
We utilise our multi-disciplinary expertise to identify, evaluate, and execute acquisition and divestment
opportunities across a range of sectors and asset types. Dexus invests alongside our third party capital
partners to access real estate with the objectives of improving portfolio quality and performance and
achieving scale in our core markets.
We have a strong track record of investing capital at the right time in the property cycle, acting quickly
and evolving our approach to secure opportunities while adhering to strict investment criteria. Our in-
house trading capabilities support the identification, origination, evaluation and execution of opportunities
across the office, industrial, healthcare and retail sectors and leverages our capabilities to achieve
trading profits. Trading activities are undertaken with the intention of realising profits from the direct
repositioning of assets in the short to medium term. These assets can either be acquired specifically for
trading or identified within Dexus’s existing portfolio as having a higher and better use through undertaking
repositioning activities. We have delivered $441 million in trading profits (pre-tax) since FY12, achieving an
average unlevered internal rate of return (pre-tax) of circa 28% per annum from our trading activities.
Dexus 2021 Annual Report
21
OverviewApproachGovernanceFinancial reportInvestor informationPerformanceDirectors’ report
Key risks
Dexus recognises
that effective risk
management requires
an understanding of
risks during all phases
of the investment
life cycle.
Board focus
The Board Risk Committee is
responsible for the Group Risk
Management Framework, reviewing
the adequacy and implementation of
risk management processes, internal
control systems and risk management
resources. Areas of focus in FY21
included:
– Overseeing Dexus’s ongoing
response to the impact of the
evolving COVID-19 situation
– Reviewing the key risks, their
controls and mitigants, and
measures set out in the Dexus Risk
Appetite Statement
– Reviewing the management of
digital disruption, cyber-security,
privacy and data breaches
including the adequacy of controls
and disaster recovery testing to
mitigate those risks
– Overseeing Dexus’s approach to
the management of Aluminium
Composite Panel cladding risk
across the portfolio
– Overseeing Dexus’s organisational
culture in collaboration with the
Board People and Remuneration
Committee
22 Approach – Key risks
Key risk
Health, safety and wellbeing
Potential impacts
– Death or injury at Dexus properties
Providing an environment that ensures
the safety and wellbeing of employees,
customers, contractors and the public
at Dexus properties and responding
to events that have the potential to
disrupt business continuity.
– Reputational damage
– Loss of broader community
confidence
– Costs or sanctions associated with
regulatory response
– Costs associated with criminal or
civil proceedings
– Costs associated with remediation
and/or restoration
– Inability to sustainably perform or
deliver objectives
– Increased employee turnover or
absenteeism
Strategic and financial performance
– Reduced investor sentiment (equity
Ability to meet market guidance,
achieve the group’s strategic
objectives, generate value and deliver
superior risk-adjusted performance.
and debt)
– Loss of broader community
confidence
– Reduced credit ratings and
availability of debt financing
Development
Achieving strategic development
objectives that provides the
opportunity to grow Dexus’s and our
third party capital partners’ portfolios
and enhance future returns.
– Reputational damage
– Fund mandates negatively
impacted
– Leasing outcomes impacting on
completion valuations
Link to key
resources
Properties
Customers
& communities
People &
capabilities
How Dexus is responding
As a priority we focus on the health, safety and wellbeing of our employees and the people in our
buildings. We adopt a series of measures to ensure building and workplace health and safety is
maintained in and around our properties.
This includes ongoing monitoring and testing at existing assets and regular training provided to
both employees and service providers.
We apply comprehensive work health and safety programs and enforce compliance requirements
by site contractors and employees, in accordance with Dexus’s ISO 45001 certified Occupational
Health and Safety Management System.
We engage external consultants to identify and remediate health and safety issues relating to the
fabric of properties across the portfolio, including facades.
We maintain a business continuity management framework to mitigate safety threats, including the
adoption of plans relating to crisis management, business continuity and emergency management.
Responsiveness at each property is regularly tested through scenario exercises. Key performance
indicators for reporting and resolution of security issues are embedded into contractor agreements
at Dexus-managed assets. Our Safe & Well program supports the mental, physical, financial and
work wellbeing of our people. Safe & Well provides a breadth of resources, designed to help our
people to develop and maintain a healthy level of wellbeing.
Financial
Properties
Customers
& communities
We have processes in place to monitor and manage performance and risks that may impact on
performance. Our strategy and risk appetite are approved annually by the Board and reviewed
throughout the year by management.
The Investment Committee is responsible for the consideration, approval or endorsement, subject
to delegated authority, of material investment decisions.
Detailed due diligence is undertaken for all investment and divestment proposals, developments
and major capital expenditure before approval or endorsement of each investment decision.
We have a high-quality office portfolio with scale in key Australian CBDs and a diversified
development pipeline across sectors and locations.
Major capital projects are monitored by control groups to assess delivery and performance
outcomes.
Financial
Properties
customer base.
Dexus has a strong development capability with a proven track record of delivering projects
with a focus on quality, sustainability and returns that satisfy the evolving needs of our growing
We have platform-wide expertise that drives our development performance and objectives,
including design and costing, leasing, risk and compliance and insurance coverage.
Capital management
– Constrained capacity to execute
Positioning the capital structure of
the business to withstand unexpected
changes in equity and debt markets.
strategy
– Increased cost of funding (equity
and debt)
– Reduced investor sentiment (equity
and debt)
– Reduced credit ratings and reduced
availability of debt financing
Financial
Our prudent management of capital, including regular sensitivity analysis and periodic
independent reviews of the Treasury Policy, assists in positioning Dexus’s balance sheet in relation
to unexpected changes in capital markets.
We maintain a strong balance sheet with diversified sources of capital. Ongoing monitoring
of capital management is undertaken to ensure metrics are within risk appetite thresholds
benchmarks and/or limits outlined within the Treasury Policy.
Further information relating to financial risk management is detailed in Note 13 of the Financial
Statements.
Key risk
Potential impacts
Health, safety and wellbeing
– Death or injury at Dexus properties
Providing an environment that ensures
– Reputational damage
the safety and wellbeing of employees,
– Loss of broader community
customers, contractors and the public
confidence
at Dexus properties and responding
to events that have the potential to
disrupt business continuity.
– Costs or sanctions associated with
regulatory response
– Costs associated with criminal or
civil proceedings
– Costs associated with remediation
and/or restoration
– Inability to sustainably perform or
deliver objectives
– Increased employee turnover or
absenteeism
Strategic and financial performance
– Reduced investor sentiment (equity
Ability to meet market guidance,
achieve the group’s strategic
objectives, generate value and deliver
and debt)
confidence
– Loss of broader community
superior risk-adjusted performance.
– Reduced credit ratings and
availability of debt financing
Development
Achieving strategic development
objectives that provides the
– Reputational damage
– Fund mandates negatively
impacted
opportunity to grow Dexus’s and our
– Leasing outcomes impacting on
third party capital partners’ portfolios
completion valuations
and enhance future returns.
Link to key
resources
Properties
Customers
& communities
People &
capabilities
How Dexus is responding
As a priority we focus on the health, safety and wellbeing of our employees and the people in our
buildings. We adopt a series of measures to ensure building and workplace health and safety is
maintained in and around our properties.
This includes ongoing monitoring and testing at existing assets and regular training provided to
both employees and service providers.
We apply comprehensive work health and safety programs and enforce compliance requirements
by site contractors and employees, in accordance with Dexus’s ISO 45001 certified Occupational
Health and Safety Management System.
We engage external consultants to identify and remediate health and safety issues relating to the
fabric of properties across the portfolio, including facades.
We maintain a business continuity management framework to mitigate safety threats, including the
adoption of plans relating to crisis management, business continuity and emergency management.
Responsiveness at each property is regularly tested through scenario exercises. Key performance
indicators for reporting and resolution of security issues are embedded into contractor agreements
at Dexus-managed assets. Our Safe & Well program supports the mental, physical, financial and
work wellbeing of our people. Safe & Well provides a breadth of resources, designed to help our
people to develop and maintain a healthy level of wellbeing.
Financial
Properties
Customers
& communities
We have processes in place to monitor and manage performance and risks that may impact on
performance. Our strategy and risk appetite are approved annually by the Board and reviewed
throughout the year by management.
The Investment Committee is responsible for the consideration, approval or endorsement, subject
to delegated authority, of material investment decisions.
Detailed due diligence is undertaken for all investment and divestment proposals, developments
and major capital expenditure before approval or endorsement of each investment decision.
We have a high-quality office portfolio with scale in key Australian CBDs and a diversified
development pipeline across sectors and locations.
Major capital projects are monitored by control groups to assess delivery and performance
outcomes.
Financial
Properties
Dexus has a strong development capability with a proven track record of delivering projects
with a focus on quality, sustainability and returns that satisfy the evolving needs of our growing
customer base.
We have platform-wide expertise that drives our development performance and objectives,
including design and costing, leasing, risk and compliance and insurance coverage.
Capital management
– Constrained capacity to execute
Positioning the capital structure of
the business to withstand unexpected
changes in equity and debt markets.
strategy
and debt)
and debt)
– Increased cost of funding (equity
– Reduced investor sentiment (equity
– Reduced credit ratings and reduced
availability of debt financing
Financial
Our prudent management of capital, including regular sensitivity analysis and periodic
independent reviews of the Treasury Policy, assists in positioning Dexus’s balance sheet in relation
to unexpected changes in capital markets.
We maintain a strong balance sheet with diversified sources of capital. Ongoing monitoring
of capital management is undertaken to ensure metrics are within risk appetite thresholds
benchmarks and/or limits outlined within the Treasury Policy.
Further information relating to financial risk management is detailed in Note 13 of the Financial
Statements.
Dexus 2021 Annual Report 23
OverviewApproachGovernanceFinancial reportInvestor informationPerformanceDirectors’ report
Key risks continued
We are committed to meeting high
standards of risk management in
the way we conduct business and
actively identify and manage risks
that may impact the realisation
of our strategy. Effective risk
management is critical in enabling
the delivery of high-quality
products and services to customers
and maximising investor returns.
Our key risks incorporate insights
and material topics relating to ESG
from our materiality assessment
process, described on pages 26-27.
24 Approach – Key risks
Key risk
Third party capital partners
Real estate investment partner of
choice for third party capital.
Potential impacts
– Change in strategy and/or capacity
of existing third party capital
partners
– Inability to attract new third party
capital partners
– Loss of confidence in governance
structure and service delivery
– Loss of funds management income
Cyber and data security
– Lack of resilience in our response to
Ability to access, protect and
maintain systems and respond to
major incidents including data loss,
cyber security threats or breaches to
information systems.
Environmental and social
sustainability
Commitment to climate resilience
and responding to the impacts of
climate change, as well as focusing on
having a positive social impact in the
communities in which we operate.
cyber security threats
– Impact to our customers and/or
third party capital partners
– Loss of broader community
confidence
– Financial losses
– Data integrity compromised
– Loss or damage to systems or assets
– Increased costs associated with
physical risks (e.g. asset damage
from extreme weather)
– Increased costs associated
with transition risks (e.g. carbon
regulation, requirements for building
efficiency)
– Inability to maintain access to
capital due to reputational damage
– Increased reputational risk for not
supporting the community and
social causes
– Increased difficulties in leasing
assets due to heightened risk of
climate change impact
Compliance and regulatory
– Sanctions impacting on business
Maintaining market leading
governance and compliance practices.
operations
– Reduced investor sentiment (equity
and debt)
– Loss of broader community
confidence
– Increased compliance costs
Link to key
resources
Financial
Properties
Customers
& communities
How Dexus is responding
Our funds management model includes strong governance principles and processes designed to
build and strengthen relationships with existing and prospective third party capital partners.
Our active approach to engagement across the business enables employees to understand the
interests of third party capital partners and design strategies to maintain partner satisfaction.
Our Funds Management team also undertake a periodic client survey to understand perceptions
and identify areas for improvement.
People &
capabilities
We aim to have the most efficient systems and processes, including financial accounting and
operational systems. Regular reviews of policies and procedures on information security are
undertaken and align to the National Institute of Standards and Technology (NIST) Cyber Security
Framework.
tested annually.
We have comprehensive Business Continuity and Disaster Recovery plans in place which are
Regular training, testing and disaster recovery activities are conducted, along with the
employment of data security software, to assist in reducing the risk of threats or breaches to data.
We also educate and train our people on how to best protect their data.
Environment
impact our business and focus on enhancing the resilience of our properties while implementing
We use scenario analysis to understand the broad range of climate-related issues that may
energy efficiency initiatives and renewable energy projects.
Customers
& communities
Dexus’s approach to climate change risk management is disclosed in accordance with the
recommendations of the Task Force on Climate-related Financial Disclosures across our Annual
Reporting Suite (see page 65 in the 2021 Sustainability Report for an index).
We established a Social Impact Strategic Framework in FY21 that is aligned with Dexus’s
Sustainability Approach and designed to streamline community activities and maximise the value
created for Dexus and the communities in which it operates.
We are committed to ensuring our operations provide quality jobs with the right conditions and
collaborate with our suppliers to understand how we can contribute to upholding human rights
across our supply chain, including preventing modern slavery.
People &
capabilities
regulatory expectations.
Our compliance monitoring program supports our comprehensive compliance policies and
procedures that are regularly updated to ensure the business operates in accordance with
Our employees and service providers receive training on their compliance obligations and are
encouraged to raise concerns where appropriate.
We maintain grievance, complaints and whistleblower mechanisms for employees and
stakeholders to safely, confidently and anonymously raise concerns.
Independent industry experts are appointed to undertake reviews where appropriate.
Key risk
Potential impacts
Third party capital partners
– Change in strategy and/or capacity
Real estate investment partner of
choice for third party capital.
of existing third party capital
partners
– Inability to attract new third party
capital partners
– Loss of confidence in governance
structure and service delivery
– Loss of funds management income
Cyber and data security
– Lack of resilience in our response to
Ability to access, protect and
maintain systems and respond to
major incidents including data loss,
cyber security threats
– Impact to our customers and/or
third party capital partners
cyber security threats or breaches to
– Loss of broader community
information systems.
Environmental and social
sustainability
Commitment to climate resilience
and responding to the impacts of
climate change, as well as focusing on
having a positive social impact in the
communities in which we operate.
confidence
– Financial losses
– Data integrity compromised
– Loss or damage to systems or assets
– Increased costs associated with
physical risks (e.g. asset damage
from extreme weather)
– Increased costs associated
with transition risks (e.g. carbon
regulation, requirements for building
efficiency)
– Inability to maintain access to
capital due to reputational damage
– Increased reputational risk for not
supporting the community and
social causes
– Increased difficulties in leasing
assets due to heightened risk of
climate change impact
Link to key
resources
Financial
Properties
Customers
& communities
How Dexus is responding
Our funds management model includes strong governance principles and processes designed to
build and strengthen relationships with existing and prospective third party capital partners.
Our active approach to engagement across the business enables employees to understand the
interests of third party capital partners and design strategies to maintain partner satisfaction.
Our Funds Management team also undertake a periodic client survey to understand perceptions
and identify areas for improvement.
People &
capabilities
We aim to have the most efficient systems and processes, including financial accounting and
operational systems. Regular reviews of policies and procedures on information security are
undertaken and align to the National Institute of Standards and Technology (NIST) Cyber Security
Framework.
We have comprehensive Business Continuity and Disaster Recovery plans in place which are
tested annually.
Regular training, testing and disaster recovery activities are conducted, along with the
employment of data security software, to assist in reducing the risk of threats or breaches to data.
We also educate and train our people on how to best protect their data.
Environment
Customers
& communities
We use scenario analysis to understand the broad range of climate-related issues that may
impact our business and focus on enhancing the resilience of our properties while implementing
energy efficiency initiatives and renewable energy projects.
Dexus’s approach to climate change risk management is disclosed in accordance with the
recommendations of the Task Force on Climate-related Financial Disclosures across our Annual
Reporting Suite (see page 65 in the 2021 Sustainability Report for an index).
We established a Social Impact Strategic Framework in FY21 that is aligned with Dexus’s
Sustainability Approach and designed to streamline community activities and maximise the value
created for Dexus and the communities in which it operates.
We are committed to ensuring our operations provide quality jobs with the right conditions and
collaborate with our suppliers to understand how we can contribute to upholding human rights
across our supply chain, including preventing modern slavery.
Compliance and regulatory
– Sanctions impacting on business
Maintaining market leading
governance and compliance practices.
– Reduced investor sentiment (equity
operations
and debt)
confidence
– Loss of broader community
– Increased compliance costs
People &
capabilities
Our compliance monitoring program supports our comprehensive compliance policies and
procedures that are regularly updated to ensure the business operates in accordance with
regulatory expectations.
Our employees and service providers receive training on their compliance obligations and are
encouraged to raise concerns where appropriate.
We maintain grievance, complaints and whistleblower mechanisms for employees and
stakeholders to safely, confidently and anonymously raise concerns.
Independent industry experts are appointed to undertake reviews where appropriate.
Dexus 2021 Annual Report 25
OverviewApproachGovernanceFinancial reportInvestor informationPerformanceDirectors’ report
Key risks continued
Key risk
Organisational culture
Ability to maintain a respectful, open
and inclusive culture which reflects
our values and embraces diversity of
thought.
Potential impacts
– Decreased business performance
– Inappropriate conduct leading to
reputational or financial loss
– Poor employer branding leading to
inability to attract talent
– Regrettable employee turnover and
associated increased costs
– Reduced investor sentiment (equity
and debt)
Talent and capability
– Decreased business performance
Ability to attract and retain the best
talent to deliver business results.
– Negative impact to customer
relationships
– Decline in workforce productivity
– Increased workforce costs
– Loss of corporate knowledge and
experience
Link to key
resources
People &
capabilities
How Dexus is responding
We foster a culture and employee experience that aligns and continually reinforces the group’s
purpose statement, including our aspirations, values and behaviours.
Our employee listening strategy enables employees to provide real-time feedback on their
experience, as well as anecdotal and anonymous feedback via regular pulse surveys throughout
the year. Insights gained are used to understand organisational culture and identify potential
challenges that may require additional focus. Psychological safety and inclusion are central
to the design of employee experiences, policies and protocols. We invest in our employees’
development and reward their achievement of sustainable business outcomes that add value to
our stakeholders.
People &
capabilities
We aim to attract, develop and retain an engaged and capable workforce that can deliver
our business results both today and in the future. Professional development is undertaken at all
organisational levels to drive continuous learning and engagement of our employees.
Talent reviews are conducted at regular intervals to monitor and respond to emerging talent
risks and opportunities and to inform succession plans for key and critical roles. External talent
mapping is undertaken for critical roles.
Based on the key megatrends, the
2021 materiality assessment confirmed
the nine material topics which help
structure our reporting and are a major
consideration for how we evolve our
sustainability approach over time.
These nine material topics did not
change from FY20 and formed the basis
for identifying material matters for value
creation as defined by the International
Integrated Reporting Council
Framework, which are disclosed as
‘value drivers’ within our value creation
framework on page 12.
Materiality assessment
The concept of materiality supports
Dexus’s approach to managing ESG
risks and opportunities because it:
Dexus consulted with representatives
from the following teams during its
2021 management review:
– Research
– Group Strategy
– Developments
– Funds Management
– Smart Building Technology
– Customer Insights and Initiatives
– Finance
– Governance
– Risk
– Investor Relations
– Sustainability
– People & Culture
– Ensures that the business focuses on
the issues of greatest importance to
its particular industry and business
model
– Communicates to the market that the
business has a strong understanding
of how ESG impacts value creation,
which in turn increases market
confidence.
Recognising this, Dexus has completed
regular materiality assessments since as
early as 2011 to inform its sustainability
approach and reporting, as detailed in
the 2021 Sustainability Report on pages
6-7. Our most recent external materiality
assessment was completed in 2020.
For 2021, we undertook an internal
management review of key megatrends
and material topics because we
deemed it not necessary to conduct an
external assessment this year.
26 Approach – Key risks
Key risk
Potential impacts
Organisational culture
– Decreased business performance
Ability to maintain a respectful, open
and inclusive culture which reflects
– Inappropriate conduct leading to
reputational or financial loss
our values and embraces diversity of
– Poor employer branding leading to
thought.
inability to attract talent
Talent and capability
– Decreased business performance
Ability to attract and retain the best
talent to deliver business results.
– Regrettable employee turnover and
associated increased costs
– Reduced investor sentiment (equity
and debt)
– Negative impact to customer
relationships
– Decline in workforce productivity
– Increased workforce costs
– Loss of corporate knowledge and
experience
Link to key
resources
People &
capabilities
How Dexus is responding
We foster a culture and employee experience that aligns and continually reinforces the group’s
purpose statement, including our aspirations, values and behaviours.
Our employee listening strategy enables employees to provide real-time feedback on their
experience, as well as anecdotal and anonymous feedback via regular pulse surveys throughout
the year. Insights gained are used to understand organisational culture and identify potential
challenges that may require additional focus. Psychological safety and inclusion are central
to the design of employee experiences, policies and protocols. We invest in our employees’
development and reward their achievement of sustainable business outcomes that add value to
our stakeholders.
People &
capabilities
We aim to attract, develop and retain an engaged and capable workforce that can deliver
our business results both today and in the future. Professional development is undertaken at all
organisational levels to drive continuous learning and engagement of our employees.
Talent reviews are conducted at regular intervals to monitor and respond to emerging talent
risks and opportunities and to inform succession plans for key and critical roles. External talent
mapping is undertaken for critical roles.
Megatrend
Urbanisation
Material topic
Value drivers
Expanding our economic impact on Australian cities
Portfolio scale and occupancy
Growth in pension capital
fund flows
Ensuring high standards of corporate governance and
transparency
Technological change
Deploying smart building technology along with
mobile and virtual technology to enhance the
customer experience
Economic contribution
Development pipeline
Green buildings
Corporate governance
Customer experience
Social and demographic
change
Championing an inclusive and high-performing culture
Employee engagement
Prioritising safety and wellbeing in our workplace and
at our assets
Inclusion and diversity
Health and safety
Customer experience
Climate change
Maintaining a portfolio resilient to the physical impacts
of climate change
Climate resilience
Managing the use of resources efficiently
Resource efficiency
Supporting the transition to a low carbon economy
through net zero emissions
Resource efficiency
Growth in sustainable
investment
Upholding a social licence to operate by meeting
stakeholder expectations for sustainability
performance
Community contribution
Supply chain focus
Dexus 2021 Annual Report
27
OverviewApproachGovernanceFinancial reportInvestor informationPerformanceDirectors’ report
Financial
Artist impression:
Atlassian, Sydney NSW
Our financial resources are the pool of
funds available to us for deployment,
which includes debt and equity capital,
as well as asset recycling activities and
profits retained from our property, funds
management, development and trading
activities. This also includes the financial
capital from our third party capital
partners which we invest on their behalf.
During the year, we maintained our
focus on the strategic initiatives of
increasing the resilience of portfolio
income streams, expanding and
diversifying the funds management
business and progressing the group
development pipeline. These initiatives
have now been incorporated into
revised strategic objectives that guide
the next stage of our business evolution:
– Generating sustainable income
streams: Investing in income streams
providing resilience through the cycle
– Being identified as the real estate
investment partner of choice:
Expanding and diversifying the funds
management business
The scale of our balance sheet and
deep access to pools of capital are
key enablers of our strategy, supported
by our prudent approach to capital
management.
Our conservative and active management
of financial capital underpins the delivery of
superior risk-adjusted returns to investors.
Board focus
Financial performance is a key focus area for the Board and Board Audit
Committee. In FY21, the Board and Board Audit Committee were involved in:
– Considering and approving Dexus’s financial reports, audit reports,
market guidance, distribution details, funding requirements and liquidity,
as well as property portfolio valuation movements and internal audit
program
– Approving the group’s Financial KPIs and scorecard, in addition to annual
and half year results materials
– Endorsing the adoption of the ASIC financial reporting relief
– Approving the implementation of the Simplification of the Dexus
corporate structure
– Approving the group’s capital management initiatives
– Approving Dexus’s co-investment commitment in DREP1
– Approving Dexus entering into an implementation agreement for the
merger of DWPF with ADPF
– Approving the establishment of the Mercatus Dexus Australia Partnership
and the partnership’s acquisition of a 33.33% interest in 1 Bligh Street,
Sydney
– Approving an agreement between Dexus and Australian Unity
Healthcare Property Trust (AUHPT) relating to future investment and
development of healthcare real estate and Dexus making a $180 million
cornerstone investment in AUHPT
28 Performance – Financial
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Sustainability
approach
Sustained Value
51.8cents
Distribution per security
FY20: 50.3 cents
51.8cents
AFFO per security
FY20: 50.3 cents
8.3%
Return on Contributed Equity
FY20: 9.0%
Earnings drivers
Our earnings are driven by three key
areas:
– Property portfolio: the largest driver
of financial value, comprising revenue
from the Dexus owned office and
industrial portfolio
– Funds management: a growing driver
of financial value, providing access to
wholesale sources of financial capital,
and enabling a growing annuity-style
income stream for Dexus investors
– Trading: an established driver of
financial value that involves the
packaging and sale of properties to
generate trading profits
How we measure financial performance
When measuring financial performance,
we focus on growth in Adjusted Funds
From Operations (AFFO) and distribution
per security, as well as Return on
Contributed Equity to measure the
returns achieved for our Security holders.
Group performance
Dexus’s activity drove a solid financial
result for the year. From a challenging
starting position during the pandemic
with the provision of no guidance in
August 2020, the Board was able to
provide guidance in October 2020
for a distribution per security amount
consistent with FY20. Guidance was
upgraded in May 2021 to 3% growth in
distribution per security, predominantly
driven by better-than-expected
outcomes across the property portfolio,
as well as delayed settlements of asset
sales and other initiatives across the
business. This guidance was delivered
upon, with the achievement of a full
year distribution of 51.8 cents per
security, reflecting 3% growth and
resulting in a 5.5% compound annual
growth rate since FY12.
This result was also achieved despite
the ongoing impacts of the pandemic
on our customer base and the extension
of the National Commercial Code
of Conduct in Victoria and Western
Australia remaining in place until the
end of March 2021, which saw rent
relief provided to impacted small and
medium enterprise customers.
Despite the volatile operating
environment caused by the pandemic,
FY21 was characterised by increased
leasing activity, strong rent collections,
the selective recycling of assets and
reinvestment into resilient assets as well
as several initiatives to grow our funds
management business.
Dexus’s group development pipeline
now stands at a cost of $14.6 billion,
of which $8.1 billion sits within the
Dexus portfolio and $6.5 billion within
third party funds. In addition, we
have identified a further $1.6 billion
opportunities across the group from
recent platform initiatives.
The Dexus stapled corporate structure
was simplified in July 2021, enabling the
group to generate further operational
efficiencies while providing improved
optionality for potential future funds
management initiatives. We also
capitalised on security price volatility
to enhance investor returns, buying
back 15,636,917 Dexus securities via
the on-market buy back for a total
consideration of $136 million.
Future focus
To learn more about our future Financial
commitments refer to page 70.
Learn more
To learn more about our progress
against our FY21 Sustained Value
approach and commitments, refer to
the 2021 Sustainability Report available
at www.dexus.com
Dexus 2021 Annual Report 29
OverviewApproachGovernanceFinancial reportInvestor informationPerformanceDirectors’ report
Financial continued
145 Ann Street, Brisbane QLD
Key drivers included:
– Property FFO reduced by $15.1 million
driven by the divestment of
45 Clarence Street and 201 Elizabeth
Street, Sydney, the full-year impact of
the divestment of the second tranche
of assets sold to DALT, alongside
rent relief and provisions associated
with the pandemic, partly offset
by development completions. Rent
collections were strong at 98.1% in FY21
– Management operations FFO
reduced by $13.8 million due to the
transition of the Australian mandate,
the continued impacts of the
pandemic on revenue, combined with
a normalisation of costs following
non-recurring cost reduction
measures in FY20. These impacts
were offset by new funds and other
initiatives that are expected to drive
strong growth in FY22
– Other FFO improved, driven by a
reduction in underlying tax expense
Despite the reduction in Underlying Funds
from Operations, AFFO was $11.2 million or
2.0% higher than the prior year driven by:
– Trading profits of $50.4 million (net of
tax) were $15.1 million higher than the
prior year, with four trading projects
contributing to the FY21 result
– Maintenance capex and incentives of
$155.3 million were $24.4 million lower
than the prior year
– On a per security basis, AFFO and
distributions per security were 51.8
cents, 3.0% higher than the prior year,
and the distribution payout ratio
remains in line with free cash flow in
accordance with Dexus’s distribution
policy
– We continued to maintain a strong
and conservative balance sheet
with gearing (look-through)1 of 26.7%
remaining well below our target range
of 30-40%
Group performance continued
Net profit after tax was $1,138.4 million,
up 17% primarily due to an increase
in Dexus’s share of net profits from
equity accounted investments and a
favourable net fair value movement of
derivatives and foreign currency interest
bearing liabilities, partly offset by lower
fair value gains on owned investment
properties.
The external independent valuations
resulted in a total estimated
$584.0 million or circa 3.5% increase
on prior book values for the 12 months
to 30 June 2021, with a stronger uplift
achieved in the second half of the
year. These revaluation gains primarily
drove the 56 cent or 5.1% increase in
net tangible asset (NTA) backing per
security to $11.42 at 30 June 2021.
Operationally, Underlying Funds From
Operations (excluding trading profits)
of $666.6 million was 4.1% lower than the
prior year, impacted by divestments and
continued impacts of the pandemic
across the property portfolio and
management business, partly offset
by income from recently completed
developments.
1 Adjusted for cash and debt in equity accounted investments. Excluding the impact of the contracted divestments of 60 Miller Street, North
Sydney which settled on 3 August 2021, and Grosvenor Place, Sydney which is expected to settle in the first half of FY22.
30 Performance – Financial
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Case study
Simplification provides improved flexibility
to expand funds management business
Further, Dexus will potentially be able to provide
broader Capital Gains Tax rollover relief to
people who receive or become Dexus Security
holders as a result of any merger or acquisition
activity that Dexus subsequently engages in.
Dexus sought determinations relating to stamp
duty and a Class Ruling from the Australian
Tax Office to confirm that CGT scrip-for-scrip
rollover relief was available to Australian resident
Security holders. Following the receipt of stamp
duty determinations, the Board determined that
the Simplification continued to be in the best
interests of Security holders.
The Simplification was approved at an
Extraordinary General Meeting in April 2021
and was implemented on 6 July 2021. The new
Stapled Securities commenced trading on the
Australian Securities Exchange on 7 July 2021.
In February 2021, Dexus announced that it was
considering making changes to simplify its
corporate structure.
Dexus’s corporate structure was a legacy of
its history and contained four stapled trusts –
Dexus Diversified Fund (DDF), Dexus Industrial
Trust (DIT), Dexus Office Trust (DOT) and Dexus
Operations Trust (DXO). The Simplification
involved “tophatting” each of DDF, DIT and
DOT with a newly established trust called Dexus
Property Trust (DPT) to form a dual stapled group
comprising DXO and DPT.
Dexus Funds Management Limited, as the
Responsible Entity of each of the four trusts
that comprise Dexus, considered the proposed
changes and determined that they were in the
best long term interests of Security holders.
The Simplification provides Dexus with an
improved ability to expand and diversify its
funds management business through greater
flexibility in meeting the investment demand
from investors for real estate assets. It also
reduces complexity, resulting in administrative
efficiencies relating to the reduced number of
external financial statements required to be
produced, and potentially reduces the reporting
requirements for Security holders.
Dexus 2021 Annual Report
31
OverviewApproachGovernanceFinancial reportInvestor informationPerformanceDirectors’ report
Financial continued
Group performance continued
Valuation movements
Office portfolio
Industrial portfolio
Total portfolio1
Weighted average
capitalisation rate
Office portfolio
Industrial portfolio
Total portfolio
Total FY21
$189.5m
$376.8m
$584.0m
30 Jun 2021
$156.7m
$264.8m
$422.9m
31 Dec 2020
$32.8m
$112.0m
$161.1m
30 Jun 2021
4.91%
4.92%
4.91%
30 Jun 2020
4.97%
5.66%
5.05%
Change
-6bps
-74bps
-14bps
1
Includes healthcare property revaluation gain of $17.7 million and excludes leased assets
revaluation movement of $(0.6) million.
We continued to maintain a strong financial position with low gearing and
enhanced liquidity.
Key financials
Funds From Operations (FFO) ($m)
Net profit after tax ($m)
AFFO per security (cents)
Distribution per security (cents)
ROCE (%)
Net tangible asset backing per
security ($)
Gearing (look-through)1 (%)
FFO composition
Office property FFO
Industrial property FFO
Total property FFO
Management operations4
Group corporate
Net finance costs
Other (including tax)6
Underlying FFO
Trading profits (net of tax)
FFO
FY21
717.0
1,138.4
51.8
51.8
8.3
11.42
26.72
FY21
$m
658.3
122.2
780.5
57.7
(35.4)
(130.5)
(5.7)
666.6
50.4
717.0
FY20
730.2
972.75
50.3
50.3
9.0
10.86
Change
(1.8)%
17.0%
3.0%
3.0%
(0.7) ppt
5.1%
24.33
2.4 ppt
FY20
$m
671.4
124.2
795.6
71.5
(33.0)
(127.4)
(11.8)
694.9
35.3
730.2
Change
%
(2.0)%
(1.6)%
(1.9)%
(19.3)%
7.3%
2.4%
(51.7)%
(4.1)%
42.8%
(1.8)%
1 Adjusted for cash and debt equity accounted investments.
2 Excluding the impact of the contracted divestments of 60 Miller Street, North Sydney which
settled on 3 August 2021 and Grosvenor Place, Sydney which is expected to settle in the first
half of FY22.
3 Proforma gearing adjusted for cash and debt in equity account investments. Look-through
gearing at 30 June 2020 was 26.3%.
4 Management operations income includes development management fees.
5 Includes a prior year $10.3m (post tax) restatement for IFRIC SaaS customisation expenses.
6 Other FFO includes non-trading related tax expense, healthcare and investment income and
other miscellaneous items.
32 Performance – Financial
$71.5m
$57.7m
88% of FFO from
property portfolio1
Office property FFO
74%
Industrial property FFO 14%
Management operations 6%
Trading profits (net of tax) 6%
1 FFO is calculated before finance costs,
group corporate costs and other
(including tax).
FY20
FY21
+61%
$25.0bn
$1.3bn
$1.4bn
$5.6bn
$15.5bn
+172%
$4.8bn
25
20
15
10
5
$16.7bn
$16.3bn
$5.7bn
$1.9bn
$3.8bn
FY12
0
$3.8bn
$10.7bn
FY20
FY21
% p.a.
12%
10%
8%
6%
4%
2%
0%
% p.a.
16
15
14
13
12
11
10
11.2% 11.2%
11.1%
9.1%
9.3%
9.6%
4.8%
3.3%
3.0%
1 year
3 years
5 years
14.7%
14.1%
12.9%
13.0%
13.1%
12.7%
13.5%
13.0%
11.8%
1 year
3 years
5 years
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Statutory profit reconciliation
Statutory AIFRS Net profit after tax
Gains from sales of investment property
Fair value gain on investment property
FY21
$m
1,138.4
(6.0)
(583.4)
Fair value (gain)/loss on the mark-to-market of derivatives
102.4
Incentives amortisation and rent straight-line1
Non-FFO tax expense/(benefit)
Other unrealised or one-off items
Funds From Operations (FFO)2
Maintenance capital expenditure
Cash incentives and leasing costs paid
Rent free incentives
Adjusted Funds From Operations (AFFO)3
Distribution
AFFO Payout ratio (%)
154.7
3.2
(92.3)
717.0
(72.0)
(29.9)
(53.4)
561.7
561.0
99.9
FY20
$m
972.7 4
(0.1)
(612.4)
2.5
127.5
3.3
236.74
730.2
(59.1)
(41.9)
(78.7)
550.5
550.3
100.0
Including cash, rent free and fit out incentives amortisation.
1
2. Including Dexus share of equity accounted investments.
3. AFFO is in line with the Property Council of Australia definition.
4. Includes a prior year $10.3m (post tax) restatement for IFRIC SaaS customisation expenses.
Group outlook
While the current lockdowns have
injected an element of uncertainty into
the outlook for FY22, there are reasons
to be positive about the prospects for
real estate. At this stage, the lockdowns
appear likely to interrupt but not derail
the broader economic recovery. Much
depends on their duration.
The year ahead is still expected to
be a year of improving occupier
demand for real estate in most sectors
and markets. In addition, investment
demand for quality real estate is
likely to remain supported by low
interest rates.
Gateway, 1 Macquarie Place,
Sydney NSW
Dexus 2021 Annual Report 33
OverviewApproachGovernanceFinancial reportInvestor informationPerformanceDirectors’ report
Financial continued
Funds management
performance
Dexus manages $25.0 billion of funds on
behalf of a diversified mix of investors.
Our strategic objective of being the real
estate investment partner of choice in
Australian property and track record of
driving investment performance enables
us to attract long-term and stable
capital partners to invest alongside
through the cycle. Dexus remains an
attractive Australian real estate partner
of choice across the office, industrial,
retail and healthcare sectors.
All funds delivered solid performance to
30 June 2021, with:
– DWPF continuing to outperform its
benchmark over 3, 5, 7 and 10 years
– DHPF continued to deliver strong
performance achieving a one-year
return of 18.1%
– All other established vehicles1
outperforming benchmarks since
inception
Dexus’s FY21 financial result was
impacted by the continued impacts of
the pandemic on revenue, combined
with a normalisation of costs following
non-recurring cost reduction measures
in FY20 and the transition of the
Australian mandate.
These impacts were partly offset by
new funds and other initiatives that are
expected to drive strong growth in FY22.
During the year however we continued
to execute on strategic initiatives,
attracting new capital and enhancing
the funds platform through various
initiatives including:
– Obtaining approval for the merger of
Dexus Wholesale Property Fund and
$71.5m
AMP Capital Diversified Property Fund,
establishing a pathway to create an
enhanced investment proposition for
both sets of unitholders
– Establishing the Mercatus Dexus
Australia Partnership (MDAP) joint
venture with Mercatus Co-operative
Limited. MDAP exchanged contracts
to acquire a 33.3% interest in 1 Bligh
Street, Sydney for $375 million in which
Mercatus holds an indirect 90% share
in MDAP with Dexus holding the
remaining 10%
– Growing the scale of Dexus
Healthcare Property Fund (DHPF),
acquiring the Australian Bragg Centre
in Adelaide (in 50/50 co-ownership
FY20
with Dexus) for $446 million, alongside
four other healthcare property
acquisitions and completion of the
fund-through acquisition of the North
Shore Health Hub in St Leonards, NSW
– Establishing the Dexus Real Estate
Partnership 1, the first in a planned
series of closed-end opportunity
funds
In July 2021, APN Property Group (APN)
securityholders voted in favour of
Dexus’s proposal to acquire all of the
stapled securities in APN for an all-cash
consideration of 91.5 cents per security.
The transaction increases Dexus’s suite
of funds on offer outside of wholesale
funds into listed REITs, real estate
securities funds and unlisted direct
property funds. The transaction also
expands Dexus’s investor network to
include retail and high net worth capital.
$57.7m
FY21
Management operations FFO
$71.5m
$57.7m
25
20
15
10
5
FY20
FY21
0
$3.8bn
+61%
$25.0bn
$1.3bn
$1.4bn
$5.6bn
$15.5bn
+172%
$4.8bn
$5.7bn
$1.9bn
$3.8bn
FY12
$16.7bn
$16.3bn
$10.7bn
FY20
FY21
Wholesale
Pooled Funds
Joint
ventures
Listed
REITS
Real estate
securities
1. Includes vehicles established prior to 30 June 2019.
34 Performance – Financial
+61%
$25.0bn
$1.3bn
$1.4bn
$5.6bn
15
% p.a.
$15.5bn
+172%
$4.8bn
$5.7bn
$1.9bn
$3.8bn
$10.7bn
4.8%
$3.8bn
4%
3.3%
FY12
3.0%
FY20
FY21
11.2% 11.2%
11.1%
9.1%
9.3%
$16.7bn
9.6%
$16.3bn
1 year
3 years
5 years
25
20
10
5
0
12%
10%
8%
6%
2%
0%
16
15
13
12
11
10
% p.a.
14.7%
14.1%
11.2% 11.2%
14
11.1%
12.9%
13.0%
13.1%
12.7%
9.1%
9.3%
9.6%
13.5%
13.0%
11.8%
4.8%
3.3%
3.0%
1 year
3 years
5 years
1 year
3 years
5 years
% p.a.
12%
10%
8%
6%
4%
2%
0%
% p.a.
16
15
14
13
12
11
10
14.7%
14.1%
12.9%
13.0%
13.1%
12.7%
13.5%
13.0%
11.8%
1 year
3 years
5 years
Case study
Merger positions
DWPF as largest
wholesale Australian
diversified fund
The successful merger of DWPF and ADPF will deliver
enhanced value to both sets of unitholders through
a high-quality diversified fund of scale.
In March 2021, Dexus and DWPF entered into an
Implementation Agreement with the Independent
Board Committee of ADPF, a circa $5.6 billion1
high-quality diversified property fund which had
accumulated a meaningful volume of redemption
requests from existing ADPF Unitholders.
The Implementation Agreement followed a
six-month period of discussions with the ADPF
Responsible Entity and engagement with ADPF
Unitholders, and proposed a merger of the two
funds and a pathway to create an enhanced
proposition for both sets of unitholders through:
– Continuing to execute on DWPF’s investment
strategy as ADPF assets are integrated to drive
performance and deliver further economies of
scale from a management, procurement and
leasing perspective
− Further diversifying DWPF’s portfolio and investor
base while solidifying its position as a globally
significant diversified real estate wholesale fund
− Circa $50 million of transaction costs for both
ADPF and DWPF being covered by Dexus
− The expected satisfaction of approximately
$2 billion of ADPF Unitholder redemption requests
on a pro rata basis over an approximate 18-month
window through the divestment of a number of
ADPF assets, circa $400 million of which would
be acquired by Dexus to provide upfront liquidity
(subject to pre-emptive rights and approvals), and
− The stapling ADPF with DWPF post the 18-month
redemption window
In April 2021, both sets of unitholders approved the
merger, signalling their confidence in Dexus’s abilities
to deliver enhanced value.
Dexus funds management business composition
Sub-sector split
$25.0bn2
Office $12.1bn
Healthcare $0.7bn
Retail $6.1bn
Industrial $4.8bn
Real estate securities $1.3bn
Investor
type
Super Funds 57%
Sovereign Funds 10%
Multi-Manager 12%
Retail and High Net
Worth 8%
Insurance 7%
Other 6%
Investor
location
Australia 71%
Offshore 29%
1. Prior to circa $2bn of redemptions to existing ADPF unitholders.
2. Prior to circa $2bn of redemptions to existing ADPF unitholders
and proforma for the acquisition of APN Property Group which was
approved on 27 July 2021 as well as settlement of MDAP’s 33.3%
interest in 1 Bligh Street, Sydney which occurred on 8 July 2021.
$71.5m
$71.5m
$71.5m
$57.7m
$57.7m
$57.7m
FY20
FY20
FY20
FY21
FY21
FY21
l
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F
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25
25
20
25
20
15
20
15
10
15
10
5
10
5
0
5
$3.8bn
0
$3.8bn
0
$3.8bn
+172%
+172%
+172%
$4.8bn
$15.5bn
$15.5bn
$4.8bn
$15.5bn
$4.8bn
$10.7bn
$10.7bn
$10.7bn
FY20
FY20
FY20
$5.7bn
$1.9bn
$5.7bn
$1.9bn
$3.8bn
$5.7bn
$3.8bn
$1.9bn
FY12
FY12
$3.8bn
FY12
+61%
+61%
+61%
$25.0bn
$1.3bn
$25.0bn
$1.4bn
$1.3bn
$1.4bn
$25.0bn
$5.6bn
$1.3bn
$1.4bn
$5.6bn
$5.6bn
$16.7bn
$16.7bn
$16.7bn
$16.3bn
$16.3bn
$16.3bn
FY21
FY21
FY21
11.2% 11.2%
9.3%
Dexus 2021 Annual Report 35
9.6%
11.2% 11.2%
9.1%
11.1%
11.1%
9.1%
9.3%
9.1%
9.3%
9.6%
9.6%
11.2% 11.2%
11.1%
3 years
3 years
3 years
5 years
5 years
5 years
4.8%
4.8%
3.0%
3.0%
4.8%
3.3%
3.3%
3.3%
% p.a.
% p.a.
12%
12%
% p.a.
10%
12%
10%
8%
10%
8%
6%
8%
6%
4%
6%
4%
2%
4%
2%
0%
2%
0%
0%
% p.a.
% p.a.
16
16
% p.a.
15
16
15
14
15
14
13
14
13
12
13
12
11
12
11
10
10
11
10
3.0%
1 year
1 year
1 year
14.7%
14.7%
1 year
1 year
1 year
12.9%
14.7%
12.9%
12.9%
13.0%
13.0%
13.0%
14.1%
14.1%
13.1%
13.1%
14.1%
13.1%
12.7%
12.7%
12.7%
13.5%
13.5%
13.0%
13.0%
13.0%
13.5%
11.8%
11.8%
11.8%
5 years
5 years
5 years
3 years
3 years
3 years
OverviewApproachGovernanceFinancial reportInvestor informationPerformanceDirectors’ report
Financial continued
Diversified management business across 20 vehicles
Our suite of unlisted vehicles is shown below and includes three open-ended funds and
seven joint ventures or partnerships. Our acquisition of APN Property Group, which was
approved in July 2021 and implemented in August 2021, adds 10 new vehicles to the
platform – two listed funds across circa $1.5 billion, five property securities funds across
circa $1.3 billion and three closed-end direct real estate funds across circa $140 million.
Open for investment
Approved proposal
DWPF
Dexus Wholesale
Property Fund
$16.0bn2
DHPF
Dexus Healthcare
Property Fund
$1.2bn3
– Established 1995
– Established 2017
– Diversified portfolio of 54
– Innovative property
assets2
portfolio of eight assets
– Outperformed benchmark
over 3, 5, 7 and 10 years
– 12-month total return of
18.1% (post-fees)
DREP 1
Dexus Real Estate
Partnership 1
New Fund
– First in a planned series of
closed-end opportunity
funds
– Finalising first close
– Identified pipeline of
investment opportunities
Joint ventures and partnerships
DOTA
DACT
DITA
AIP
DALT
MDAP
1 All figures as of 30 June 2021 unless otherwise stated.
2 DWPF and Dexus ADPF merged portfolio. Prior to circa $2 billion of redemptions.
3 Includes Dexus ownership interest and value of assets under development.
36 Performance – Financial
APN Property Group
APN Property Group
acquisition
$2.9bn
– Takeover of an existing
funds management
platform that includes a
real estate securities fund,
listed and unlisted direct
property funds
– Approved at Security
holder vote in July 2021
and implemented in
August 2021
Taronga Ventures
Partnership
New partnership
> Established 2020
> Platform and fund
investment
> Partnership with
large, reputable real
estate companies
> Investing into next
generation solutions
l
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Having weathered the pandemic
relatively well, Australia’s healthcare
sector is well positioned to take
advantage of the longer-term
thematics of growth in health spending
and ageing of the population. Like
other sectors, the landscape for health
is changing. The acceleration of trends
such as telehealth will contribute to
an evolution of the sector. Another
trend is the shift towards day surgery
and shorter hospital stays which
broadens the investment opportunities
beyond traditional regional hospitals.
There are also growing links between
healthcare and tertiary education
with the establishment of a number of
health campuses incorporating medical
office buildings that cater to research,
treatment and learning.
Investors continue to demonstrate
significant interest in healthcare and
alternative asset classes. Demand for
healthcare services will continue to
benefit from ageing demographics,
longer life expectancy and population
growth. The pandemic has highlighted
the role of high-quality healthcare
infrastructure and the sector tends to be
resilient to downturns.
About Dexus Wholesale
Property Fund (DWPF)
Dexus’s flagship fund DWPF is an
open-ended unlisted fund with a
prime quality diversified Australian
portfolio across office (51%), retail
(35%) and industrial (14%) property
sectors.
The funds are conservatively
geared with DWPF gearing at 15.2%
and Dexus ADPF gearing at 9.2%.
With access to diverse funding
sources. DWPF has raised $7.8 billion
of equity to fund acquisition and
development initiatives since 2010,
contributing to its track record of
outperformance as well as strong
and consistent growth in FUM.
In addition, DWPF has a strong
track record of providing liquidity
to investors as well as selectively
recycling properties in accordance
with its Investment Plan, which is
updated at least annually.
In April 2021 DWPF’s proposed
merger with ADPF was approved
by both sets of unitholders, further
diversifying DWPF’s portfolio and
investor base while solidifying its
position as a globally significant
diversified real estate wholesale
fund.
ADPF’s $5.6 billion portfolio has
now been integrated onto Dexus’s
platform, with circa $2 billion of
redemption requests from existing
ADPF unitholders expected to be
satisfied on a pro rata basis over
an approximate 18-month period
through the divestment of a number
of these assets. DWPF and ADPF will
be stapled post the completion of
the redemption window.
DWPF is a GRESB Global Sector
Leader for diversified office/retail
entities (listed and unlisted).
Funds management outlook
We are pleased to have progressed two
large scale strategic initiatives during
the year, accelerating the diversification
of our funds platform. Our continued
investment in building relationships with
existing and prospective third party
capital partners, combined with our
commitment to delivering performance
and meaningful ESG outcomes,
enhance our prospects for attracting
further capital.
Our funds management business’s
current exposure is 48% to office
properties, 19% to industrial properties,
24% to retail properties, 3% to healthcare
properties and 5% to real estate
securities.
Office and industrial property
performance is expected to be
influenced by the key leading indicators
described on pages 38-39.
The outlook for office and industrial
property is described on page 40.
Activity in the retail sector received a
boost during 2020, with online sales
and total sales both running ahead
of average. Growth rates are now
converging back to more normal levels.
Performance of shopping centres has
varied by centre type with smaller
supermarket-based neighbourhood
centres performing better than large
regional centres. There are now signs
that the fortunes of larger shopping
centres could begin to improve.
Discretionary spending (including
department stores, household goods,
apparel, footwear and entertainment)
exceeded non-discretionary spending
(mainly food and groceries) for the
first time in several years. While retail
turnover growth is expected to ease
from current elevated levels as the
stimulus wears off, it should still be
supported over the next year by a
falling unemployment rate, positive
consumer sentiment and low mortgage
interest rates.
Dexus 2021 Annual Report 37
OverviewApproachGovernanceFinancial reportInvestor informationPerformanceDirectors’ report
$71.5m
$57.7m
Financial continued
FY20
FY21
+61%
$25.0bn
$1.3bn
$1.4bn
$5.6bn
$15.5bn
+172%
Office portfolio
$4.8bn
key metrics
95.2%
$10.7bn
Occupancy
$16.7bn
$16.3bn
FY20: 96.5%
FY20
FY21
4.6yrs
WALE
FY20: 4.2 years
184,029sqm
Space leased1
+2.3%
Effective LFL income2
FY20 +4.7%
24.9%
Average incentives1
FY20: 17.1%
1. Excluding development leasing.
2. Excluding rent relief measures and a
provision for expected credit losses.
Including these impacts: Effective
+0.9% and Face +1.3%.
Property portfolio performance
We remained focused on maximising
the performance of the property
portfolio through maintaining high
occupancy, with the property portfolio
contributing to 88% of FFO in FY21.
Office portfolio performance
Dexus manages a high-quality
$26.0 billion group office portfolio,
$14.0 billion of which sits in the
Dexus portfolio.
During the year, we leased
184,029 square metres of office space
across 339 transactions, as well as
11,068 square metres of space across
office developments, locking in future
income streams.
Office portfolio occupancy reduced to
95.2% driven by Melbourne properties
where leasing has been impacted
by extended lockdowns, which offset
occupancy increases at 2 Dawn Fraser
Avenue, Olympic Park, 25 Martin Place
(previously known as MLC Centre),
Australia Square and 60 Castlereagh
Street in Sydney.
We are encouraged by the increase
in enquiry levels, particularly from
smaller customers in Sydney and
Melbourne, which translated into leasing
achievements during the year.
25
20
From our survey and conversations
with our customers, it is clear that
workplace flexibility is here to stay, but
to different degrees depending on the
organisation. Our business is well placed
to accommodate workplace flexibility as
it relates to physical spaces through our
flexible product offering.
10
15
$5.7bn
$1.9bn
5
Customer conversations around the
future of work have reinforced the
importance of well-located high
quality office space located in key
CBD locations which will continue
0
$3.8bn
to attract talented workforces and
remain leading work and entertainment
destinations. 80 Collins Street, Melbourne
and 25 Martin Place, Sydney are key
examples of this.
FY12
$3.8bn
Our focus on minimising downtime and
maintaining high occupancy has been
supported by our quality portfolio, with
a number of examples of organisations
centralising into CBDs from a diverse
range of industries.
Dexus office portfolio vs PCA/MSCI office index at 31 March 2021*
11.2% 11.2%
11.1%
9.1%
9.3%
9.6%
% p.a.
12%
10%
8%
6%
4%
2%
0%
4.8%
3.3%
3.0%
1 year
3 years
5 years
Dexus office portfolio
Dexus Group office portfolio
PCA/MSCI office index
* Period to 31 March 2021 which reflects the latest available PCA/MSCI Australia Annual Property Index.
14.7%
14.1%
12.9%
13.0%
13.1%
12.7%
13.5%
13.0%
11.8%
38 Performance – Financial
% p.a.
16
15
14
13
12
11
10
1 year
3 years
5 years
$71.5m
$57.7m
FY20
FY21
25
20
15
10
5
0
$3.8bn
$5.7bn
$1.9bn
$3.8bn
FY12
+61%
$25.0bn
$1.3bn
$1.4bn
$5.6bn
$15.5bn
+172%
$4.8bn
$16.7bn
$16.3bn
$10.7bn
FY20
FY21
l
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Industrial portfolio
key metrics
97.7%
Occupancy
FY20: 95.6%
4.4yrs
WALE
FY20 4.1 years
445,428sqm
Space leased1
+3.7%
Effective LFL income2
FY20: +0.1%
19.1%
Average incentives
FY20: 13.4%
1. Including development leasing.
2. Excludes rent relief and provision for
expected credit losses. Including these
impacts: Effective +4.5% and Face
+2.2%.
Face rents remain largely unchanged
in the core CBD markets; however
effective rents are under pressure as
incentives continue to increase. There is
potential for incentives to decline early
in the calendar year 2022 in Sydney and
Premium grade Melbourne assets, albeit
the latest lockdowns could slow the rate
of improvement.
Office portfolio like-for-like income
growth2 was +2.3% (FY20: +4.7%),
excluding the impact of rent relief
measures and provisions for expected
% p.a.
credit losses (including these impacts
FY21: +0.9% and FY20 +2.4%). The Dexus
12%
office portfolio delivered a one-year
return of 5.7% at 30 June 2021 and the
10%
9.1%
Dexus office portfolio outperformed
its benchmark over the five-year time
8%
period to 31 March 2021.
Industrial portfolio
performance
Dexus manages a growing, high-
quality $7.8 billion group industrial
portfolio, $3.0 billion of which sits in the
Dexus portfolio.
During the year, we leased an
exceptional 445,428 square metres of
industrial space across 116 transactions,
with the portfolio continuing to benefit
from logistics and ecommerce demand.
9.3%
9.6%
11.2% 11.2%
Portfolio occupancy increased from
95.6% at FY20 to a three-year high
of 97.7%, driven by successful leasing
at Axxess Corporate Park and Lakes
Business Park North. Weighted average
lease expiry by income and committed
space at key developments both
also increased.
11.1%
6%
4%
2%
0%
4.8%
3.3%
3.0%
1 year
Industrial portfolio like-for-like income
growth2 was +3.7% (FY20: +0.1%)
excluding the impact of rent relief
measures and provisions for expected
credit losses (including these impacts:
FY21 +4.5% and FY20 -2.1%). The Dexus
industrial portfolio delivered a one-
year return of 23.5% to 30 June 2021
and outperformed its benchmark over
the three and five-year time periods to
31 March 2021.
5 years
3 years
Dexus industrial portfolio vs PCA/MSCI industrial index at
31 March 2021*
% p.a.
14.7%
14.1%
12.9%
13.0%
13.1%
12.7%
13.5%
13.0%
11.8%
16
15
14
13
12
11
10
1 year
Dexus
industrial portfolio
3 years
5 years
Dexus Group
industrial portfolio
PCA/MSCI
industrial index
* Period to 31 March 2021 which reflects the latest available PCA/MSCI Australia Annual
Property Index.
Dexus 2021 Annual Report 39
OverviewApproachGovernanceFinancial reportInvestor informationPerformanceDirectors’ report
Financial continued
Property market outlook
After an uncertain year for office
markets, an improvement in key leading
indicators such as job advertisements
signals a period of strengthening
demand ahead. The recovery was
apparent in leasing markets with
positive net absorption across the major
CBD office markets in the June quarter.
Physical occupancy levels have steadily
increased over the past six months and
should keep moving back towards pre-
COVID levels in the year ahead as less
people work from home.
Generally high vacancy rates are likely
to keep rents weak and incentives
elevated over the next year. Positively,
the outlook for office demand will be
underpinned by healthy white-collar
employment growth, which is projected
to grow at a rate of 1.8% per annum over
the next decade, commensurate with
past growth.
The industrial sector has been
surprisingly resilient over the past
12 months. Growth in retail turnover and
a surge in ecommerce has led to above
average levels of take-up in key markets
of Sydney and Melbourne. Demand in
the industrial sector has been driven by
occupiers including food and beverage
retailers, ecommerce groups, transport
and logistics providers, data centres,
cold storage and pharmaceuticals.
Face rents have been flat or up
depending on location. Investment
demand has been strong, yields
have tightened and land values have
increased.
Trading performance
Trading is a capability that involves
the identification of opportunities,
repositioning to enhance value, and
realising value through divestment.
Trading properties are either acquired
with the direct purpose of repositioning
or development, or they are identified
in Dexus’s existing portfolio as having
value-add potential and subsequently
transferred into the trading trust to be
repositioned, and then sold.
We realised $50.4 million of trading profits
(net of tax) in FY21 through:
– Exercising the option to sell the
remaining 25% interest in 201 Elizabeth
Street, Sydney NSW which settled in
August 2020
– Entering into agreements to sell
a portfolio of six trading assets
(Truganina VIC and Lakes Business
Park South, Botany NSW) to the Dexus
Australian Logistics Trust (DALT) across
two tranches, with the first tranche
settling in October and December
2020 respectively
– Completing the North Shore Health
Hub development in March 2021
In addition, Dexus settled on the sale of
436-484 Victoria Road, Gladesville on 9
August 2021 and entered into a put and
call option arrangement on 13 August
2021 to sell a recently acquired trading
asset at 22 Business Park Drive, Ravenhall.
For FY22 we have already secured trading
profits of $25-$30 million (pre-tax) relating
to 436-484 Victoria Road, Gladesville NSW
and the second tranche of the portfolio
of six industrial assets sold to DALT, as
well as 22 Business Park Drive, Ravenhall
VIC. Further, we have identified three new
opportunities to replenish the trading
pipeline, with the potential to contribute
to trading profits in future years.
Financial position
– Total look-through assets increased by $537 million primarily due to $409 million of acquisitions, $444 million of development
capital expenditures and $584 million of property valuation increases, partially offset by $931 million of divestments
– Total look-through borrowings decreased by $64 million due to divestments, partly offset by funding required for acquisitions,
the security buy back as well as development capital expenditure
– Total number of securities on issue decreased slightly following the on-market buy back
Financial position
Office investment properties
Industrial investment properties
Healthcare investment properties
Other1
Total tangible assets
Borrowings
Other liabilities
Net tangible assets
Total number of securities on issue
NTA ($)
30 Jun 2021
$m
30 Jun 2020
$m
13,895
2,904
282
1,017
18,098
(5,003)
(815)
12,280
14,171
2,233
140
1,124
17,668
(5,067)
(750)
11,851
1,075,565,246
1,091,202,163
11.42
10.86
1 Adjusted for cash and debt in equity accounted investments. Excludes the $76.6m (FY20: $73.2m) deferred tax liability on management rights.
40 Performance – Financial
$71.5m
$57.7m
FY20
FY21
25
20
15
10
5
+61%
$25.0bn
$1.3bn
$1.4bn
$5.6bn
$15.5bn
+172%
$4.8bn
$16.7bn
$16.3bn
$5.7bn
$1.9bn
$3.8bn
FY12
0
$3.8bn
$10.7bn
FY20
FY21
Capital management
We continued to maintain a strong
and conservative balance sheet
with gearing (look-through)1,2 of 26.7%
below our target range of 30-40%, and
$1.1 billion of cash and undrawn debt
facilities.
11.2% 11.2%
In the 12 months to 30 June 2021,
15,636,917 Dexus securities were acquired
on market at pricing ranging from
$8.42-$9.40, resulting in 1,075,565,246
securities on issue at the end of the
financial year.
11.1%
Dexus’s simplified corporate structure
was approved by Security holders
and recommended by the Board
of DXFM prior to 30 June 2021, with
implementation occurring on 6 July 2021.
Dexus has manageable debt expiries
over the next 12 months and remains
within all of our debt covenant limits
and continue to retain our strong credit
rating of A-/A3 from S&P and Moody’s
respectively.
5 years
Our strong balance sheet provides
capacity to deliver on our strategic
objectives at a competitive cost of
funding.
Capital management metrics
Key metrics
Gearing (look-through)1 (%)
Cost of debt4 (%)
Duration of debt (years)
Hedged debt5 (incl caps) (%)
13.5%
S&P/Moody’s credit rating
13.0%
9.1%
9.3%
9.6%
4.8%
3.3%
3.0%
1 year
3 years
14.7%
14.1%
12.9%
13.0%
13.1%
12.7%
l
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F
i
Diversified sources
of debt
USPP
28%
Exchangeable Notes 7%
MTN
20%
Commercial Paper
2%
Bank Facilities
43%
43%
Bank Debt
57%
Debt capital
markets
30 Jun 2021
30 Jun 2020
26.72
3.2
6.2
81
A-/A3
24.33
3.4
6.9
78
A-/A3
1. Adjusted for cash and debt in equity accounted investments.
2. Excluding the impact of the contracted divestments of 60 Miller Street, North Sydney which settled on 3 August 2021, and Grosvenor Place,
11.8%
Sydney which is expected to settle in the first half of FY22.
3. Proforma gearing adjusted for cash and debt in equity accounted investments. Look-through gearing at 30 June 2020 was 26.3%
4. Weighted average for the year, inclusive of fees and margins on a drawn basis.
5. Average for the year. Hedged debt (excluding caps) was 68% for the 12 months to 30 June 2021 and 62% for the 12 months to 30 June 2020.
1 year
3 years
5 years
Dexus 2021 Annual Report 41
% p.a.
12%
10%
8%
6%
4%
2%
0%
% p.a.
16
15
14
13
12
11
10
OverviewApproachGovernanceFinancial reportInvestor informationPerformanceDirectors’ report
Properties
QV retail, 180-222 Lonsdale Street,
Melbourne VIC
As one of Australia’s
largest owners and
managers of real
estate, our high-
quality sustainable
properties contribute
to the creation of
leading cities.
Board focus
From a property perspective, the Board
approves acquisitions, divestments, and
developments. In FY21, the Board was
involved in:
– Approving the divestment of:
Grosvenor Place, 225 George Street,
Sydney on behalf of Dexus and DOTA
(Dexus holds total 37.5% interest);
436-484 Victoria Road, Gladesville
(trading asset); 60 Miller Street, North
Sydney; and 10 Eagle Street, Brisbane
on behalf of DOTA (Dexus holds 50%
interest)
– Approving the acquisition of: Australian
Bragg Centre, Adelaide in a 50/50
co-ownership with DHPF; a 49% interest
in a holding trust that owns Capital
Square Tower 1, Perth; and OzProp
Cold Store Portfolio, Queensland
– Approving binding terms which provide
a framework to fund, develop and
invest in Atlassian’s new headquarters
at 8-10 Lee Street, Sydney
42 Performance – Properties
Creating spaces where people
thrive
As a real estate company our properties
are central to how we create value. We
actively manage our property portfolio
to enhance its potential, while unlocking
further value through development to
further enhance quality, or for higher
and better uses.
Underpinned by our customer-centric
approach, we utilise our asset and
property management expertise to
optimise building efficiency and maintain
high occupancy levels. The activation
of our development pipeline enhances
portfolio quality, while providing our
third party capital partners with
co-investment opportunities and the
opportunity to create places where
our customers can thrive.
Contributing to Leading Cities
Our investment portfolio comprises
mainly prime CBD offices in Australia’s
gateway cities and includes some of the
country’s most iconic and irreplaceable
assets such as One Farrer Place, Australia
Square and 25 Martin Place (formerly
MLC Centre) in Sydney, Rialto Towers in
Melbourne, Waterfront Place in Brisbane
and 240 St Georges Terrace in Perth.
We believe these locations are where
our customers want and need to be,
and we demonstrated this commitment
by investing in and developing new
generation properties such as 1 Bligh
Street, 5 Martin Place, One Farrer Place
and 25 Martin Place (formerly MLC
Centre) in Sydney, 480 Queen Street
and Waterfront Place in Brisbane, and
80 Collins Street and Rialto Towers
in Melbourne.
Our properties are located where our customers
want and need to be.
Sydney
1,431,505
square metres
Melbourne
1,291,622
square metres
Brisbane
431,703
square metres
Perth
122,202
square metres
Adelaide
113,786
square metres
Sustainability
approach
Leading Cities
95.2%
Dexus office portfolio
occupancy
97.7%
Dexus industrial portfolio
occupancy
$42.5bn
Value of group property
portfolio
$1.27bn
Gross Value Added (GVA)1
to the Australian economy
7,980
Construction jobs supported2
$14.6bn
Group development pipeline
One of the key megatrends influencing
our business model is urbanisation. In
Australia, our major cities contribute
around 80% to national GDP. The CBDs
are the engine room for most of this
economic activity, supporting hundreds
of thousands of businesses and millions
of jobs. Urbanisation is supported by
the growth drivers of strong long-term
population growth and record levels of
infrastructure investment which enhance
our cities’ accessibility, liveability and
sustainability. Our investment and value
creation potential is closely linked to the
success of Australia’s major cities which
are recognised for their amenity, ease of
access, and place to do business.
Government lockdowns in response to
the pandemic have interrupted but not
derailed the recovery of our CBDs, with
international border closures resulting
in a competitive employment market in
the short-term. We have been working
alongside the Property Council of
Australia advocating for a COVID-safe
restoration of Australia’s net overseas
migration to drive long-term demand.
We expect physical occupancy of office
buildings will return to previous levels as
restrictions are eased.
Flexible working is here to stay, but
CBDs will remain core hubs for business,
entertainment, transport nodes and
organisations seeking to attract and
retain key talent.
Our diversified group portfolio is
well-positioned to continue to deliver
sustained value in a post-COVID
environment. We continue to expand
our offering into leading workplaces
of the future; our industrial portfolio is
strategically located in highly accessible
markets, servicing the growing demand
of ecommerce customers; and as we
expand our footprint in healthcare real
estate, we are meeting the demand
of a growing population for quality
healthcare infrastructure.
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Our $14.6 billion development pipeline
includes committed projects and near-
term projects along with longer-term
city-shaping projects providing us with
a strong platform for organic growth
and value-creating opportunities.
We utilise our capability to secure
development sites and create the next
generation of buildings, ideally helping
in shaping our cities for the future as
desirable places to live, work and play,
while contributing to job creation and
economic growth.
Our approach towards
Leading Cities
Our Leading Cities approach involves:
– Developing world-class office
properties that deliver customer-
focused, sustainable workspaces,
which enhance the amenity and
vibrancy of CBDs
– Developing high quality industrial
facilities to meet the growing
demands of ecommerce business
and other growth industries
– Contributing to the long-term
viability of cities by integrating
sustainable outcomes into
developments
– Building mutual city partnerships
through collaboration with industry
associations
Future focus
To learn more about our future
Properties commitments refer
to page 70
Learn more
To learn more about our progress against
our FY21 Leading Cities commitments,
refer to the 2021 Sustainability Report
available at www.dexus.com
1. Total Gross Value Added (GVA) includes estimated direct GVA and indirect GVA generated to
the economy by developments completed in FY21 and currently underway. Source: Urbis, Dexus.
2. Total construction jobs include direct and indirect employment supported by developments
completed in FY21 and currently underway. Source Urbis, Dexus.
Dexus 2021 Annual Report 43
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Properties continued
Case study
Collaborating to drive the
recovery of Australian CBDs
Dexus has worked alongside
key industry partners and city
stakeholders to reinvigorate CBDs
around Australia and bring to life
our purpose of creating spaces
where people thrive.
Attracting customers back
to the CBD on a Friday
A collaborative Property industry
initiative was launched in May this
year to give people and workers a
reason to return to city centres on a
Friday, with a coordinated program
of activations and attractions rolled
out across Dexus’s Melbourne and
Brisbane properties.
As people returned to offices in
the post-pandemic period, office
occupancy data compiled by
the Property Council of Australia
indicated they were tending to opt
to work from home on Mondays and
Fridays – traditionally the day when
CBD workers spent the most money
on retail and hospitality.
More than any city in Australia,
Melbourne endured months of
COVID-19 restrictions. FOMO
Fridays showcased the best of
Melbourne’s CBD with a program
of free events and activations
designed to reignite the excitement
of being in the CBD on a Friday,
along with free public transport to
attract workers back to the office.
At its new 80 Collins Street
development, Dexus collaborated
with the Melbourne Food and Wine
Festival to host progressive dining
events, light sculpture laneway
installations and various retail
offers. At QV Melbourne, customers
could have their cosmic cards read
or enjoy the pop-up cocktail bar
with guest DJs. At Rialto, shoppers
enjoyed shop front art installations,
and at Galleria, there were
interactive arcade games with prize
giveaways.
In Brisbane, the Fridays in the
City initiative brought together
reactivation efforts in partnership
with Brisbane City Council and other
CBD stakeholders. Dexus manages
eight office buildings in Brisbane,
including 480 Queen Street and
Waterfront Place which includes
Eagle Street Pier. A host of lobby
activations including mini putt-putt,
table tennis, tarot reading, ‘paint
and sip’ classes and happy hours
were offered to customers who
visited the city on a Friday.
Following the success of this
initiative in Melbourne and Brisbane,
similar initiatives are planned for
Australia’s other CBDs.
44 Performance – Properties
How we are positioned
A key part of our strategy in driving
superior risk-adjusted returns
involves actively recycling assets to
capitalise on investment demand and
reallocating capital into acquisitions
that complement our investment
portfolio and customer offering, while
enhancing returns.
The resilience of values for quality
assets increased our confidence
to allocate capital towards new
investment opportunities that offered
strong growth prospects. Over the
year we acquired the Ford Facility
development at Merrifield Business
Park, Melbourne, and grew our
direct investments in healthcare real
estate through a 50% interest in the
development of the Australian Bragg
Centre, Adelaide, while establishing
a new healthcare relationship that
resulted in a $180 million investment
in the Australian Unity Healthcare
Property Trust (AUHPT) and providing
future opportunities to invest in
certain aspects of AUHPT’s healthcare
development pipeline. Post 30 June
2021, the announcements of Dexus’s
involvement in developing and investing
in Atlassian’s new headquarters in
Sydney’s Tech Central precinct and the
acquisition of a 49% interest in Capital
Square Tower 1, Perth expanded our
offering into leading workplaces of
the future and reinforced our focus on
creating spaces where people thrive.
Our leasing efforts drive portfolio
occupancy which is a key contributor
to cash flow optimisation. Enquiry
levels increased throughout the year
which translated into leasing, with the
Dexus office portfolio maintaining high
occupancy at 95.2% (FY20: 96.5%).
Our industrial portfolio continued to
benefit from logistics and ecommerce
demand, with occupancy increasing to
97.7% (FY20: 95.6%).
Over recent years, buying quality
properties has become increasingly
competitive and we have undertaken
developments as an efficient allocation
of our capital. Our focus on progressing
our developments is helping to satisfy
the demand for quality product in the
healthcare and industrial sectors from
both our customers and third party
capital partners.
This year we completed the development
at the North Shore Health Hub in St
Leonards, delivering high quality healthcare
infrastructure integrated within an
established health precinct. In Melbourne,
we completed the hotel at our landmark
80 Collins Street, and the development of
180 Flinders Street delivering a vibrant new
office tower, refurbishment of the existing
heritage offices, with the building façade
fully restored to its former glory.
In Sydney, construction continued at
25 Martin Place (formerly MLC Centre), a
project that will transform the retail offering
over four levels, enhance the ground floor
plane for the office tower and reactivate
the Theatre Royal.
Progressing our city-shaping development
pipeline, we received planning approvals for
Waterfront Brisbane, and are progressing
through Stage 3 of the Unsolicited Proposal
(USP) process for Central Place Sydney and
lodged planning applications. We also
progressed an agreement that will enable
us to fund, develop and invest in Atlassian’s
new headquarters which is located
adjacent to Central Place Sydney. Together
these developments will anchor Sydney’s
Tech Central and position the precinct as
a key driver of innovation and growth in
the Asia Pacific region and significantly
contribute to large-scale urban change in
Sydney. A planning amendment application
for an expanded scheme was also lodged
for 60 Collins Street, Melbourne.
We continued to build out our industrial
pipeline, completing circa $450 million of
developments over the year and increasing
the size of the group’s industrial portfolio to
2.6 million square metres. On completion
of the group development pipeline, the
group’s industrial portfolio would grow to
$9.4 billion across 3.4 million square metres.
We recognise the significant opportunity
to grow our industrial pipeline as customers
benefit from multiple tailwinds and
seek to drive operational efficiencies in
modern, well-located facilities. Industrial
projects were added to our committed
development pipeline including increasing
the scale of existing industrial development
projects underway and securing land for
future industrial development adjacent
to the existing industrial estate at Horizon
3023 (see case study on this page).
Case study
Continued momentum
accelerates industrial
development leasing
Strong demand for high quality
logistics facilities to support the
growing needs of ecommerce and
other growth businesses continues
to underpin the activation of
Dexus’s industrial developments
across the east coast of Australia.
In FY21, an additional 6.8 hectares
of land, adjacent to the existing
industrial estate, was acquired to
improve the existing masterplan and
provide the opportunity to create
additional industrial product to
respond to an active leasing market.
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The momentum across Dexus’s
industrial development business
has resulted in significant leasing
being achieved at Horizon 3023
estate in Ravenhall, Victoria, well
ahead of the original target.
Horizon 3023 is a masterplanned
industrial estate in Melbourne’s
Western Corridor with convenient
access to freight and logistics
networks. The 127 hectare site was
acquired in June 2018, and is owned
by Dexus Australian Logistics Trust
(DALT) (in which Dexus owns a 51%
interest) and Dexus Wholesale
Property Fund (DWPF).
Dexus is developing up to
450,000sqm of prime commercial
and industrial property on the site
comprising modern large scale
high-tech manufacturing, logistics
and warehousing facilities, with an
estimated $620 million investment
over the life of the development.
On completion, Horizon 3023 is
expected to support around 5,000
to 6,000 jobs.
The estate’s first tenant, food
manufacturer and distributor Scalzo
Foods, was secured last year and
its 35,300sqm purpose-built facility
was completed in December 2020.
A pre-commitment with Hello Fresh
was also achieved last year for a
circa 25,500sqm facility which was
completed in June 2021.
During the year, Amazon Australia
committed to a circa 36,700sqm
facility that will be the retailer’s
fulfilment centre servicing
the Melbourne market. Pre-
commitments were secured with
Electrolux (c.20,000sqm) and Mitre10
(c.50,900sqm), while build-to-lease
commitments were secured with
e-Store (c.17,500sqm) and Myer
(c.40,000sqm).
These leases take commitments at
Horizon 3023 to circa 226,000sqm.
Along with an adjacent speculative
building of 60,000sqm to be
constructed to leverage synergies in
the project delivery, new buildings
are now committed or under
construction across 63% of the
expanded developable area, with
50% of the estate leased, 24% above
the original leasing forecasts.
450,000sqm
of prime commercial and industrial
property being developed in Melbourne’s
Western Corridor
Amazon Australia committed to a circa
36,700sqm
facility that will be the retailer’s fulfilment
centre servicing the Melbourne market
Dexus 2021 Annual Report 45
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Properties continued
NSW
25 Martin Place, Sydney
A vibrant mixed-use redevelopment
across four levels of retail, dining and
cultural spaces in the heart of the
Sydney CBD, including the renewal and
refurbishment of the Theatre Royal.
Project status: committed
Project cost: $210 million
Ownership: 50% Dexus, 50% DWPF
Expected completion: early 2022
Central Place Sydney, Sydney
Dexus is progressing its exclusive
position to integrate the NSW
Government’s plans to revitalise
Sydney’s Central Station through
the redevelopment of its Lee Street
properties and Henry Deane Plaza
in partnership with Frasers Property
Australia into a large scale, mixed-use
development integrating a transport
and pedestrian solution.
Project status: uncommitted
Expected project cost: circa $1.1 billion1
Ownership: 25% Dexus, 25% Dexus
Office Partner
1. Excluding external party share of project
cost of land already owned, downtime and
income earned through development.
Artist impression:
25 Martin Place, Sydney NSW
46 Performance – Properties
Artist impression:
Central Place Sydney, Sydney NSW
Artist impression:
Atlassian, Sydney NSW
Artist impression:
Pitt and Bridge Precinct, Sydney NSW
Atlassian building, Sydney
Dexus has reached a binding
agreement with Atlassian which
provides a framework to fund, develop
and invest in their new headquarters,
located adjacent to the Central Place
Sydney development and within the
State Government-led Tech Central
precinct. The development incorporates
a market leading, sustainable office
tower representing the future of
workplace, with retail amenities and new
YHA accommodation space at its base,
as well as a new public realm around
Central Station.
Project status: uncommitted
Expected project cost: circa $1.2 billion
Expected completion: early 2026
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Pitt and Bridge Precinct,
Sydney
A potential office development for
Dexus and the Dexus Office Partner on
a large 3,300 square metre site located
in the financial core of the Sydney CBD.
Project status: uncommitted
Expected project cost: circa $2.9 billion
Ownership: 50% Dexus, 50% Dexus
Office Partner
Adelaide
Australian Bragg Centre
A landmark, large-scale, state-
of-the-art clinical and research
facility within Adelaide’s BioMed City
precinct, incorporating research
facilities and lab and office space.
The building will house Australia’s
first proton therapy unit specialising
in next generation cancer treatment.
Project status: committed
Expected project cost: $460 million
Ownership: 50% Dexus, 50% DHPF
Expected completion: mid 2023
Artist impression:
Australian Bragg Centre, Adelaide SA
Dexus 2021 Annual Report 47
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Properties continued
VIC
Horizon 3023, Ravenhall
Located in Melbourne’s Western Growth
Corridor, Horizon 3023 is a 134 hectare
master planned estate in close proximity
to key transport links.
Project status: committed
Expected project cost: $620 million
Ownership: 25.5% Dexus, 24.5% Dexus
Australian Logistics Partner, 50% DWPF
Expected completion: early 2025
60 Collins Street, Melbourne
A shovel-ready development
incorporating the consolidation of two
adjacent sites, 60 and 52 Collins Street
to create Premium grade office space
located at the ‘Paris end’ of Collins
Street.
Project status: uncommitted
Expected project cost: circa $900 million
Ownership: 100% Dexus
Horizon 3023, Ravenhall VIC
48 Performance – Properties
Artist impression:
60 Collins Street, Melbourne VIC
QLD
Waterfront Brisbane
A major redevelopment of the Eagle
Street Pier site which will make way
for two office towers and unlock the
considerable potential of this Brisbane
CBD gateway. Waterfront Brisbane
will be a great outcome for Brisbane
with the renewal of the city’s premium
business district, a vibrant retail and
public space, activation of the river and
improvements to the Riverwalk.
Project status: uncommitted
Expected project cost: circa $2.2 billion
Ownership: 50% Dexus, 50% DWPF
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Artist impression:
Waterfront Brisbane QLD
Artist impression:
Spring Hill Medical Centre, Brisbane QLD
Spring Hill Medical Centre and
Herston Car Park, Brisbane
Spring Hill Medical Centre is located
opposite St Andrew’s War Memorial
Hospital in the inner northern Brisbane
suburb of Spring Hill. The site comprises
a nine-storey development which
will be anchored by a day surgery
accompanied by ancillary healthcare
services. Herston Car Park will be
comprised of 354 car bays and will be
directly adjacent to one of Australia’s
largest and growing integrated
precincts, the Herston Health Precinct,
which is home to the Royal Brisbane and
Women’s Hospital.
Project status: uncommitted
Expected project cost: circa $130 million
Ownership: 100% DHPF
Dexus 2021 Annual Report 49
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People and
capabilities
Our people are
central to how we
deliver our strategy
and their knowledge
and expertise are
key inputs to how we
create value.
Board focus
The Board People & Remuneration
Committee oversees all aspects
of human resource management
as well as Director and Executive
remuneration. For further details
on the key focus areas during FY21,
refer to the Remuneration Report
starting on page 78 or the Corporate
Governance Statement available at
www.dexus.com
Sustained employee
engagement and commitment
Our people and our capabilities are
key components to delivering on our
strategy. We inspire, engage, and
develop a workforce to ensure our
purpose of ‘creating spaces where
people thrive’ comes to life.
We maintain awareness of our people’s
views and needs through our Employee
Listening Strategy, which is an
integrated approach to understanding
their experience. This strategy involves
periodic employee pulse surveys,
and providing real time feedback
throughout the year so we are quickly
able to ensure teams have what they
need to thrive at Dexus.
Pulse surveys from FY21 returned
an average employee NPS of +43,
a decrease from +61 in FY20 but
remaining above our target of +40.
This year’s pulse surveys focused on
understanding our people’s perceived
psychological safety, their experiences
with change management, and
understanding any support they require
while working remotely.
We also considered how our people
used flexibility, looked at their
sense of inclusion, and assessed
their understanding of the Dexus
Sustainability Approach. Our
people told us they experienced
an inclusive culture; they have felt
supported during the pandemic and
that they are aligned to the Dexus
Sustainability Approach.
Throughout the year, we remained
attentive to health and safety
challenges arising from the
pandemic, including supporting
the mental health of our people
through training programs and
other wellbeing initiatives. We also
reassessed our culture using the
Organisational Culture Inventory, with
a view to identifying actions we can
take to ensure we align with our ideal
culture and sustain performance.
50 Performance – People and capabilities
Sustainability
approach
Thriving People
+43
Employee
Net Promoter Score
35%
Females in senior
and executive
management roles
100%
Safety audit score across
Dexus workspaces
559
Dexus employees
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Safe & Well prioritises mental health
Dexus’s Safe & Well program focuses on
the pillars of mental, physical, financial
and work wellbeing as the key to a
thriving workforce, providing our people
with what they need to develop and
maintain a healthy level of wellbeing
throughout the year.
Safe & Well provides a breadth of
resources freely accessible to Dexus
employees in one easy to access
location, designed to help them
develop and maintain a healthy level of
wellbeing. These resources are offered
alongside Dexus’s employee assistance
program through a partnership with a
confidential counselling and coaching
service available to all our employees
and their families.
The Safe & Well program progressed
several initiatives throughout FY21
to support mental health in the
workplace. Through a partnership with
Heart on My Sleeve, a mental health
social movement, we launched the
‘Real Leaders’ and ‘Real Conversations’
training programs across Dexus. The
objective of ‘Real Leaders’ was to
support our leaders in identifying
when someone needs help and
responding empathetically, while
‘Real Conversations’ took this further,
encouraging all employees to seek help
and speak up.
Despite the challenges presented by
the pandemic, we were able to launch
the training in a virtual environment and
implement in person sessions before
the year end. During the year, 33% of
our people took part in ‘Real Leaders’
training and we will continue to offer this
training to our people in FY22.
Other mental health initiatives included
Mindset Reset mindfulness training,
R U OK? Day events. This year, Dexus
established a community partnership
with Black Dog Institute, and will work
with Black Dog Institute to evolve the
mental health awareness and education
of our people in line with our Safe and
Well program.
Addressing mental health is part of our
broader commitment to supporting
a safety culture across our business,
demonstrated through the inclusion
of health and safety in our Group
Scorecard. Our goal is a ‘no harm’, safe
work environment with zero fatalities,
and in FY21 we recorded zero fatalities.
Our steadfast focus on safety continued
this year and we maintained a score
of 100% on independent external
safety audits conducted across our
corporate and building management
office workspaces and Dexus Place
workspaces.
Future focus
To learn about our People and
Capabilities future commitments
refer to page 71.
Learn more
To learn more about our progress
against our FY21 People and
Capabilities commitments, refer
to the 2021 Sustainability Report
available at www.dexus.com
Dexus 2021 Annual Report
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People and capabilities continued
Fostering an inclusive and
diverse workforce
Our approach to inclusion and
diversity allows us to harness different
perspectives for better decision-making,
as well as providing access to the
widest pool of available talent. Our
people identify with a variety of different
cultural and ethnic backgrounds, and
we aim to build a diverse workforce that
reflects our customers and communities.
Dexus is proud to be included amongst
a select group of Australian companies
with an Employer of Choice for Gender
Equality citation from the Workplace
Gender Equality Agency. We earned
our most recent Employer of Choice for
Gender Equality citation last year and
seek to maintain the citation when we
are required to reapply for it in FY22.
Throughout FY21, we continued to
deliver programs and initiatives directed
at supporting gender equality at Dexus
and within our broader industry.
Back in 2020, we committed to
achieving 40% female, 40% male, and
20% either/other representation (the
40:40:20 target) across senior and
executive management roles by the end
of FY21. At 30 June 2021, there was 35%
female representation across senior and
executive management roles.
We are mindful that this percentage has
not met our target, and we continue
to put in place initiatives to increase
female representation at these levels of
our organisation. We remain committed
to advancing gender equality and
intend to achieve the 40:40:20 target
at senior and executive management
levels by the end of FY23.
An initiative aimed at facilitating
greater gender diversity in the industry
is our Future Leaders in Property (FLIP)
program. In March 2021, we launched
this program to encourage the next
generation of female leaders into the
property industry by designing a STEM+
program for Sydney and Melbourne.
The goal of this program is to increase
female participation in the property
industry by heightening their awareness
of available career pathways.
Dexus is also committed to building
a culturally inclusive workplace and
continues to track the diversity of our
workforce across a range of factors
including cultural background, country of
origin, sexual orientation, gender identity
and age.
A key initiative in FY21 was the
development of our Reflect Reconciliation
Action Plan (RAP) for endorsement by
Reconciliation Australia. The development
of a RAP will formalise our activities with
First Nations people and enable our
employees to learn, understand and
connect with First Nations people and
their history.
It will also provide a framework to
promote opportunities for sustainable
business growth, career development and
economic participation for First Nations
people within the property industry.
We also continued our work supporting
LGBTI+ inclusion in our workplace and
across the industry more broadly. Led by
our LGBTI+ employee network TRIBE, we
implemented initiatives and celebrated
LGBTI+ events throughout the year and
were recognised as a Bronze Employer by
the Australian Workplace Equality Index
(see case study on page 53).
52 Performance – People and capabilities
Case study
Dexus recognised for creating
further inclusion in its workplace
Dexus is creating an inclusive and
diverse workplace for all people and
this year gained recognition for its
work in supporting LGBTI+ inclusion in
the workplace.
Established in August 2019, TRIBE
is Dexus’s network which promotes
inclusion for LGBTI+ people across the
business, ensuring that people feel
safe to bring their true self to work.
This year the network had a focus
on increasing ally participation and
grew membership to over 150 active
members across Dexus’s national
workforce, representing both people
who identify as LGBTI+ and allies.
To raise awareness, throughout
the year TRIBE participated in
events including Pride and Mardi
Gras events in Sydney, Brisbane,
Melbourne and Perth, and days of
significance including Wear It Purple
Day, Fair Day and IDAHOBIT Day.
Dexus also hosted panel discussions
with guest speakers on how to
influence further change in the
workplace.
TRIBE progressed several initiatives
including reviewing Dexus policies
and procedures to ensure inclusion
is reflected, creating a guide on
LGBTI+ inclusive language, and
delivering a ‘Kick the Slur’ campaign
to draw attention to inadvertent
discriminatory language and
eliminate language bias.
Acknowledging the work Dexus
has been undertaking, Dexus
was recognised as a 2021 Bronze
Employer by the Australian
Workplace Equality Index, the
definitive national benchmark
on LGBTI+ workplace inclusion
which drives best practice across
Australian organisations and sets a
comparative benchmark.
This recognition is testament to the
progress Dexus has made towards
LGBTI+ inclusion within its diversity
and inclusion strategy. It also further
informs the strategic work being
undertaken to enhance inclusivity
across the group’s operations.
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Investing in our people
Dexus actively supports internal career
planning, development and learning
opportunities for our people. During the
year, we placed internal candidates in 35%
of available roles. We also support a range
of professional development opportunities,
to ensure that our people are equipped
with the skills necessary to do their job well,
and to enable our people to grow and
further develop their talents.
In December 2020, we launched
Lead @ Dexus, a program designed to
equip our people with the self-awareness,
motivation, and strategies to improve
their leadership skills. Lead @ Dexus was
developed in collaboration with our
senior executives and external leadership
development specialists to articulate and
align what the business expects of all our
leaders. After being rolled out to our Group
Management Committee in December
2020, the program is being cascaded
across all levels of the organisation so
that all employees can benefit from
this training.
As well as empowering our managers and
leaders within the business, we also want
to make Dexus a place where young talent
want to build their careers. This year, we
again invited talented young people to
take part in our graduate program. This
year, we received the most graduate
applications for our 2021 intake since
starting the Program in 2015. Our 2021
intake of graduates introduced diverse
academic training and experience to the
business. We look forward to welcoming
our 2022 cohort to the business.
Effective implementation of the Dexus
Sustainability Approach requires our
people to have a strong understanding
of sustainability and how it should be
integrated into our business activities.
Our annual Creating Change program
is designed to support employee
understanding of our Sustainability
Approach. In May 2021, we delivered
Creating Change Week, which brought
sustainability into the spotlight by
showcasing the importance of making
small changes to daily routines for the
wellbeing of our planet. We were also able
to highlight the work of Planet Ark, one of
our new community partners that is now
collaborating with us as part of our Social
Impact Strategic Framework (see page 61).
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Customers
and
communities
Our ability to create
value relies on strong
and enduring
relationships with our
customers, suppliers
and the communities we
operate in.
Future Enabled Customers
We know that our customers are more
likely to be satisfied when we listen
to their concerns and cater to their
needs. We create workplaces with
customer productivity in mind and offer
a range of supporting products and
services that are aimed at enhancing
the performance and wellbeing of our
diverse customer base.
This year, our annual customer survey
across our office and industrial
portfolios returned a customer Net
Promoter Score (NPS) of +46 (out of a
possible range of -100 to +100). This
was a slight decrease on last year’s
result of +50 but remained above our
target of +40, despite the challenging
operating environment and the
disruption caused by embedding a new
customer operating platform. Average
satisfaction with property management
was 8.6/10, consistent with FY20.
Some of the key factors contributing to
customer NPS results this year include:
– Customer connection and
communication with the property
management team, including
property managers, concierge, and
facility managers
– The level of support and
communication provided through the
pandemic
– Stability of property management
teams, with higher levels of
satisfaction generally associated with
properties where teams experienced
no changes over the year
Board focus
Our customers and communities are a
focus area for the Board and Board ESG
Committee. In FY21 the Board and Board
ESG Committee were involved in:
– Reviewing and discussing the annual
customer survey results and associated
actions
– Reviewing customer complaints
(including those received during
COVID-19 and rent relieve requests)
– Overseeing healthy buildings initiatives,
including system upgrades and
technology pilots
– Approving the development of Dexus’s
Reflect Reconciliation Action Plan
– Approving Dexus’s Social Impact
Strategic Framework designed to
streamline community activities
– Considering support for small business
customers most affected by the
COVID-19 crisis
– Overseeing supplier engagement on
modern slavery risk
54 Performance – Customers and communities
– Building amenities, such as end-of-trip
facilities, and activations for holidays
such as Easter, ANZAC Day, and
Christmas
Deciding what our customers will need to
create an optimal workplace in a post-
pandemic environment was an area of
focus for Six Ideas by Dexus (Six Ideas),
the workplace and change consultancy
division of Dexus.
Extensive research by Six Ideas to
understand the future of work revealed
that the favoured workplace model
was a ‘blended workplace’, one which
is a blend of physical and virtual work
environments. Considering this research,
we are working alongside our customers
to help them create and experiment with
new ways of working in our office spaces.
We are also supporting our customers
who want more flexible business
operations with initiatives such as the
Dexus Place Virtual Office, which provides
small and medium businesses working
remotely with similar benefits as those
that utilise the traditional Dexus Place
offer including access to a premium
business address, landline phone number,
meeting rooms and business lounges,
and team support without committing to
a dedicated office space.
Learn more
To learn more about our progress
against our FY21 Customers and
Communities commitments, refer to the
2021 Sustainability Report available at
www.dexus.com
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Case study
Investment in innovation delivers
value to customers, communities
and investors
Dexus is continuously investing in
innovation to secure first-mover
advantage on next generation
technology solutions for its customers,
investors and business.
The pace of technological
advancement presents a distinct
opportunity for owners of real estate
who adopt early, enabling them
to deliver value to their customers,
communities and investors. History
suggests that companies that
invest in innovation through a crisis
outperform peers in times of recovery,
and Dexus recognises that prioritising
innovation today is the key to
unlocking post-crisis growth.
Dexus is an investor in Asia’s leading
real estate technology investment
manager, Taronga Ventures, and
founding partner of its RealTechX
Growth Program, providing early
exposure to emerging global
technology and innovation trends.
Getting early access to emerging
technology is important for groups
with scale like Dexus so it can trial
and roll out innovations quickly
throughout the portfolio.
With a growing focus on customer
health and wellbeing and creating
human-centred building and
workplace experiences, Dexus is
employing the latest in technology to
healthy building initiatives. Examples
include implementing touchless
building entry, and trialling clean-air
technologies which will be able to
be retrofitted across the portfolio as
well as adopted in new developments
such as the Atlassian headquarters
and Central Place Sydney.
Some of the innovations that Dexus
has implemented include:
− Australia’s first fully integrated
touchless experience in an office
building at Gateway Sydney, using
hand scanning technology to
enable access, eliminating the need
for office passes or touching lift
buttons
− Partnering with SparkBeyond to
unleash artificial intelligence (AI)
powered insights across Dexus’s
portfolio, accelerating Dexus’s
digital transformation. Leveraging
an AI-powered platform helps
Dexus to understand drivers
governing business and real estate
performance in a fraction of the
time taken using existing methods
− Dexus.com, an easy-to-use leasing
platform that allows customers to
select their office, industrial, retail
and health leasing requirements
based on location, number of
people and preferred features.
This innovation is a significant
improvement on the way customers
typically search for space, which
is looking for a property by square
metres, and was recognised as one
of Australia’s top 10 innovations
in the property, construction, and
transport category by AFR BOSS
Dexus understands that to be
globally recognised as Australia’s
leading real estate company, it
needs to be at the forefront of that
innovation. Innovation is an area that
is embedded into Dexus’s business
and its investment in innovation
ensures that it is continually driving
performance and setting new
benchmarks.
Future focus
To learn about our Customer and
Communities future commitments refer
to pages 71.
Dexus 2021 Annual Report 55
Sustainability
approach
Future Enabled
Customers and Strong
Communities
+46
Customer Net
Promoter Score
>4,800
Customers
>$0.8m
Value of community
contribution
1,948
Supplier partnerships
OverviewApproachGovernanceFinancial reportInvestor informationPerformanceDirectors’ report
Customers and communities continued
1 Bligh Street, Sydney NSW
This survey provided Dexus with a solid
evidence base to understand the future
of working and the foundations that
organisations would need to create an
optimal workplace in a post-pandemic
environment.
The favoured workplace model was
a blended workplace, representing a
blend between physical and virtual
work environments. This meant remote
working would continue, but only for
some of the time.
A physical workplace that reflected
the organisational culture was needed
to experience professional and social
interaction, while amenities in and
around the workplace, together with
choice and flexibility around where
people could work, would deliver
improved talent attraction and retention.
To explore the possibilities around the
future of work, Six Ideas has continued
its research work with several national
organisations on the opportunities and
challenges in devising and implementing
the blended workplace.
That research has identified the biggest
challenges being:
– Understanding what constitutes a
‘critical mass’ of office attendance and
how this will be achieved
– How to achieve consistency for remote
working arrangements across the
organisation
– Deciding to what extent can the
individual’s location, performance
and health be monitored and self-
managed
– How to onboard new employees,
ensuring they are settled and
supported effectively
– How to ensure the organisational
culture resonates with remote workers
The research indicates that to achieve
a blended workplace, three different
areas of focus are required: the needs
of the organisation; of the business
units or teams; and of the individuals
in the organisation. Once these needs
are reconciled, there is a series of
decisions and initiatives to follow across
five key areas, starting with leadership,
management, technology, and people.
Place is the final, but equally important,
area of consideration.
In a blended office, Six Ideas predicts
that less space will be dedicated to
individuals and more spaces created
for knowledge sharing, collaboration,
and socialising. It will incorporate
sophisticated video-conferencing
facilities and remote working
technologies, real-time booking and
locating systems, advanced noise
suppression and improved acoustics,
a better balance and diversity of
work settings and spaces and greater
expression of organisational identity
and culture.
The blended workplace will be the new
competitive advantage for employers
of choice. However, it is not a matter of
flicking a switch. The office of the future
is a significant business investment that
needs careful planning and resources,
and organisations must be prepared to
experiment.
Case study
Future of
workplace
The COVID-19 pandemic accelerated
the evolution of the workplace and
proved that flexible working is here to
stay, with organisations forging on with
a hybrid, or “blended” model that allows
greater flexibility but where offices
continue to play an important role.
Deciding how organisational workplace
practices will operate is a decision that
organisations of all shapes and sizes are
having to make. But that decision is not
clear cut and businesses are grappling
with how to create a truly innovative,
inclusive, and culturally relevant blended
workplace.
Six Ideas by Dexus (Six Ideas), the
workplace and change consultancy
division of Dexus, conducted an
extensive survey in 2020 involving 7,647
respondents based in 368 organisations
across 28 industries on how the
pandemic changed workplace
practices.
56 Performance – Customers and communities
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Blended workplace
In a post-pandemic environment, the favoured workplace model is a blended workplace,
representing a blend between physical and virtual work environments.
THE BLENDED WORKPLACE
Virtual /
remote
The blended
workplace
value
Physical /
face-to-face
Working remotely
Blending the physical and virtual
delivers the best of both worlds
Working in the office
– Optimise work/life balance
– Having choice in balancing
work and life
– Have a sense of purpose, pride,
identity, culture and belonging
– Recycle the commute
– Do focused work
– Have autonomy and trust
– Be better connected to other
time zones and the global
community
– Being productive and satisfied
– Connect and learn from others
– Feeling safe and valued
– Collaborate, create and
– Being happy and healthy
– Being part of a team doing
great work
implement
– Enjoy the services, amenities
and social life of the workplace,
the building and the city
Dexus 2021 Annual Report 57
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Customers and communities continued
Focus on healthy buildings
Our focus on healthy buildings
guides how we develop and
operate buildings that deliver
high-quality, productive working
environments that maximise the
customer experience.
During the year, we progressed
several healthy buildings
initiatives, including rolling out
new technologies that enhance
thermal comfort and indoor air
quality. We upgraded air filtration
systems at select properties across
our portfolio to improve air quality,
removing harmful particles.
We also piloted the use of new
technologies, such as occupancy
management systems that track
the usage patterns of areas
including end-of-trip facilities, to
help communicate to customers
when areas reached maximum
capacity and to monitor cleaning
cycles within the facilities.
We will continue to embed healthy
buildings initiatives into new
developments and our property
management activities. We are
now committed to achieving
WELL Health-Safety Ratings across
our portfolio and continue to use
the NABERS Indoor Environment
ratings to benchmark property
indoor environmental quality and
inform enhancements.
58 Performance – Customers and communities
Collaborating with our
suppliers
Our capacity to create value depends
on strong working relationships with
capable suppliers of products and
services. Our supply chain also extends
our economic impact through our
procurement spend and associated
job creation.
Every year, we depend on our large
network of suppliers to progress our
development pipeline and manage
our properties efficiently. This includes
providing cleaning, maintenance or
security services at our properties, or
through partnerships with suppliers to
deliver elements of our customer offer,
such as wellbeing service providers as
part of our Wellplace offering.
Since the commencement of the
Modern Slavery Act 2018, Dexus has
also welcomed the increased interest
from its investors, customers, and
suppliers about how we are managing
modern slavery risk across our
operations and supply chain.
Our Anti-Modern Slavery Working
Group oversaw several activities
across each dimension of our modern
slavery management framework.
These included:
– Undertaking an extensive risk mapping
exercise across 1,731 suppliers, including
cleaning, security and construction
contractors, to identify the key suppliers
that presented the highest risk
– Enhancing our procurement guidelines
and implementing a reporting tool
which will assist in conducting regular
supplier risk assessments
– Installing refreshed modern slavery
awareness posters with QR codes,
enabling the information to be
interpreted in different languages
and targeting the individual worker
– Creating a framework to address any
incidents or grievances within our
supply chain
– Enhancing training for our suppliers’
workforces with the implementation
of a modern slavery induction module
at development sites and awareness
training at our properties
– Working alongside key suppliers on
an approach to combatting modern
slavery on construction sites. The
case study on page 59 provides more
information on how we collaborated
with a building contractor engaged
at one of our developments
Our Anti-Modern
Slavery Working
Group coordinates the
group’s approach to
identifying, assessing,
and addressing
modern slavery
risk across Dexus’s
operations and supply
chain.
Learn more
More information on
our Modern Slavery
Management Framework is
provided in our 2021 Modern
Slavery Statement, which
has been lodged with the
Australian Government and
is also publicly available on
the Dexus website.
Aprenda a identificar os sinaisexibidos por vítimas da escravidão moderna:- ser forçado a trabalhar com pouco ou nenhum pagamento- não ter passaporte ou visto, ou mencionar que outra pessoa está com o passaporte - trabalhar horas excessivas, ter pouco ou nenhum intervalo ou não ter contrato de trabalho- ser impedido por outros de viajar para o trabalho por seus próprios meios. A ESCRAVIDÃO EM TEMPOS MO-DERNOS ACONTECE NA AUSTRÁLIAQualquer pessoa pode ser vítima da escravidão moderna. Pode acontecer com você ou alguém que você conhece. Todos os trabalhadores na Austrália têm direitos protegidos por lei.Contato:1300 790 228Visite: yourcall.com.auPara quem você pode contar?Se você acha que você ou alguém que você conhece está sendo ou pode ser vítima da escravidão moderna, informe-nos entrando em contato com nosso serviço de denúncias confidenciais, você tem uma Escolha. Case study
Partnering with our suppliers
to combat modern slavery
We believe that collaborating with
our suppliers will achieve the best
outcomes in combatting modern
slavery. Dexus partnered with
Roberts Co, a builder contractor
engaged on the development
of the North Shore Health Hub
in St Leonards, on an approach
to prevent modern slavery on
construction sites. During the
year, Dexus and Roberts Co held
workshops to share knowledge on
each organisation’s approach to
combatting modern slavery.
Approaches to address modern
slavery risks
There were common features
across the organisations’
approaches, including:
− Mechanisms in place to identify
modern slavery
− Assessment of supply chain risks
− Alternative means of
communicating effectively
across a diverse workforce and
supplier base
Collaboration initiatives
Through the identification of key
differences in approaches, both
Dexus and Roberts Co shared
knowledge to enhance each
other’s anti-modern slavery
procedures.
Site induction procedures were
enhanced to include regular
compulsory modern slavery
induction training on contractor
sign-in. Dexus’s grievance
procedure was shared with
Roberts Co along with posters to
raise awareness on who to contact
if workers were a victim, or if they
suspect someone is a victim of
modern slavery.
The following differences in approach were identified:
Risk
assessment
approaches
Dexus uses the Property
Council of Australia’s
Informed365 Modern
Slavery due diligence
tool to assess its top tier
suppliers, with some of
these suppliers also being
required to report under
the Modern Slavery Act
2018
Roberts Co adopts a risk
management-based approach
as most subcontractors are
too small to be required to
report under the Act, to assess
their subcontractor workforces
during the procurement stage,
with subcontractors being
required to demonstrate that
they have addressed the risks
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Focus areas Dexus focuses on its Tier
Grievance
procedures
1 suppliers, in particular
the labour forces of its
cleaning, security and
construction supplier
companies
Dexus has a modern
slavery grievance
procedure which outlines
the framework and process
to be undertaken on the
receipt of a grievance
relating to modern slavery
within its supply chain
Roberts Co identified two
streams to address – its
labour supply chain and its
procurement supply chain
Roberts Co has a simplified
grievance procedure which
deals with grievances on a
case-by-case basis
This included expanding the
availability of Dexus’s whistle
blower service to contractors’
workforces.
In the procurement stream,
Roberts Co has delineated the
steps in their supply chain and
are in the process of identifying
the areas of greatest risk. Dexus
has identified stone suppliers as
a high-risk procurement category
and is working with Roberts Co to
gain a deeper understanding of
this risk.
Next steps
Through this exercise, Dexus and
Roberts Co found that there was
an opportunity to identify modern
slavery risks in the procurement
supply chain during the
architectural design process.
We will require design consultants
to consider modern slavery in the
suppler chain of materials and
products they specify to be used
in development projects. This new
approach will be advocated by
both parties within the property
industry.
Dexus 2021 Annual Report 59
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Customers and communities continued
Artist impression:
Waterfront Brisbane QLD
We also continued to actively support the
viability of our small business customers
most affected by the COVID-19 crisis,
as a result of government-imposed
lockdowns, in accordance with the
Australian Government National Code
of Conduct. Dexus provided $21.7 million
of rent waivers in total to impacted small
business customers across FY20 and FY21.
We recognised our responsibility to
advance reconciliation with Aboriginal
and Torres Strait Islander communities by
developing a draft Reflect Reconciliation
Action Plan (RAP). The draft Reflect RAP
has been submitted to Reconciliation
Australia for a three-month feedback
engagement process, where content may
be refined to ensure the deliverables are
achievable. We expect our Reflect RAP to
be approved in the first half of FY22, where
the Dexus RAP Working Group will oversee
its implementation across the business.
Our capacity to create
value is influenced by
the strength of our
relationships with local
communities in and
around our properties.
With more than 150 million people
visiting our properties every year, we
are in a unique position to be able to
have a positive social impact in the
communities in which we operate and
contribute to important issues where we
can make a difference.
We leverage our scale to amplify
the important work of community
organisations. We welcome the use of
space in our office and retail properties
by the community, supporting a range
of community causes that deliver social
impact while engaging our people and
our customers.
Over the year we contributed over
$0.8 million financially and in-kind to
communities across Australia through
initiatives such as our retail portfolio’s
national community campaign that
partnered with local charities, and our
involvement with STEPtember, where our
people and customers raised money
and awareness for the Cerebral Palsy
Alliance.
Strong communities
>$0.8m
Contributed to communities
across Australia
$21.7m
Provided in rent relief to
impacted customers during
COVID-19 across FY20-FY21
60 Performance – Customers and communities
Case study
Dexus’s new community partnerships
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Dexus’s Social Impact Working Group (SIWG)
was formed in July 2020 and tasked with
implementing a social impact strategy for
the business. In April 2021, the SIWG internally
launched Dexus’s Social Impact Strategic
Framework (Framework) which is aligned with
Dexus’s Sustainability Approach (refer page 42 of
the 2021 Sustainability Report).
Under the Framework, the SIWG identified the
key causes for Dexus to support and in line
with this, welcomed two new major community
partners, being the Black Dog Institute and
Planet Ark:
− Black Dog Institute is the only research
institution in Australia dedicated to mental
health and suicide prevention with a national
focus across all age demographics
− Planet Ark is one of Australia’s leading
environmental behaviour change
organisations, with a focus on working
collaboratively and positively with
communities, the government, and businesses
These partnerships align with Dexus’s
Sustainability Approach and will maximise the
value created for Dexus and the communities in
which it operates. They will also deliver positive
outcomes for Dexus’s people and customers.
Dexus will be working with these partners on
the following objectives:
Black Dog Institute
– Evolving the mental health awareness and
education of Dexus’s people in line with its
Safe and Well program
– Engaging with the communities in which it
operates through targeted and meaningful
activations across Dexus’s retail, industrial and
office spaces
– Aligning the extensive research of the Black
Dog Institute to Dexus’s Sustainability
Approach and utilising it to support Dexus’s
people and customers across various initiatives
– Creating opportunities for Dexus’s people to
contribute through volunteering initiatives
Planet Ark
– Educating Dexus’s people and customers
on environmental sustainability topics,
including resource reduction and
recycling
– Empowering Dexus’s people
and customers to make positive
environmental changes
– Improving Dexus buildings’ environmental
footprint
Dexus 2021 Annual Report
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Environment
Our capacity to
create value depends
on the efficient use
of natural capital,
building resilience to
environmental risks and
leveraging emerging
opportunities driven by
climate change.
Board focus
Environmental sustainability is a focus area for
the Board and Board ESG Committee. In FY21,
the Board and Board ESG Committee were
involved in:
– Endorsing the Dexus 2020 Sustainability
Report
– Discussing sustainability improvement plans
for capital and operating expense items
– Discussing results of ESG benchmark surveys
– Discussing progress in relation to Dexus’s
supply chain and actions to prevent
modern slavery
– Reviewing Dexus’s approach to reporting
against the United Nations Sustainable
Development Goals
– Discussing group’s progress in relation to
2021 environmental targets
– Discussing bringing forward Dexus’s target
to achieve net zero emissions
– Discussing Customer Sustainability
Framework
– Discussing activities of the Climate
Resilience Working Group
– Overseeing 2021 materiality assessment
62 Performance – Environment
In a changing climate, developing
and managing resilient properties
requires an understanding of how
to reduce their impact on the
natural environment and leave a
positive legacy. To do this, we lower
our carbon footprint and reduce
operating costs through initiatives
that seek to consume less and source
more sustainably.
We recognise the risks and
opportunities that climate change
presents for our business and are
acting to better understand, prepare
for, and respond to physical risks such
as damage from extreme weather
and chronic heat stress, and the
transition risks and opportunities as
customer expectations shift and our
economy decarbonises.
Recognising the urgent need to
combat climate change and harness
the competitive advantage of bold
climate action, we have brought
forward our target to achieve net
zero emissions to 30 June 2022,
advancing our original 2030 goal by
eight years. Our net zero target has
been verified by the Science Based
Targets initiative as being consistent
with the effort required to limit global
temperature increases to below 1.5°C.
We actively manage water and
waste through building optimisation,
as well as customer engagement
and awareness programs. We also
integrate energy, water and waste
efficiency into the design and
daily operation of our properties
and regularly benchmark property
performance using independent
building certifications such as NABERS
and Green Star.
Our focus on the environment
is aligned with many of our
customers’ ambitions and
contributes to our purpose
of creating spaces where
people thrive.
Future focus
To learn about our future Enriched
Environment commitments refer to
page 71
Learn more
To learn more about our progress
against our FY21 Environment
commitments, refer to the 2021
Sustainability Report available at
www.dexus.com
Sustainability
approach
Enriched Environment
5.0star
NABERS Energy average rating
across our group office portfolio
4.5star
NABERS Water average rating
across our group office portfolio
56%
Reduction in group office
emissions intensity since FY08
31%
Of electricity sourced from
on-site and off-site renewable
sources in FY21 across our
group managed portfolio
4.7star
NABERS Indoor Environment
average rating1 across our group
office portfolio
1. NABERS Indoor Environment rating is
based on 65% of Net Lettable Area
coverage.
Net zero by 2022
Net zero emissions refers to achieving
an overall balance between
greenhouse gases emitted in operation
and greenhouse gases removed from
the atmosphere. Getting Dexus to net
zero is an opportunity to align with
changing consumer sentiment and
meet the increasing investor appetite
for low-carbon investments.
We have made great progress on our
goal and have brought forward our
target to achieve net zero emissions to
30 June 2022, advancing our original
2030 goal by eight years.
Accelerating our net zero ambition
delivers strong climate action for
our planet, enhances our vision and
customer proposition for smart,
sustainable workplaces, and ensures
we will be ready for other opportunities
- including supporting our customers
on their own journey.
We have brought forward
our target to achieve
net zero emissions from
2030 to 2022.
Our commitment to deliver net zero
emissions by 30 June 2022 will be
achieved by:
1. Our transition to 100% renewable
electricity for base building
operations from July 2021, purchasing
renewable energy credits in the
form of Large-scale Generation
Certificates or GreenPower
2. Continuing to invest in certified
carbon offsets for our remaining
emissions. We will purchase
accredited nature-based offsets to
account for emissions from natural
gas, wastewater, refrigerants, and
waste/recycling
3. Verifying we are net zero and
maintaining this status through
Australia’s Climate Active carbon
neutral program
In parallel with this transition, our focus
remains on improving energy efficiency
and accelerating the deployment of
on-site renewables (see page 64).
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Environment continued
Advancing resource
efficiency
Together with our strong action to
rapidly transition to net zero emissions,
energy efficiency at the asset level
remains critical to driving long-term
value as savings in energy and water
consumption contribute to lower
occupancy costs as well as reducing
environmental impacts.
Building on the success of meeting our
portfolio NABERS Energy and NABERS
Water targets last year, we continued
to enhance the resource efficiency of
our properties. To help ensure optimal
building performance, our facilities
management teams engaged with
customers to understand occupancy
trends and actively managed building
systems to optimise resource use and
performance.
Despite challenges presented by the
pandemic, we continued to implement
energy efficiency projects to enhance
monitoring and control capabilities
at properties in Melbourne such as 80
Collins Street and Rialto Towers. Other
notable projects included progressing
the major lift upgrade at One Farrer
Place, Sydney, which helped the
property achieve a NABERS Energy
rating of 5 stars, and replacing two
chillers at 25 Martin Place, Sydney,
with further improvements planned for
FY22.
25 Martin Place, Sydney NSW
64 Performance – Environment
Increasing renewable energy
Focusing on operational waste
Our pathway to net zero is supported
by increasing our use of renewable
energy through a combination of
on-site renewable energy installations
and purchasing of innovative
ways to source renewable energy
generated off site. It also contributes
to the achievement of our RE100
commitment of 100% renewable
energy by 2030.
In FY21 we sourced 31% of the group
managed portfolio’s electricity
consumption from onsite and offsite
renewable sources
Throughout FY21, we continued to
roll out on-site solar photovoltaics
(PV) across the property portfolio,
with over 3.1 MW of new solar
systems completed or underway.
At Deepwater Plaza, Woy Woy, we
added a 253 kW car park solar
array to the existing 100 kW rooftop
system, and an 80 kW solar array
was installed on the rooftop of 1 Bligh
Street, Sydney. Across our office and
industrial properties, we collaborated
with our customers to accelerate the
uptake of on-site solar energy. These
collaborations have resulted in a solar
array being installed at Kings Square
in Perth, and progress toward solar
installations at Quarry at Greystanes
industrial estate.
Leveraging the positive response
for on-site solar from customers
at Quarry at Greystanes we are
preparing for a portfolio-wide rollout
program.
Back in 2018, we drove innovation
in renewable energy procurement
through agreeing the industry’s first
renewable Energy Supply Agreement
with Red Energy for our New South
Wales portfolio. This year, we
completed a competitive market
engagement for renewable Electricity
Supply Agreements, selecting
CleanCo for the Queensland portfolio,
which commences in July 2021, and
Iberdrola (formerly Infigen) for the
Victoria portfolio, commencing from
July 2023. Within both agreements,
we have built in the capability to help
procure renewables on behalf of our
customers.
We benchmark the operational waste
management performance of our office
portfolio using the NABERS Waste rating. In
FY21, we expanded uptake of the NABERS
Waste tool, increasing the rated net
lettable area of the group office portfolio
to 70% (FY20: 28%), and achieving an
average 2.7 star NABERS Waste rating.
At 25 Martin Place, Sydney, the NABERS
Waste rating improved to 3.5 stars from
3.0 stars as a result of waste management
initiatives, including the addition of
organics and paper towel streams, and
the appointment of an accredited Good
Environmental Choice Australia waste
service provider.
Reducing waste creation while improving
reuse and recycling across our buildings
requires active collaboration between
Dexus and our customers.
Our cleaning and waste management
contracts include requirements for
customer engagement on waste
management and performance. During the
year, our cleaning and waste management
contractors put these requirements into
action through a program of customer
bin profiling, involving the emptying,
categorising, and weighing of the
contents of each customers’ bins. The
results will be used to provide feedback
to help customers place waste items in
the correct waste stream and identify key
opportunities to introduce new streams.
Our waste management program
aims to go beyond waste diversion to
embrace circular economy principles
that promote efficient resource use and
keeping materials at their highest value.
Achieving a circular economy within urban
precincts requires collaboration between
governments, suppliers, customers, and
property companies like Dexus. Working
together we can unlock the potential value
of circular resource use for all stakeholders
(page 65).
This year we have set the goal to achieve
an average 4 star NABERS Waste rating
across our group office portfolio by FY25.
This is equivalent to diverting 50% of
operational waste from landfill, placing
greater focus on the activities we can
employ to consistently and systematically
reduce overall volumes of materials that
end up in landfill.
Enhancing indoor environments
Case study
The role buildings can play in human
health and wellbeing has never been more
important. Tools such as NABERS Indoor
Environment (NABERS IE) provide ongoing
benchmarking of performance, while the
WELL Building Standard is helping us
understand more about the relationship
between the physical environment and
human health.
The WELL Building Standard is a roadmap
for creating and certifying spaces that
advance human health and wellbeing,
administered by the International WELL
Building Institute.
Through initiatives to enhance occupant
health and wellbeing, we are targeting an
average 5 star NABERS IE rating across the
group office portfolio by FY25. At the end
of FY21, we achieved a 4.7 star NABERS IE
rating across 35 properties, representing
almost two-thirds of total lettable area
across the group office portfolio. Standout
performers include 480 Queen Street,
Sydney (improving by 3 stars to 5.5 stars),
60 Castlereagh Street, Sydney (improving
by 2.5 stars to 5.5 stars) and 383 Kent Street,
Sydney (improving by 1.5 stars to 5.5 stars).
Ensuring safe and productive indoor
environmental conditions is a core
component of our healthy buildings focus,
with innovative initiatives trialled within
the portfolio. Some of the progress made
on healthy buildings initiatives during FY21
included:
– Upgrading air conditioning filters at
select properties to F7 grade filters,
which are more effective in removing finer
particulates caused by bushfire ash
– Aligning the remaining properties to
upgrade the air conditioning filters to F7
grade filters, which improves the filtration
of fine particulates such as bushfire ash
– Establishing an alerting protocol to help
facility teams forewarn customers of
ambient air quality conditions
– Trialling emerging health and safety
technologies such as air quality sensors for
continuous monitoring and real-time data
to enhance building plant operation
– Collaborating with science groups and
academia to analyse and verify the results
of the trial air purification technologies
that address concerns related to airborne
particulates and pathogens within
occupied spaces
To align our healthy buildings initiatives with
international best practice even further, we
are committed to achieving a WELL health-
safety certification across our office portfolio.
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Integrating the circular economy into
developments and the portfolio
Dexus is taking steps towards
creating a more circular
approach to how it manages and
develops its properties, with the
aim of minimising (and eventually
eliminating) waste through
reusing, repairing, reshaping, and
recycling materials.
Achieving a circular economy
within urban precincts requires
collaborations between
governments, suppliers,
customers, and property
companies like Dexus, to unlock
the potential value of circular
resource use for all stakeholders.
During the year, Dexus partnered
with a circular economy specialist
consultancy to identify practical
circular economy insights and
opportunities that could be
integrated within the Waterfront
Brisbane development, which is
undergoing planning approvals
and has been designed to
deliver workspaces of the future.
Stakeholder workshops were
held involving a circular economy
maturity analysis and an ideation
session to review the available
opportunities and understand the
steps involved to adopt a circular
economy approach within the
procurement and management
phases of the project.
Key outcomes that are being
incorporated into the project
include:
- Incorporating environmental
features into the design of the
public domain
- Adopting regenerative design
and construction that aligns
with circular economy principles
- Developing circular fit-out
guidelines for the development
- Exploring ways to increase
the lifecycle of construction
materials
Continuing the partnership,
Dexus and its circular economy
specialist consultancy
collaborated on a project for
implementation in the coming
year that looks at tackling the
challenge of incorporating
circular economy principles within
property operations. This project
has been awarded a grant from
Sustainability Victoria’s Circular
Economy Business Innovation
Centre.
Through this project, Dexus seeks
to understand, measure, and
map how materials flow through
complex mixed-use corporate
and retail precincts with the
intention of improving the
circularity of these material flows.
This project will be conducted
for the retail and commercial
tower operations at the Dexus
co-owned and managed
QV complex in Melbourne, which
has over 120 retail and nine
corporate customers including
Woolworths, RMIT, Australia Post,
and multiple Victorian State
Government tenants. Lessons
learned from this project will be
applied to complex materials
supply chains and mixed-use
precincts across Dexus nationally.
Sustainability Victoria will be
able to leverage key learnings
and resources developed
through the project to support its
engagement with businesses and
the wider community throughout
Victoria and Australia.
Adopting circular economy
practices in its developments
and operations will ensure Dexus
creates additional value for its
assets and achieves tangible
progress on the journey towards
a more sustainable, efficient, and
resilient future.
Dexus 2021 Annual Report 65
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Environment continued
Climate resilience
We are committed to
disclosing climate-
related issues in
accordance with
the Task Force on
Climate-related
Financial
Disclosures (TCFD)
recommendations.
We support the UN Paris Agreement’s
goal of transitioning to net zero
emissions and have brought forward
our net zero emissions target to 30
June 2022, in recognition of the need to
take accelerated action to address the
impacts of climate change.
Climate-related risks and opportunities
are of growing importance when
it comes to meeting our strategic
objectives. Maintaining sustainable
income streams requires both
understanding the financial
consequences of climate impacts, as
well as having a solid approach to
mitigating climate risks. Being a real
estate investment partner of choice
requires transparent acknowledgment
of the challenges posed by climate
change and collaboration with the
investment community to understand
and proactively respond to climate-
related risks and opportunities.
66 Performance – Environment
Governance
Strategy
Dexus takes a collaborative approach
to managing climate-related impacts
across the group’s operations. Climate
change has been incorporated into
relevant group policies and procedures
to provide guidance to employees
and inform all stakeholders of Dexus’s
commitment to managing climate-
related issues.
Dexus’s corporate governance
framework supports a culture that
understands the importance of
sustainability and ensures that
climate-related issues are addressed
appropriately at board and
management levels:
– The Dexus Board oversees all
strategic risks including climate
change
– The Board ESG Committee oversees
the group’s approach to addressing
climate-related issues
– The Board Risk Committee oversees
the group enterprise risk management
practices and key risk register, which
includes climate change
– The Sustainability team, led by
the Executive General Manager,
Investor Relations, Communications
and Sustainability, and the Senior
Manager, Group Sustainability
and Energy oversee the group’s
management response and reporting,
presenting on a quarterly basis to the
Board ESG Committee on progress
against targets and to the Board as
key topics emerge.
Sustainability has been integrated
into the roles and responsibilities of
executives, management and other
employees through its inclusion within
the Group Scorecard. Remuneration
is linked to the successful delivery of
group-wide sustainability outcomes
through the evaluation of progress
against ESG-related commitments and
targets within the Scorecard.
Climate-related issues present
risks and opportunities across our
entire operations and prospective
strategic opportunities. To support
a comprehensive understanding
of climate-related issues, we
have incorporated a wide range
of scenarios into our climate risk
management approach.
Dexus’s Towards Climate Resilience
report explains the use of
scenario analysis, summarises the
identified climate-related risks and
opportunities, and explores ways
that we can evolve our strategy
to enhance the resilience of our
operations and meet our strategic
objectives.
Our climate resilience strategy
responds to a range of climate-
related issues that have been
identified through our scenario
analysis and risk management
processes over the years. The
strategy comprises three themes:
Reducing our impact
through decarbonisation,
energy efficiency and
renewable energy with the
remaining emissions achieved
by nature-based offsets
Adapting to climate change
and physical and transition
risks relevant to our properties,
people, and operations, and
leveraging climate change-
related opportunities
Influencing our value chain
by engaging customers and
suppliers to reduce climate
impacts and engaging other
key stakeholders on our climate
resilience strategy
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Reducing our impact
Influencing our value chain
We collaborate across our value chain to broaden
our positive impact and to enhance climate
resilience more widely.
During the year we publicly supported the City
of Sydney’s new net zero building performance
standards, which we have already incorporated
into existing development plans at projects such as
Central Place Sydney and Pitt and Bridge Precincts.
We also progressed plans to adopt a customer
sustainability framework across the portfolio that
impacts the customer lifecycle experience from
leasing, fit-out and occupancy to end of lease. The
approach involves collaborating with customers
to raise the awareness of Dexus’s sustainability
approach, providing data and insights, identifying
opportunities and supporting implementation.
Dexus intends to progress initiatives aligned to this
framework over the next 12 months.
We completed tenders for electricity in Queensland
and Victoria accelerating our goal to transition
to renewable energy, which resulted in renewable
Electricity Supply Agreements with two new retailers
for 100% renewable electricity. These contracts
have helped underpin their investment in wind and
solar power stations that are in operation or under
construction.
Our commitment to achieve net zero emissions involves
enhancing the energy efficiency of our properties and
increasing the use of renewable energy. The acceleration
of our net zero target from 2030 to 2022 supports Dexus
on this journey (page 63).
Adapting to climate change
Physical risk
During the year, we expanded our site-specific
environmental risk assessments to continue to evaluate,
mitigate and manage significant climate-related
vulnerabilities and adaptation activities at high-risk
properties. A key focus in recent years has been addressing
the significant indirect health impacts from bushfires.
To protect our people, customers, communities, and
properties from these impacts, we actively manage portfolio
indoor environmental quality and use the NABERS Indoor
Environment rating tool to benchmark property
performance as part of our approach to focus on healthy
buildings (page 65).
We are addressing physical risks at the property level by:
– Incorporating a review of climate exposures and controls
within our existing environmental risk assessment program
– Integrating climate-related issues in transaction due
diligence
– Tracking environmental, social, economic, and political
factors that could influence the resilience of our portfolio
Transition risk
Dexus recognises that to understand how climate change
will impact its business model, and build resilience against
these impacts, it must evaluate the impact of climate-
related transition events on the economy and its customers.
Over the past year, we commissioned an economic analysis
of the climate-related transition impacts relevant to Dexus’s
customer base to explore (see findings on page 68).
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Environment continued
Risk management
Through integration of climate change
as a material topic into our Risk
Management Framework (aligned
to the principles of ISO 31000:2018),
climate-related issues are identified
and managed in a systematic and
timely way. Dexus’s climate-related
risks are assessed based on an overall
risk evaluation informed by likelihood,
consequence, and effectiveness of
controls.
Dexus’s Risk team oversee the group’s
Risk Management Framework, which
includes Dexus’s risk appetite in relation
to climate change and monitoring
of relevant tolerances. Dexus’s
Sustainability team is responsible for
day-to-day operationalisation of
carbon reduction and climate resilience
activities across the group, including
regular review of climate-related risks
and opportunities through scenario
analysis. Together, the Sustainability
and Risk teams work collaboratively
with the Property Operations teams,
to ensure that the business is managing
its climate risk appropriately.
Addressing physical risk
Since 2011, Dexus has conducted
periodic group-wide physical climate
risk assessments to determine the
magnitude of climate risks across the
portfolio. Properties which have been
identified as high risk through the
portfolio-wide climate risk assessment
have site-specific climate risk
assessments undertaken to evaluate
significant climate-related vulnerabilities
and adaptation actions. At the property
level, natural disaster risks are assessed
as part of Dexus’s risk engineering
audit regime which uses a risk adjusted
approach to selecting sites to audit.
The assessment process involves
sensitivity analysis and determination of
climate risk level based on the inherent
risk with reference to recent and
historical natural disaster events and
geographical factors, while factoring in
climate change projections and data on
previous economic losses.
Management of physical risks at the
asset level has been integrated into
the Dexus Environmental Management
System (EMS), which is certified to
ISO 14001:2015. Climate change is listed
as an ‘aspect’ within the EMS, which
provides a structured framework for
considering physical risk factors, such as
higher temperatures, into the day-to-
day business activities across the group.
Addressing transition risk
Dexus’s recent economic analysis
assessed the implications of the climate
transition pathways on the economic
environment in which Dexus operates
and the demand for its products and
services over the next 10 years, with
white-collar employment being used as
a proxy for demand for office space.
The economic modelling was informed
by the pace and scale of transition
events to achieve emissions reductions
under two of the climate scenarios
previously disclosed in our Towards
Climate Resilience report. Each
pathway is characterised by different
combinations of policies, technologies,
and broader societal change.
Under both scenarios, the climate
related transition impact on white-
collar office-based employment is
estimated to be lower than the impact
on Australia’s overall employment
landscape as white-collar employment
is concentrated in industries and sectors
that are less impacted by climate
transition risks.
The two different scenarios included:
– A Coordinated and Orderly
Transition: This scenario is
characterised by global recognition
for the need to address climate
change, leading to a deliberate,
collaborative, and steady economy-
wide efforts to reduce emissions and
limit warming to 1.5°C above pre-
industrial levels by 2100
Findings
It is projected that white-collar
employment in Australia will
experience a 1.0% reduction relative
to baseline1 in 2030-31, compared to
Australia-wide employment which
will experience a 1.3% reduction.
– An Abrupt and Delayed Transition: In
contrast, this scenario sees a group
of countries (including Australia)
continuing with a period of ‘business
as usual’ carbon emissions, resulting
in an abrupt and drastic national
policy response pre-2030 and
disorderly decarbonisation for which
financial markets are not prepared
Findings
It is projected that white-collar
employment in Australia will
experience a 1.7% reduction relative
to baseline1 in 2030-31, compared to
Australia-wide employment which
will experience a 2.1% reduction.
1. The baseline forecast suggests that white-collar jobs in Australia will grow by 21% up to 2030-31.
68 Performance – Environment
In the coordinated and orderly scenario
early action has a greater upfront
cost, with some sectors benefiting and
others becoming more exposed. Clear
government policy signalling allows time for
existing infrastructure to be replaced and
for technological progress to keep energy
costs at a reasonable level, benefiting
the Electricity, Gas, Water and Waste
services sectors and creating opportunities
for innovation in the Manufacturing and
Construction sectors. However, policies
limiting the levels of emissions will force
sectors including the Mining and Agriculture,
Forestry, and Fishing sectors to make
significant operational changes or face an
increase in the cost of production.
In contrast, the abrupt and delayed
transition scenario initially has less impact
on carbon intensive sectors as they
benefit from policy inaction. However, the
subsequent sudden and uncoordinated
transition will result in abrupt structural
policy adjustments that create significant
pressure to decarbonise. This is disruptive,
particularly for more exposed sectors
including Mining and Construction, and will
increase the flow-on effects for indirectly
exposed industries such as the Financial
and Insurance services sectors, as well as
the Professional, Scientific, and Technical
services sectors.
Over the next 10 years, the economic
modelling found lesser impacts to GDP
under the orderly scenario, with early
action showing a more positive economic
outlook when compared to the disorderly
scenario. Dexus plans will integrate material
insights from this analysis into the business’s
broader strategy.
Metrics and targets
We have committed to achieve net zero emissions by 30 June 2022.
Our net zero target has been verified by the Science Based Targets
initiative as aligned with the objectives of the UN Paris Agreement and
consistent with the effort required to limit global temperature increases
to below 1.5°C in this century.
Dexus is committed to operational efficiency across its property
portfolio to deliver savings in resource consumption and associated
greenhouse gas emissions, and to meet current and future
environmental targets. We monitor and report on absolute, like-for-like
greenhouse gas emissions and emissions intensity for all properties
under our operational control. Dexus obtains external assurance
over selected sustainability performance data, with progress against
environmental targets and other climate-related metrics being
disclosed in the 2021 Sustainability Report.
Looking ahead
The coming year will be an important one for Dexus, as we work to deliver
our net zero emissions commitment. Future areas of focus include:
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Climate resilience strategy
Future areas of focus
Reducing our impact
Adapting to climate change
Influencing our value chain
– Deliver net zero emissions in operation
across the group-managed portfolio
in FY22
– Commence broad rollout of our on-site
renewable energy program
– Integrate material insights from the
economic analysis into the business’s
broader strategy
– Continue rollout of asset-level climate
change risk assessments, identify
key interdependencies and progress
identified actions
– Progress healthy building initiatives to
enhance understanding of climate-
related health impacts to occupants
and management opportunities
– Continue training on climate risks and
opportunities
– Enhance focus on measuring and
reducing embodied carbon impacts
for new developments
– Continue active engagement with
suppliers to understand the carbon
intensity of our supply chain and
mitigation opportunities
Dexus 2021 Annual Report 69
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How we create value
Our purpose
To create spaces
where people thrive
Our values
Openness, trust,
empowerment, and
integrity
Megatrends
Vision
• Urbanisation
• Growth in
pension capital
funds flow
• Social and
demographic
change
• Technological
change
• Climate change
• Growth in
sustainable
investment
p.14
Key risks
Outlines the
key risks and
controls in place
for mitigation
p.22
To be globally
recognised
as Australia’s
leading real estate
company
Strategy
Delivering
superior risk
adjusted returns
for investors
from high quality
real estate in
Australia’s
major cities
Strategic
objectives
• Generating
sustainable
income streams
• Being identified
as the real estate
investment
partner of choice
Properties
g
M
People and
capabilities
Office
Industrial
Retail
Healthcare
Investin
T
r
a
n
s
a
c
t
i
n
g
& Trading
D
a
n
a
g
i
n
g
g
e v elopin
Financial
Customers and
communities
Environment
Operating
environment
Our
strategy
p.16
Key
resources
p.18
Key business
activities
p.20
Our sustainability
approach
Value creation
outcomes
Our sustainability
approach is the lens
that we use to effectively
manage emerging ESG
risks and opportunities,
creating sustained value
for our stakeholders
Future
commitments
Sustainability
Commitments drive
Report 2021
action and outcomes
Sustained
Value
p.28
Leading
Cities
p.42
VALUE DRIVERS
• Financial performance
• Capital management
• Corporate governance
Superior long-term
performance for our investors
and third party capital
partners, underpinned by
integrating ESG issues into
our business model
By developing commitments
for FY22 and beyond based on
the value creation outcomes
of our Sustainability Approach,
we aim to deliver outcomes
aligned to the interests of our
investors and all stakeholders.
A high-quality portfolio
that contributes to
economic prosperity and
supports sustainable urban
development across
Australia’s key cities
VALUE DRIVERS
• Portfolio scale and
occupancy
• Economic contribution
• Development pipeline
Sustainability
Approach
Thriving
Sustained Value
People
p.50
An engaged, capable and
high-performing workforce
that delivers on our strategy
and supports the creation
of sustained value
VALUE DRIVERS
• Employee engagement
• Inclusion and diversity
• Health and safety
Creating sustained value by
delivering superior long-term
performance, underpinned
by integrating ESG issues
into our business model.
Future Enabled
Customers and
Strong
Communities
p.54
FY22 commitments
Based on current expectations
relating to COVID-19 impacts and
barring unforeseen circumstances,
Dexus expects distribution per
A strong network of value
security growth of not less than
chain partners (customers,
2% for the 12 months ended
communities and suppliers)
30 June 2022
who support Dexus and are
positively impacted by Dexus
Maintain a strong balance sheet
while further diversifying debt
VALUE DRIVERS
• Customer experience
• Community contribution
• Supply chain focus
Leading Cities
Enriched
Environment
An efficient and resilient
portfolio that minimises our
environmental footprint and
is positioned to thrive in
a climate-affected future
VALUE DRIVERS
• Resource efficiency
• Climate resilience
• Green buildings
p.62
Playing a leading role in
contributing to economic
prosperity and supporting
sustainable urban
development across
Australia’s key cities.
Grow industrial precincts by more
than 200,000 square metres to
meet the demand for high-quality,
highly accessible logistics facilities
across the east coast of Australia
Contribute to economic growth
through the generation of
employment and contribution
to Gross Value Added from
development projects
FY22 commitments
Maintain office portfolio
occupancy above the Property
Council of Australia market
average
Progress city-shaping precinct
projects in Sydney, Brisbane,
Melbourne, Perth and Adelaide
that improve the amenity and
vibrancy of Australia’s CBDs
70 Performance – Future commitments
Thriving People
Creating an engaged,
capable and high-performing
workforce that delivers on our
strategy and supports the
creation of sustained value.
FY22 commitments
Maintain employee Net Promoter
Score at or above +40
Maintain recognition as an Employer
of Choice for Gender Equality
Roll out mental health awareness
training to all employees
Target key talent retention rate of
90% or higher
Roll out Lead @ Dexus to all people
managers
Maintain standing on AWEI in
relation to LGBTI+ inclusion
By FY23
Achieve 40:40:20 gender
representation in senior and
executive management roles by FY23
Future Enabled Customers
and Strong Communities
Delivering satisfied and
successful customers
supported by high
performing workspaces and
a comprehensive customer
product and service offering.
Supporting well connected,
prosperous and strong
communities within and
around our properties.
Partnering with a network of
capable and effective supplier
relationships that ensures ESG
standards are maintained
throughout our supply chain.
FY22 commitments
Maintain a Customer Net Promoter
Score for the Office portfolio at or
above +40
Continue to support customers with
their future workspace needs
Harness technology and innovation
to improve customer experience
Continue to support customer
wellbeing by delivering initiatives
such as a WELL Health-Safety
portfolio certification
Progress Dexus’s reconciliation
efforts with First Nations peoples
through implementing the Reflect
Reconciliation Action Plan
Require our design consultants
to consider modern slavery in the
supply chain of the materials and
products they specify to be used
in development projects, and
advocate for industry change by
encouraging peers to adopt the
same approach
Conduct assessments on key Tier 2
Support the wellbeing of our
services suppliers
people and customers through
implementing initiatives
Influence the sustainability
practices of our people and
customers through implementing
an engagement program
Extend our supply chain mapping to
other geographies beyond Australia
Enriched Environment
Creating an efficient and
resilient portfolio that
minimises our environmental
footprint and is positioned
to thrive in a climate-
affected future.
Reduce energy intensity by 10%
across the group office portfolio by
FY25 against a 2019 baseline
Reduce water intensity by 10%
across the group office portfolio by
FY25 against a 2019 baseline
Achieve an average 4 star NABERS
Waste rating across the group
office portfolio by FY25
FY22 commitment
Achieve net zero emissions across
the group-managed portfolio by
30 June 2022
By FY25
Source at least 70% of electricity
from on-site and off-site
renewable sources across the
group portfolio by FY25
Deliver an average 5 star NABERS
Indoor Environment rating across
the group office portfolio by FY25,
delivering initiatives to enhance
occupant health and wellbeing
Dexus 2021 Annual Report
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Governance
A high standard of corporate
governance is the foundation for the
long-term success of the group.
Our Board and Group Management
Committee are committed to excellence
in corporate governance and aspire to
the highest standards of conduct and
disclosure. To support this aspiration,
we have embedded a framework that
enhances corporate performance
and protects the interests of all key
stakeholders. Our Board believes
that a high standard of corporate
governance supports:
– A culture of ethical behaviour resulting
in an organisation that acts with
integrity
– Improved decision-making processes
– Better controls and risk management
– Improved relationships with
stakeholders
– Accountability and transparency
We continue to focus on organisational
culture by encouraging an environment
where our people and stakeholders
feel comfortable in raising issues and
ensuring our Board and Management
are kept informed of incidents that may
impact the business.
Our Board and its Board Committees
have overall responsibility for corporate
governance and are collectively
focused on the long-term success of the
group. Areas of specific responsibility
include financial performance,
setting strategy and overseeing its
implementation, providing leadership
and direction on workforce culture and
values, and agreeing and overseeing
the risk framework and risk appetite.
Our Board regularly reviews its corporate
governance policies and processes to
ensure they are appropriate and meet
industry best practice, governance
standards and regulatory requirements.
For the 2021 financial year, the group’s
governance practices complied with the
ASX Corporate Governance Council’s
Corporate Governance Principles and
Recommendations (fourth edition)
and addressed additional aspects
of governance which the Board
considers important.
Further details are set out in the
Corporate Governance Statement,
which outlines key aspects of our
corporate governance framework
and practices, which is available at
www.dexus.com/corporategovernance
Governance for Funds
Management
Dexus uses its expertise, scale and
knowledge of the Australian real estate
market to create and manage property
investments for these third party capital
partners and investors.
A high standard of corporate
governance is vital for attracting,
retaining and reinforcing the confidence
of these third party capital partners and
investors.
Demonstrating this importance, Dexus’s
unlisted pooled funds have in place a
best practice corporate governance
model in consultation with their
respective investor base. These funds
have Responsible Entity Boards that
are comprised predominantly of non-
executive directors that are independent
of the Dexus Board. In addition, these
funds each have Advisory Committees in
place comprising Unitholder appointed
representatives. The Responsible Entity
Boards are responsible for reviewing
and approving recommendations with
respect to each Fund’s major decisions,
including acquisitions, divestments,
developments, major capital expenditure
and the annual Investment Plan.
The Dexus Board and Board Committee membership at 30 June 2021
Board
Audit
Committee
Risk
Committee
People &
Remuneration
Committee
Nomination
Committee
Environmental,
Social and
Governance
Committee
Director
Richard Sheppard
Darren Steinberg
Patrick Allaway
Penny Bingham-Hall
Tonianne Dwyer
Mark Ford
Warwick Negus
The Hon. Nicola Roxon
KEY
Chair and member
Member
72 Governance
Dexus also acknowledges the
importance of effective corporate
governance practices in relation to its
third party capital partners. Firm policies
are in place to manage conflicts of
interest and related party transactions.
In managing conflicts of interest, Dexus
has established a structure whereby the
responsibility for the investment vehicle
is separated from the other Funds or
investment vehicles involved for which
Dexus provides services.
The Fund Manager for each Fund or
investment vehicle will, at all times,
act in the best interests of the Fund
or investment vehicle. In addition,
staff involved in managing a Fund are
dedicated to the funds management
business, rather than to other activities.
Following the acquisition of APN
Property Group, Dexus will manage
two additional listed funds and will
apply many of the same governance
arrangements. These funds will also
benefit from leveraging Dexus’s funds
and property management expertise to
drive growth and performance.
Board of Directors
Our Board comprises a majority of
Independent Directors with all directors
other than the CEO being Independent
Non-Executive Directors. The Board
currently consists of seven Independent
Non-Executive Directors and one
Executive Director. The Board renewal
process over the past several years
has produced an experienced Board
of Directors with a broad and diverse
skill set. Our Board has determined
that, along with individual Director
performance, diversity is integral
to a well-functioning board. We
also acknowledge that an effective
Board relies on board members with
different tenures.
In FY21, we progressed our Board
renewal strategy, with the appointment
of Warwick Negus to the Board on 1
February 2021 and the retirement of
John Conde on 2 September 2020 and
Peter St George on 30 June 2021. Mr
Negus brings a valuable mix of funds
management, finance and property
industry experience to our Board and
his expertise complements the Board’s
diverse skillset.
Both Mr Conde and Mr St George had
served more than 11 years as non-
executive directors, bringing a wealth of
knowledge and experience in accounting,
finance, people and remuneration
matters and corporate governance to the
Board and Management.
On behalf of the Board, the Group
Management Committee and our
Security holders, Mr Conde and Mr St
George are thanked for their dedication
and contribution to Dexus over the past
decade.
The members of the Board of Directors
and the relevant business and
management experience the Directors
bring to the Board is detailed on pages
74-76 and available at www.dexus.com.
Board skills and experience
Our Board has determined the skills,
expertise and experience required as a
collective to ensure diversity of thought
and vigorous debate on key decisions.
This is regularly reviewed when recruiting
new Directors and assessed by the Board
on an ongoing basis. The collective
experience of the current Directors has
been outlined against the areas of skill
and expertise in the table below. The
Board believes that its composition meets
or exceeds the minimum requirements in
each category.
Areas of skill
and expertise
Leadership
Governance
Strategy and
innovation
Experience
– Directorship experience with ASX listed companies
– CEO or Senior Executive experience
– Experience in governing large and complex organisations
– Experience in overseeing the successful execution of strategy
– Ability to assess, and commitment to ensure, the effectiveness of governance structures
– Ability to consider multiple scenarios to achieve the strategic direction
– Experience in identifying innovative ways of achieving an organisation’s vision, purpose and strategy
– Experience in complex merger and acquisition activities
– Deep understanding of financial drivers and alternative business models
Capital and funds
management
– Senior investment banking experience (including capital raising)
– Experience in the management of third party funds (including strategy and growth)
Large scale
property experience
(including
developments)
Talent, remuneration
and culture
Sustainability
Finance and
accounting
Risk management
– Deep experience and industry knowledge in the development and management of property
– Property sector expertise in Office, Industrial and Healthcare assets
– Understanding of industry trends (demographic and societal changes and stakeholder needs)
– Experience in attracting, engaging and retaining a highly talented and dynamic workforce
– Experience with remuneration structures and incentives in large ASX listed companies
– Experience in the management of people and the influence of organisational culture
– Experience in identifying and embedding innovative sustainability policies and practices
– Deep understanding of environmental and social issues relevant to the property sector
– Expertise in analysing and challenging accounting concepts and judgements
– Deep understanding of Australian Accounting Principles and their application in financial statements
– Experience in the oversight and management of material risks in large organisations including
technology risks (cyber attacks, loss of customer, proprietary and other sensitive information)
– Extensive knowledge of risk and compliance frameworks governing workplace health & safety,
environmental & community and social responsibility issues
Dexus 2021 Annual Report
73
OverviewApproachGovernanceFinancial reportInvestor informationPerformanceDirectors’ report
Board of
Directors
The key areas of focus for the
Board and Board Committees
during FY21 are aligned to each
of our key resources
Board focus
during the year
Financial
The Board and Board Audit
Committee are involved in
focusing on financial performance.
→ p. 28
Properties
The Board is involved in approving
transactions and developments
across the portfolio.
→ p. 42
People and capabilities
The Board and Board People
& Remuneration Committee
are involved in aspects relating
to employees.
→ p. 50
Customers and
Communities
The Board and Board ESG
Committee are involved in
reviewing aspects relating to
customers and community
related activities.
→ p. 54
Environment
The Board and Board ESG
Committee are involved in
reviewing aspects relating
to climate change and the
environment.
→ p. 62
Risk
The Board Risk Committee
is involved in reviewing and
monitoring our key risks.
→ p. 22
74 Governance – Board of Directors
Richard Sheppard
Chair and Independent Director
BEc Hons, FAICD
Appointed to the Board on 1 January 2012, Richard
Sheppard is both Chair and Independent Director
of Dexus Funds Management Limited, Chair of the
Board Nomination Committee and a member of the
Board People & Remuneration Committee.
Richard is a Director of Snowy Hydro Limited and
Star Entertainment Group.
Richard brings to the Dexus Board extensive
experience in banking and finance and as a
director and Chairman of listed and unlisted
property trusts. He was Managing Director and
Chief Executive Officer of Macquarie Bank Limited
and Deputy Managing Director of Macquarie Group
Limited from 2007 until late 2011. Following seven
years at the Reserve Bank of Australia, Richard
joined Macquarie Group’s predecessor, Hill Samuel
Australia in 1975, initially working in Corporate
Finance. Richard became Head of the Corporate
Banking Group in 1988 and headed a number of
the Bank’s major operating Groups, including the
Financial Services Group and the Corporate Affairs
Group. He was a member of the Group Executive
Committee since 1986 and Deputy Managing
Director since 1996. Richard was also Chairman
of the Australian Government’s Financial Sector
Advisory Council, Macquarie Group Foundation,
Eraring Energy and Green State Power Pty Limited.
Patrick Allaway
Independent Director
BA/LLB
Appointed to the Board on 1 February 2020,
Patrick Allaway is an Independent Director of
Dexus Funds Management Limited and a member
of the Board Nomination Committee, Board Audit
Committee and Board Risk Committee.
Patrick is Chairman of the Bank of Queensland
and a Non-Executive Director of Allianz
Australia and is on the Advisory Board of Adobe
International.
Patrick brings over 30 years’ experience in
financial services across financial markets,
capital markets, and corporate advisory. Patrick’s
executive career was in financial services with
Citibank and Swiss Bank Corporation (now UBS)
working in Sydney, New York, Zurich and London.
Patrick was also Managing Director of SBC
Capital Markets & Treasury.
Patrick has over 15 years Non-Executive Director
experience across financial services, property,
media, and retail. Patrick was formerly a Non-
Executive Director of Macquarie Goodman
Industrial Trust, Metcash Limited, Fairfax Media,
Woolworths South Africa, David Jones, Country
Road Group, and Domain Limited. He was also
Chair of the Audit & Risk Committees for Metcash,
David Jones, and Country Road Group.
Penny Bingham-Hall
Independent Director
BA (Industrial Design), FAICD, SF (Fin)
Appointed to the Board on 10 June 2014, Penny Bingham-Hall is an Independent Director of Dexus
Funds Management Limited, Chair of the Board People & Remuneration Committee and a member
of the Board Nomination Committee and Board Environmental, Social & Governance Committee.
Penny is a Non-Executive Director of Fortescue Metals Group Ltd, BlueScope Steel Limited, Supply
Nation, the Crescent Foundation and Vocus Group Limited. Penny is also Chair of the Taronga
Conservation Society Australia and the NSW Freight and Logistics Advisory Council.
Penny has broad industry experience having spent more than 20 years in a variety of senior
management roles with Leighton Holdings Limited including Executive General Manager Strategy,
responsible for the Group’s overall business strategy and Executive General Manager Corporate,
responsible for business planning, corporate affairs including investor relations and governance
systems. She is a former director of the Port Authority of NSW, Australian Postal Corporation,
SCEGGS Darlinghurst Limited, Macquarie Specialised Asset Management Limited and the Global
Foundation (a member-based organisation promoting high-level thinking within Australia and
cooperation between Australia and the world). Penny also served as the inaugural Chair of
Advocacy Services Australia Limited, a not-for-profit organisation promoting the interests of the
Australian tourism, transport, infrastructure and related industries.
Tonianne Dwyer
Independent Director
BJuris (Hons), LLB (Hons)
Appointed to the Board on 24 August 2011, Tonianne Dwyer is an Independent Director of Dexus
Funds Management Limited and Dexus Wholesale Property Limited, Chair of the Board Risk
Committee and a member of the Board Audit Committee and Board Nomination Committee.
Tonianne is a Director of OZ Minerals Limited, ALS Limited and Incitec Pivot Limited. She is also
Deputy Chancellor and a member of the Senate of the University of Queensland, and she is on
the Board of the Sir John Monash Foundation.
Tonianne brings to the Board significant experience as a company director and executive
working in listed property, funds management and corporate strategy across a variety
of international markets. She was a Director from 2006 until 2010 of Quintain Estates and
Development – a listed United Kingdom property company comprising funds management,
investment and urban regeneration – and was Head of Funds Management from 2003. Prior to
joining Quintain, Tonianne was a Director of Investment Banking at Hambros Bank, SG Cowen
and Societe Generale based in London. She also held directorships on Queensland Treasury
Corporation, Metcash Limited and Cardno Limited, the Bristol & Bath Science Park Stakeholder
Board, and on a number of boards associated with Quintain’s funds management business
including the Quercus, Quantum and iQ Property Partnerships.
Mark Ford
Independent Director
Dip. Tech (Commerce), CA, FAICD
Appointed to the Board on 1 November 2016, Mark Ford is an Independent Director of Dexus Funds
Management Limited and Dexus Wholesale Property Limited, Chair of the Board Audit Committee
and a member of the Board Environmental, Social & Governance Committee and Board
Nomination Committee.
Mark is Chair of Kiwi Property Group and Non-Executive Director of the manager for China
Commercial Trust. He is a Director of Prime Property Fund Asia.
Mark has extensive property industry experience and has been involved in real estate funds
management for over 25 years. He was previously Managing Director, Head of DB Real Estate
Australia, where he managed more than $10 billion in property funds and sat on the Global
Executive Committee for Deutsche Bank Real Estate and RREEF. Mark was also a Director in
the Property Investment Banking division of Macquarie and was involved in listing the previous
Macquarie Office Fund. His previous directorships include Comrealty Limited, Property Council of
Australia, Deutsche Asset Management Australia and he was also Founding Chair of Cbus Property
Pty Limited and South East Asia Property Company. Mark previously held senior roles with Price
Waterhouse and Macquarie Bank.
Dexus 2021 Annual Report
75
OverviewApproachGovernanceFinancial reportInvestor informationPerformanceDirectors’ report
Board of Directors continued
Warwick Negus
Independent Director
BBus (UTS), MCom (UNSW), SF Fin
Appointed to the Board on 1 February 2021, Warwick Negus is an Independent Director of Dexus
Funds Management Limited and a member of the Board Nomination Committee, Board Audit
Committee and Board Risk Committee.
Warwick is Chair of Pengana Capital Group and a Non-Executive Director of Washington H. Soul
Pattinson, the Bank of Queensland, Virgin Australia Holdings Limited, Terrace Tower Group, New
South Wales Rugby Union Limited and Tantallon Capital Advisors. He is also Deputy Chancellor
and a member of the Council of UNSW.
Warwick has more than 30 years of funds management, finance and property industry
experience in Australia, Europe and Asia. His most recent executive roles included Chief Executive
Officer of Colonial First State Global Asset Management, Chief Executive Officer of 452 Capital,
and Goldman Sachs Managing Director in Australia, London, and Singapore. Warwick was
formerly Chair of UNSW Global and a Non-Executive Director of FINSIA.
The Hon. Nicola Roxon
Independent Director
BA/LLB (Hons), GAICD
Appointed to the Board on 1 September 2017, Nicola Roxon is an Independent Director of
Dexus Funds Management Limited, Chair of the Board Environmental, Social & Governance
Committee and a member of the Board People & Remuneration Committee and Board
Nomination Committee.
Nicola is an Independent Chair of HESTA and VicHealth, a Non-Executive Director of Lifestyle
Communities Limited and Health Justice Australia and chairs the Lifestyle Communities
Remuneration Committee. Prior to her non-executive career, Nicola served in the Commonwealth
Parliament, including as Minister for Health and Australia’s first female Attorney-General.
Nicola brings more than 20 years’ experience in government and law which have given her
significant insights into health, public policy and professional services sectors.
Darren Steinberg
Chief Executive Officer and Executive Director
BEc, FAICD, FRICS, FAPI
Appointed to the Board on 1 March 2012, Darren Steinberg is the CEO of Dexus and an Executive
Director of Dexus Funds Management Limited.
Darren has over thirty years’ experience in the property and funds management industry with an
extensive background in office, industrial and retail property investment and development. He
has a Bachelor of Economics from the University of Western Australia.
Darren is a Fellow of the Australian Institute of Company Directors, the Royal Institution of
Chartered Surveyors and the Australian Property Institute. He is a former National President of
the Property Council of Australia and a founding member of Property Champions of Change
Coalition. He is also a Director of VGI Partners Limited and Sydney Swans Limited.
76 Governance – Board of Directors
Board composition
Group
Management
Committee
Tenure
The Board has appointed a Group Management Committee (GMC)
comprising Dexus’s most senior executives. The GMC is responsible for
implementing Dexus’s strategy, maintaining Dexus’s high standards of
governance, driving culture and engagement, achieving objectives and
ensuring the prudent financial and risk management of the group.
0–3 years 25%
3–6 years 25%
6–9 years 12%
9+ years 38%
Members of the GMC in FY21 include:
Darren Steinberg
Chief Executive Officer and
Executive Director
Gender1
Men 57%
Women 43%
Professional
Qualifications
Economics 20%
MBA 10%
Other 10%
Commerce/
Accounting 30%
Law 30%
1 Non-Executive Directors only.
Melanie Bourke
Chief Operating
Officer
Brett Cameron
General Counsel and
Company Secretary
Deborah Coakley
EGM, Funds
Management
Ross Du Vernet
Chief Investment
Officer
Kevin George
EGM, Office
Alison Harrop
Chief Financial
Officer
Jonathan Hedger
EGM, Group Strategy
Stewart Hutcheon
EGM, Industrial, Retail
and Healthcare
David Yates
EGM, Investor
Relations,
Communications
and Sustainability
EGM = Executive General Manager
Dexus 2021 Annual Report
77
OverviewApproachGovernanceFinancial reportInvestor informationPerformanceDirectors’ report
Remuneration Report
Dear Security holder,
On behalf of the Board, I am pleased to
present the Remuneration Report for the
year ended 30 June 2021 (FY21).
Year in review
Throughout the year, as described
on pages 6-11 of the Chair and CEO
review, Dexus maintained a focus on
maximising property portfolio income
and performance, while also supporting
our small business customers impacted
by the lockdowns and growing and
diversifying the funds management
business.
It was a year in which our entire
workforce created value for future years
by making complex transactions come
to fruition. This included attracting new
unlisted investors through the merger of
AMP Capital Diversified Property Fund
with Dexus Wholesale Property Fund and
strengthening our funds management
business through the acquisition of
APN Property Group. In addition, Dexus
was involved in undertaking $5.6 billion
of healthcare, industrial and office
transactions across the Group.
Despite the ongoing challenges
presented by the COVID-19 pandemic,
Dexus achieved 3% growth in Adjusted
Funds From Operations (AFFO) and
distribution per security (51.8 cents)
driven by a combination of better-
than-expected outcomes achieved
across the property portfolio, as well as
delayed settlements of asset sales and
other initiatives. This result is particularly
pleasing given the initial expectation for
a distribution consistent with FY20 (50.3
cents) and demonstrates our leaders’
focus on Security holder value and the
commitment of our people in responding
to the challenges presented by the
pandemic.
Dexus also performed well in other key
financial and non-financial areas:
– Achieving relative outperformance for
our funds, with five out of seven funds
within the funds management business
outperforming their respective external
benchmark measures
– Achieving a high customer Net
Promoter Score of +46
– Reinforcing our strong culture and
engaged workforce by achieving a
weighted average employee Net
Promoter Score of +43
– Achieving a 100% safety audit score at
Dexus workplaces and zero fatalities
– Delivering strong ESG performance
relative to four external benchmarks
We also made progress on fostering
an inclusive and diverse workforce and
investing in our people which is detailed
in the People and capabilities section
from page 50.
FY21 remuneration outcomes
No increases were made to Executive
KMP remuneration or Non-Executive
Director fees in FY21, with one exception
to reflect an expanded role.
On 1 July 2020, remuneration for all KMP
reverted back to prior levels following
reductions for the last quarter of FY20 as
a result of COVID-19.
As outlined in our FY20 Remuneration
Report, the unprecedented conditions
experienced in 2020 meant that the
Board set performance targets for the
FY21 Short Term Incentive (STI) in line
with business forecasts in November
2020. These targets were reviewed in
February 2021, with no adjustments to
performance expectations made at
that time. This differed from our typical
approach of setting the targets at the
commencement of the performance
period.
As part of the FY21 performance
assessment, the Board considered
whether any discretion on the STI
outcomes should be applied in light
of the challenges in setting targets
and the better-than-expected AFFO
performance. However, the Board is
confident that the 3% growth in AFFO,
and Dexus’s performance against the
other key metrics outlined above, were
achieved as a result of active portfolio
management and the successful
execution of key initiatives. In reviewing
these outcomes, the Board would like
to acknowledge our people for their
exceptional contributions during FY21.
Reflecting Dexus’s performance,
Executive KMP STI outcomes for FY21
ranged from 100% to 125% of target. STI
payments reflect the outperformance
of financial KPIs, execution of numerous
initiatives to embed future growth,
continued strong ESG performance and
support from our customers and our
employees.
The Long-Term Incentive (LTI) for
Executive KMP for Tranche 1 of the FY19
plan vested at 69.5% and Tranche 2 of
the FY18 plan vested at 97.4%.
Despite our strong performance during
much of the performance period, our
AFFO growth and Return on Contributed
Equity (ROCE) performance were
adversely impacted by the COVID-19
pandemic. These outcomes are lower
than our historical outcomes, which
have typically vested between 95% and
100% over the past three financial years.
We expect to see this trend of lower
vesting outcomes continue for future LTI
tranches as the impact of the pandemic
encompasses a greater proportion of
the respective performance periods.
The Board is confident that the FY21
remuneration outcomes reflect the
performance achieved by Dexus through
a period of continuing uncertainty
and reflect the returns delivered to our
investors.
FY21 remuneration decisions
FY21 LTI grant changes
The environment faced in 2020 made
the setting of hurdles for the FY21 LTI
grant a difficult exercise. The Board
recognised the importance of securing
the senior leadership team in a
competitive employment market by the
introduction of a retention component
weighted at 50% for FY21 only. This
applied to all participants in the LTI plan
with the exception of Darren Steinberg,
Deborah Coakley and Ross Du Vernet.
The Board also introduced a threshold
level of vesting for AFFO growth which
was below the ‘through the cycle’ range
of 3% to 5% given the difficult operating
environment. Additional detail on the
changes made to the FY21 LTI grant, are
detailed in section 3.3 of this report.
78 Directors’ report – Remuneration Report
Once-off awards
As announced to the Australian
Securities Exchange on 25 May 2021, the
Board determined that it was in Dexus’s
best interests to put in place measures
to retain three Executive KMP over
the next three and four years in order
to maintain stability in the Executive
team in a competitive employment
market. This is particularly important
as the Board believes these individuals
have the highly sought-after skills
and experience required to navigate
the challenges being experienced in
the Australian office market and to
deliver the shift in focus of our strategic
objectives. These awards were a once-
off CEO Incentive Award for Darren
Steinberg, and a once-off Retention
Equity Award to Deborah Coakley
(EGM, Funds Management) and Ross Du
Vernet (Chief Investment Officer). These
awards are detailed in section 3.4 of this
report.
Changes to remuneration for
FY22
A review of external remuneration
benchmarking for senior property
executives resulted in Deborah Coakley
and Ross Du Vernet receiving fixed
remuneration increases effective
1 July 2021. There will be no changes
in FY22 to other Executive KMPs’ fixed
remuneration, other than the legislated
superannuation increase of 0.5%.
Average fixed remuneration increases
for employees will be no more than 3%
including the legislated superannuation
increase. Non-Executive Directors’
fees will increase by approximately
2%, with the Chair fee to increase by
approximately 5%, effective 1 July 2021.
Board focus
The main objective of the Board
People and Remuneration Committee
(PRC) is to assist the Board in fulfilling
its responsibilities of developing
remuneration strategy, framework and
policies for Board approval for the
following groups:
– Non-Executive Directors (NEDs)
– Executive Key Management
Personnel (Executive KMP),
including the Chief Executive
Officer (CEO)
– Group Management Committee
(GMC)
In FY21, the PRC also undertook a range
of activities relating to broader people
and remuneration issues including:
– Delivering the Director/Employee
engagement program
– Endorsing the design of FY21
Group Scorecard to the Board for
approval
– Endorsing the FY21 LTI performance
hurdles to the Board for approval
– Approving the Inclusion and
Diversity strategic priorities and
targets
– Approving the FY22 Fixed
Remuneration parameters
– Monitoring the organisational
culture, employee engagement
and corporate culture metrics
– Reviewing talent development
programs and succession planning
– Approving performance objectives
and Key Performance Indicators for
the CEO, Executive KMP and other
executives
– Endorsing the CEO Incentive
Award and Retention Equity
Awards to the Board for approval
– Approving the Plan Features for
the CEO Incentive Award and
Retention Equity Awards
– Consulting with key stakeholders
regarding proposed changes to
the LTI Plan for FY22
– Approving the two additional
GMC appointments effective
1 September 2020
In response to investor and proxy
advisor feedback regarding duplication
of AFFO as a performance measure
in the STI and LTI plans, and the
Board’s focus on delivering positive
absolute returns to Security holders,
the Board has decided to change the
performance measures for the LTI plan,
effective from FY22. This change has
resulted in:
– The AFFO growth measure being
removed from the LTI but retained as
a key financial measure in the annual
STI plan.
– The introduction of an Absolute Total
Security holder Return (ATSR) measure
with a ‘through the cycle’ hurdle range
of 6-12% compound annual growth
rate (CAGR), weighted at 40% of the
award.
– Retaining the existing average ROCE
measure and ‘through the cycle’
hurdle range of 7-10%, weighted at
40% of the award.
– The introduction of measures
related to the successful execution
of strategic objectives, collectively
weighted at 20% of the award.
The Board is not proposing any other
changes to the LTI for FY22. Further
details are outlined in section 5. The
Board believes the changes made
in both FY21 and FY22 are in the
best interests of all stakeholders by
increasing alignment to our revised
strategic objectives and in delivering
a framework which creates sustained
value for our investors.
We welcome your feedback on our
remuneration framework and look
forward to your continued support at
our 2021 AGM.
Sincerely
Penny Bingham-Hall
Chair – People and Remuneration
Committee
This report has been prepared and audited
in accordance with section 308(3C) of the
Corporations Act 2001.
Dexus 2021 Annual Report
Dexus 2021 Annual Report
79
79
OverviewApproachGovernanceDirectors’ reportFinancial reportInvestor informationPerformance
Remuneration Report continued
Contents
1. Introduction
2. Remuneration strategy and
governance
3. FY21 remuneration structure
4. FY21 performance and
remuneration outcomes
5. FY22 remuneration framework
6. Terms of Executive KMP service
agreements
7. Non-Executive Directors’ (NED)
remuneration
8. Additional disclosures
80
81
85
92
99
101
102
104
This Remuneration
Report forms part of
the Directors’ Report
and outlines the
remuneration framework
and outcomes for KMP
in FY21.
Our remuneration approach
Our FY21 remuneration framework
supported our revised strategic
objectives, which are focused on
delivering sustainable income streams
and being a real estate investment
partner of choice for third party capital.
To deliver on our business strategy,
market performance and Security holder
returns are paramount.
The Board set performance targets
for the Short-Term Incentive (STI) and
Long-Term Incentive (LTI) to manage
Executives’ alignment to our strategy.
Our mix of financial and non-financial
measures encouraged responsible
decisions that benefit both the short
and long term. We believe that this
approach resulted in remuneration
results that reflect sustainable
performance through the business cycle.
80 Directors’ report – Remuneration Report
1. Introduction
1.1 Key Management Personnel (KMP)
In this report, KMP are those individuals having the authority and
responsibility for planning, directing and controlling the activities of the
Group, either directly or indirectly.
They comprise:
– Non-Executive Directors (NEDs)
– Executive Directors (i.e. the CEO)
– Other Executives considered KMP
The CEO and other Executives considered KMP are referred to collectively
as “Executive KMP” in this report. Outlined below are the KMP of the Group
during FY20 and FY21.
There have been no changes to KMP since the end of FY21 up to the date
of the signing of the Directors report.
Key Management Personnel
Independent Non-Executive Directors
W Richard Sheppard
Non-Executive Chair
Patrick Allaway
Non-Executive Director
Penny Bingham-Hall
Non-Executive Director
John C Conde AO
Non-Executive Director
Tonianne Dwyer
Non-Executive Director
Mark H Ford
Non-Executive Director
Warwick M Negus
Non-Executive Director
The Hon. Nicola Roxon
Non-Executive Director
Peter B St George
Non-Executive Director
Executive Director and KMP
Darren J Steinberg
Executive Director & Chief Executive Officer
Other Executive KMP
Deborah C Coakley
Executive General Manager, Funds Management
Ross G Du Vernet
Chief Investment Officer
Kevin L George
Executive General Manager, Office
Alison C Harrop
Chief Financial Officer
KMP
FY20
From
1 February
2020
KMP
FY21
Until
2 September
2020
From
1 February
2021
Until
30 June 2021
2. Remuneration strategy and governance
2.1 Our remuneration strategy
Our Vision
Our Strategy
Our Remuneration Strategy
To be globally recognised as
Australia’s leading real estate
company
To deliver superior risk-adjusted
returns for investors from high quality
real estate in Australia’s major cities
To attract, retain and motivate the
best people to create a great culture
that delivers our business strategy
and contributes to sustainable long-
term returns
Remuneration principles
Culture
Alignment to
performance
Market
competitive
We align reward to
our strong risk, high
performance, diverse
and inclusive culture
We reward for
performance aligned to
our business strategy
with an emphasis on
equity ownership
We position reward
opportunity to
attract and retain the
best talent
Sustainable
We appropriately
reward for both
financial and
non-financial
outcomes
Simple and
Transparent
We keep it simple
and set clear
expectations
2.2 Executive remuneration components
Fixed Remuneration (FR)
Short-Term Incentive (STI)
Long-Term Incentive (LTI)
Purpose
Attract and retain Executives
with the capability and
experience to deliver our
strategy.
Reward for performance against
annual financial and non-
financial objectives.
Align performance focus with
the long-term business strategy
to drive sustained earnings and
Security holder returns.
Link to
performance
Appropriately compensate
Executives for driving a great
culture and delivering on the
business strategy
Strategic annual objectives are
embedded in each Executive’s
personalised scorecard of
performance measures.
Performance hurdles are set by
the Board over three and four-
year periods to deliver sustained
Security holder value.
Alignment
Attract and retain the best
people based upon the
competitive landscape among
relevant peers.
Reward year-on-year
performance achieved in a
balanced and sustainable
manner.
Delivery
Competitive, market-based fixed
remuneration.
(Base salary, statutory
superannuation and other
benefits)
Annual cash (75%)
Deferred Security Rights with
allocation calculated at Face
Value (25%)
12.5% 12.5%
1 year 2 years
Encourage sustainable, long-
term value creation through
equity ownership
Performance Rights with
allocation calculated at Face
Value
50% 50%
3 years 4 years
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Remuneration Report continued
2.3 Remuneration delivery and mix
The Executive KMP remuneration mix is structured so that a substantial portion of remuneration is delivered as Dexus
Securities through either deferred STI or LTI. The total remuneration opportunity provides for higher remuneration outcomes
if outperformance is delivered. The following diagram (which is not to scale) sets out the remuneration structure and delivery
timing for Executive KMP.
Remuneration delivery
Fixed Remuneration
STI
(Target is 100% of fixed remuneration
and Outperformance is 125% of fixed
remuneration)
LTI delivered as Performance Rights
(150% of fixed remuneration for CEO or 75%
of fixed remuneration for other Executive KMP)
100%
75% paid in Cash
25% paid as
Security Rights
50% subject to a 3-year
performance period
50% subject to a 4-year
performance period
Behavioural gateway applied
Unvested Rights subject to forfeitures
Base Salary, Superannuation
and Other Benefits1
Cash STI
12.5%
deferred
for 1 year
delivered
as Security
Rights
12.5%
deferred
for 2 years
delivered
as Security
Rights
50% vests after 3 years
subject to the
achievement of
performance measures
50% vests after 4 years
subject to the
achievement of
performance measures
1
r
a
e
Y
2
r
a
e
Y
3
r
a
e
Y
4
r
a
e
Y
1 Other Benefits comprise wellbeing and insurance arrangements provided to all employees. These benefits do not flow into the STI and LTI
calculations.
The diagram above does not include once-off remuneration arrangements approved by the Board during FY21. For more information, refer to
section 3.3.
82 Directors’ report – Remuneration Report
Remuneration mix
The remuneration components for each Executive KMP are expressed as a percentage of total remuneration, with the
STI value varied to reflect target performance (100% of target amount) and outperformance (125% of target amount).
The following diagram sets out the typical remuneration mix for Executive KMP.
The remuneration mix below reflects the ongoing remuneration structure and does not consider any once-off
arrangements. For specific details on the remuneration mix and incentive plan opportunities applying to the CEO
and Other Executive KMP in FY21, refer to section 3.
CEO
Target
29%
Outperformance
27%
Other Executive KMP
Target
36%
Outperformance
33%
21%
7%
43%
25%
8%
40%
27%
31%
9%
28%
10%
26%
Fixed Remuneration (Cash)
STI (Cash)
STI Deferred (Security Rights)
Maximum LTI (Performance Rights)
2.4 Dexus Securities Trading Policy
The Securities Trading Policy provides guidance to Directors, Employees (including KMP), Contractors and Associates for ongoing
compliance with legal obligations relating to trading or investing in financial products managed by Dexus.
The Policy prohibits employees from trading in financial products while they are in possession of Inside Information (non-public
price sensitive information) and hedging their exposure to unvested Dexus Securities. Trading in Dexus Securities or related
products is only permitted with the permission of the Chair (for Directors and the CEO) or the CEO (for Other Executive KMP and
all other staff).
The Group also has Conflict of Interest and Insider Trading policies in place which extend to family members and associates
of employees.
2.5 Minimum Security holdings guidelines
A minimum Security holding guideline was introduced on 1 July 2018, with all Executive KMP and Group Management Committee
(GMC) members targeting to attain the minimum Security holding within five years of this date, or their appointment to GMC. The
value is calculated by reference to the 12-month average fixed remuneration for the relevant financial year. For existing Executive
KMP and GMC members as at 1 July 2018, the guide is based on fixed remuneration as at 1 July 2018. By 1 July 2023, the CEO is
expected to hold Dexus Securities to the value of 150% of fixed remuneration and Other Executive KMP are expected to hold
Dexus Securities to the value of 75% of their fixed remuneration.
Minimum Security holding guidelines are also in place for Non-Executive Directors, such that they are expected to hold the
equivalent of 100% of their base fees in Dexus Securities, to be acquired over five years from appointment date (as referenced in
Section 7.2 of this report).
2.6 Employee Security Ownership Plan (ESOP)
All employees may be eligible to receive up to $1,000 worth of Dexus Securities each year for no cash payment under the ESOP.
The number of Securities a participant receives is calculated by dividing $1,000 by the Volume Weighted Average Price (VWAP) of
Dexus Securities ten trading days either side of the grant date. The Securities carry all the same rights as a fully owned Security.
The Securities granted under the Plan cannot be sold, transferred, or otherwise disposed of or dealt with for a period of three
years after the Grant Date (Restriction Period). Following the expiry of the Restriction Period, participants will be free to sell their
Securities (subject to the terms of the Dexus Securities Trading Policy). If a participant ceases to be an employee of Dexus, the
restriction will no longer apply, and the Securities may be sold or transferred at the participant’s discretion.
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Remuneration Report continued
2.7 Remuneration governance
Board
Approves and has oversight of
Dexus’s Remuneration Policy, NED
and Executive KMP remuneration
and culture indicators.
People & Remuneration
Committee
Members
Penny Bingham-Hall
The Hon. Nicola Roxon
Richard Sheppard
Risk Committee
Advises the PRC of material risk issues,
behaviours and/or compliance breaches.
Two joint meetings are held each
year with the PRC to review Risk
Culture frameworks, metrics and
audit information.
Management
Propose Executive appointments,
succession plans, policies, remuneration
structures and remuneration outcomes
to the PRC for review and approval or
recommendation to the Board.
Audit Committee
Review the calculation of
financial performance measures
within incentive plans.
Independent external advisors
The Board’s independent remuneration
advisor, EY, provides market practice
insights and trends in relation to Executive
remuneration approaches. EY did not make
any remuneration recommendations in FY21.
Any advice provided by EY, or any other
remuneration consultant, is used as an input
in making remuneration decisions, and is
not a substitute for consideration of relevant
issues by each member of the PRC.
People & Remuneration Committee (PRC)
Meetings
The PRC is responsible for developing the remuneration strategy,
framework and policies for NEDs, Executive KMP and the GMC for
Board approval.
The PRC is required to meet at least three times per year.
In FY21, the PRC met five times to discuss and review
remuneration, and people and culture related matters.
The responsibilities of the PRC are outlined in the PRC’s Terms of
Reference, available at www.dexus.com/boardcommittees, which
is reviewed and approved annually by the Board. The primary
accountabilities of the PRC are:
– Reviewing and recommending to the Board for approval
Dexus’s Remuneration practices, which covers Executive KMP,
GMC members and all other Dexus employees
– Reviewing and approving the Group Scorecard, annual
performance objectives and KPIs of the CEO and GMC
members
Accurate and complete committee papers are provided
to all PRC members prior to meetings to enable timely,
considered and effective decision making. The PRC may
request additional information from management or
external advisors where required.
Remuneration decision making
When discussing the remuneration strategy, framework and
outcomes, the PRC seeks input from:
– Audit Committee
– Recommending to the Board for approval CEO and GMC
– Risk Committee
members’ remuneration and incentive payments
– Reviewing and approving aggregate fixed remuneration
changes and annual incentive payments for all
Dexus employees
– Reviewing and recommending to the Board for approval the
Code of Conduct and other key policies
– Reviewing and recommending to the Board for approval the
Diversity Principles, including identification of measurable
objectives for achieving gender diversity and progress towards
those objectives
– Reviewing and approving processes and information on talent
assessments, leadership development and succession planning
– Reviewing processes and metrics for measuring culture and
behaviours, including risk culture areas
– Overseeing general people and culture practices including the
risk of gender or other bias in remuneration of Directors, GMC
members and other employees
Members
The PRC members have experience in remuneration, people,
leadership, human resources, risk management and compliance
which enables effective oversight and governance of Dexus’s
remuneration framework.
84 Directors’ report – Remuneration Report
– People and Culture team
– Independent external advisors (when required)
For remuneration concerning the Executive KMP, not
including the CEO, the CEO’s input was sought to help
guide discussions and provide input on Executive KMP
performance throughout the year. The CEO’s remuneration
was considered separately to manage conflicts of interest.
The PRC uses a range of inputs when assessing Executive
KMP performance and determining remuneration outcomes:
– Financial performance – measured using audited financial
measures
– Management providing detailed examples of how non-
financial outcomes have been achieved
– Demonstrated leadership of the Dexus values and
behaviours
– External remuneration benchmarking provided by
independent external advisors
Under certain circumstances, the PRC and Board may
adjust proposed remuneration outcomes for Executive
KMP and the GMC or require a forfeit of unvested Security
Rights or Performance Rights (Rights) issued under the
Dexus LTI or STI Plans.
3. FY21 remuneration structure
3.1 Fixed remuneration
The Group’s fixed remuneration strategy is to offer market competitive rates to attract and retain top talent. Remuneration levels
are set based on role size, complexity, scope and leadership accountability. Dexus is committed to continue adhering to the
principle of pay equity, which has achieved gender pay equity across like-for-like roles. To determine fixed remuneration levels,
Dexus benchmarks externally against A-REIT ASX100 companies, and compares similar roles in organisations with similar market
capitalisation.
No increases were made to annual fixed remuneration levels for Executive KMP in FY21, with the exception of Deborah Coakley
(EGM, Funds Management) who received a 7.4% ($50,000) increase to her fixed remuneration to account for her expanded role.
In FY20, the CEO’s base salary was reduced by 15%, while Other Executive KMP, GMC members’ and other executives’ base
salaries were reduced by 10%, for the period 1 April 2020 to 30 June 2020. These measures were taken to assist in absorbing
the financial impact of COVID-19. Base salaries reverted to prior levels at the start of FY21. Consequently, the annual fixed
remuneration levels presented in this report will appear higher than those presented in our FY20 Remuneration Report.
The annual fixed remuneration levels for Executive KMP in FY21 were as follows:
Executive KMP
Darren J Steinberg
Deborah C Coakley
Ross G Du Vernet
Kevin L George
Alison C Harrop
Contract annual fixed remuneration ($)
1,600,000
725,000
750,000
750,000
750,000
3.2 Short-Term Incentive (STI)
The STI plan is aligned to Security holder interests by:
– Encouraging Executives to achieve year-on-year performance improvement in a balanced and sustainable manner.
– Mandatory deferral of 25% of each STI award into Security Rights deferred over one and two years, acting as a retention
mechanism and providing further alignment with Security holders’ interests.
75% Financial
Adjusted Funds From Operations (AFFO)
financial outcomes (relative measures)
$
25% Non-Financial
Customer, culture, environmental
sustainability and safety measures
Short-Term Incentive (at risk)
Cash
Annual cash payment (75%)
Equity
Deferred Security Rights (25%)
12.5%
1 year
12.5%
2 years
Subject to behavioural gateway
forfeiture provisions and
continued employment during
the vesting period.
Fixed
Remuneration
STI Target
Group Result on
Financial and
Non- financial
performance
measures
Individual
Contribution
Factor
Individual STI Outcome
(Capped at 125% of Target)
Each Executive KMP is awarded an individual STI outcome between zero and 125% of their target.
Individual STI outcomes are based on Group performance and an Individual Contribution Factor, which includes a behavioural gateway.
The maximum STI opportunity for Executive KMP is 125% of Fixed Remuneration (outperformance).
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Remuneration Report continued
STI plan structure
What are the financial performance measures
(75% of Group results)?
The financial performance measures have been selected
so the overall focus of Executive KMP is on achieving the
financial hurdles outlined by the annual business plans. AFFO
per security growth reflects the Group’s overall financial
performance and cash flow. Office and Funds Management
financial measures incentivise each business area to achieve
market competitive results relative to industry benchmarks.
What are the non-financial performance measures
(25% of Group results)?
The non-financial performance measures provide the
Board with a mechanism to enhance the sustainability of
annual results and make sure Dexus’s environment, people
and customer objectives are reflected in Executive KMPs’
remuneration outcomes.
What is the behavioural gateway (across the entire award)?
In FY20, Dexus introduced a behavioural gateway for
Executive KMP to further align performance with Dexus’s
values and expectations of executives.
The gateway requires that, for Executive KMP, there is no
material financial misstatement, no workplace fatality or
actions that are not in keeping with the commercial or ethical
standards expected by the Board and our stakeholders.
If an Executive KMP does not meet this gateway, then the
individual’s award will automatically be forfeited, regardless
of company performance.
What is the Individual Contribution Factor (ICF)
(award multiplier)?
The ICF is a multiplier that applies to the Group scorecard
result and can range between 0% and 125%. At the end of
the year, the CEO assesses Executive KMP performance to
determine their ICF outcome (in the case of the CEO, the
Board Chair assesses his performance).
STI outcomes are capped at 125% of target STI for Executive
KMP (and all other STI participants), even in cases where both
Group performance and an individual’s contribution result
in exceptional results (i.e., a Group scorecard result of 125%
and an ICF result of 125% will still result in a final STI outcome
of 125%).
The ICF outcome is determined by assessing the performance
of the individual in relation to the unique challenges they
faced that year, as well as individual performance objectives
set at the start of the performance year. These objectives
can include a combination of strategic, people, safety and
risk, leadership, governance and financial measures that are
specific to that Executive.
How much of the STI award is deferred?
Twenty-five percent (25%) of any award under the STI plan is
deferred into rights to Dexus Securities.
The Security Rights vest in two equal tranches, 1 and 2 years
after being granted. Security Rights deferred under the STI
plan are subject to forfeiture, and vest based on continued
employment.
86 Directors’ report – Remuneration Report
The number of Security Rights awarded is based on 25% of the
awarded STI value divided by the VWAP of Dexus Securities
10 trading days either side of the first trading day of the new
financial year.
The remaining 75% of any award is paid in cash in August
following the announcement of the Group’s annual results.
Dexus Securities are purchased on market and held in trust to
satisfy the deferred Security Rights for the STI plan.
Are distributions paid on unvested Security Rights awarded
under the STI plan?
For the portion of STI deferred as Security Rights, participants
are entitled to the benefit of distributions paid on the
underlying Dexus Securities prior to vesting through the issue
of additional Security Rights at the time of vesting.
What discretion does the Board have to determine outcomes?
The Board has the discretion to adjust STI outcomes upward
or downward, including to zero, where:
– The STI scorecard outcome does not reflect the actual
participant’s performance or conduct, the performance of
the Executive KMP’s business unit or functional unit, or the
overall Group performance
– There have been unintended consequences or outcomes
as a result of the Executive KMP’s actions, including where
the original performance outcomes are later found to have
been unrealised or not in line with the original performance
assessment
– The STI outcomes are materially misaligned with the
experience of Security holders
The Board would typically exercise its discretion in situations
where the combination of performance measures, behavioural
modifier and ICF have not resulted in remuneration outcomes
that reflect actual Group performance or the experience of
Security holders. The Board can apply its discretion on Group
outcomes or at the individual level.
When are STI awards forfeited?
Forfeiture will occur should the participant’s employment
terminate within six months of the grant date for any reason,
or if the participant voluntarily resigns or is terminated for
cause prior to the vesting date.
Security Rights may be reduced or cancelled at the Board’s
discretion, including in the following circumstances:
– Committing an act of fraud
– Wilful misconduct
– Serious or wilful negligence or incompetence
– Behaving in a way that does not meet the Code of
Conduct and results in reputational damage to Dexus
– Being convicted of a criminal offence
– If there has been a material misstatement of the Group’s
financial accounts as a consequence of a deliberate
misrepresentation or fraud
Notwithstanding the above, if a participant’s employment
is terminated and they are deemed a “Good Leaver” (i.e.
in circumstances of retirement, redundancy, death, illness,
serious disability or permanent incapacity, or other unforeseen
circumstances), the PRC may recommend that the Board
exercise its discretion to vest some or all of the Security Rights
at the time of termination.
3.3 Long-Term Incentive (LTI)
The LTI plan is aligned to Security holders’ interests in the following ways:
– Encourages Executives to make sustainable business decisions within the Board-approved strategy of the Group
– Aligns the financial interests of Executives participating in the LTI Plan with Security holders’ through exposure to Dexus
Securities
CEO, EGM Funds Management and CIO
The diagram below presents an overview of the FY21 LTI structure for Darren Steinberg (CEO), Deborah Coakley (EGM Funds
Management) and Ross Du Vernet (CIO).
For the FY21 LTI, the two performance conditions under the LTI plan are growth in AFFO per security (implied CAGR)1 and
average ROCE2 over both three and four-year periods. These performance conditions are weighted equally, measured distinctly
in each tranche, and align the plan outcomes with the commercial long-term performance that is within the Executives’ ability
to influence. The Board’s view is that investors will be rewarded over time by superior market performance of the Group when
Executives meet or exceed the hurdles in place.
50% Adjusted Funds from Operations
(AFFO) per security growth
50% Average Return on
Contributed Equity (ROCE)
Long-Term Incentive (at risk)
Equity
Performance Rights
with allocation calculated
at Face Value
50%
3-year
Performance Period
50%
4-year
Performance Period
Subject to behavioural gateway,
hurdles, forfeiture, and
continued employment during
the vesting period
Fixed
Remuneration
LTI Allocation
50%
AFFO per security
growth performance
50%
Average ROCE
Individual LTI Outcome
(Capped at 100% of
allocation)
Each Executive KMP is allocated an LTI opportunity subject to performance hurdles. The award may vest between 50% to 100%
of the allocation amount based on performance. LTI awards do not vest if performance targets are not met.
The maximum LTI opportunity for the CEO is 150% of Fixed Remuneration, and for other Executive KMP is 75% of Fixed Remuneration.
Broader senior leadership team
For the FY21 LTI plan only, a retention component was introduced for our broader senior leadership team. This decision was
made due to the criticality of retaining this team over the next three years to deliver on our revised strategic objectives. In
particular, to support Dexus in navigating the challenges COVID-19 has presented to the Australian office market, growing and
diversifying our funds management business and progressing our Group development pipeline.
The retention component represents 50% of the award, with the remaining 50% subject to AFFO growth and average ROCE
(weighted at 25% each). Vesting of the retention component is subject to service continuity and meeting governance and
behavioural standards, with 50% vesting after three-years and 50% after four-years, in line with the LTI plan structure.
The retention component does not result in any changes to LTI opportunity or the allocation methodology, which are consistent
with the diagram above.
1 The implied compound annual growth rate refers to the nominal growth per annum that is required to achieve the AFFO per security hurdle
over the vesting period.
2 The ROCE calculation excludes the impact of stabilised asset revaluations and includes the revaluations of major completed developments.
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LTI performance measures
AFFO per security growth is a key measure of growth and is calculated in line with the Property Council of Australia’s (PCA)
definition. AFFO comprises net profit/loss after tax attributable to stapled Security holders, calculated in accordance with
Australian Accounting Standards and adjusted for: property revaluations, impairments, derivative and foreign exchange
mark-to-market impacts, fair value movements of interest bearing liabilities, amortisation of tenant incentives, gain/loss
on sale of certain assets, straight line rent adjustments, deferred tax expense/benefit, certain transaction costs, one-off
significant items, amortisation of intangible assets, movements in right-of-use assets and lease liabilities, rental guarantees
and coupon income, less maintenance capital expenditure and lease incentives.
This hurdle enables the Board to reward the performance of management having regard to revenue generation (adjusted
for maintenance capital expenditure and incentives) using an implied CAGR of the Group’s aggregate AFFO earnings
per security.
Average ROCE represents the simple average return on contributed equity, calculated as a percentage, comprising AFFO
together with the net tangible asset impact from completed developments, divided by the weighted average contributed
equity during the period. ROCE is measured as the per annum average at the respective conclusion of the three and four-
year vesting periods.
This hurdle enables the Board to reward the performance of management having regard to the level of returns generated on
Security holder equity through a combination of improving earnings and capital management.
NTA impact from completed developments is calculated as the book value on the first statutory reporting period after
practical completion, less the book value at commencement less development costs.
Completed developments comprise major developments defined in accordance with Dexus’s guidelines for capital
expenditure which have regard to the quantum of development expenditure, increase in net lettable area, leasing and/
or rezoning or change of use. Completed developments exclude trading assets that generate trading profits which are
captured in AFFO.
During FY21 the following completed developments, amongst others, have been included in the calculation of ROCE:
– 180 Flinders Street, Melbourne, VIC
– 47 Momentum Way, Ravenhall, VIC
ROCE is calculated as follows each year: ROCE = (AFFO + NTA impact from completed developments) / Contributed
Equity. The ROCE calculation excludes the impact of stabilised asset revaluations and includes the revaluations of major
completed developments. Contributed equity is based on the book value of equity (i.e. reflected in the balance sheet) and
is a weighted average calculation.
For FY21, ROCE = ($561.7m + $42.1m) / $7,232.9m = 8.3%
Compared to the use of relative measures, the two absolute measures provide greater focus on the fundamentals of Dexus’s
business and on the performance of the Executive team in meeting the hurdles set by the Board.
The Board continues to review existing performance measures and their associated vesting schedules so they remain aligned
with investor expectations and Dexus’s revised strategic objectives. We note that the FY21 LTI grant was the last grant with
AFFO growth as a performance measure, with the Board making a decision to replace AFFO with different measures from FY22
onwards. AFFO remains a critical business metric as reflected in the LTI’s Average ROCE measure and the STI plan. Refer to
section 5 for further detail.
LTI hurdle ranges
The Board sets the hurdle range and vesting schedule for LTI performance measures over three and four-year periods. The
Board does not reset or change the hurdle range or vesting schedules during the performance period. The Board aligns the
hurdle range with the Group’s key operational metrics of maintaining a ‘through the cycle’ AFFO per security growth range of 3%
to 5% and ROCE of 7% to 10%.
Actual AFFO per security growth and Average ROCE performance achieved relative to the hurdles are disclosed retrospectively
at the end of the performance period. Dexus does not publish details of the hurdles prior to the testing of the first tranche at
the end of the first performance period (year 3), as this would result in the disclosure of commercially sensitive information in
connection with the Group’s forecasts.
88 Directors’ report – Remuneration Report
FY21 AFFO Targets
As part of delivering on our revised strategic objectives, since the start of FY21 Dexus has announced or completed the sale of
$3.2 billion of property assets and the purchase of $6.4 billion of property assets, and has also undertaken complex transactions
(e.g. ADPF and DWPF merger, proposal to acquire APN Property Group and establishment of Australian Unity relationship), which
will have a material impact on AFFO growth. Additionally, the consequences of COVID-19, including rent relief measures, resulted
in difficulties in setting meaningful targets for the FY21 LTI grant. As at the time of the Annual General Meeting in October
2020, the Board had not confirmed the details for the FY21 LTI grant. Subsequently, the Board reviewed the LTI performance
hurdles and ranges, with the principle of rewarding for long-term value creation. The decision was made to introduce a “below
the range threshold” for AFFO growth, where 25% of the AFFO component would vest (rather than 0% in prior years, when
performance was below the minimum target of 3%).
AFFO and ROCE Performance
Vesting outcome
Hurdle range
Below Threshold Performance
Nil vesting
Below threshold set by the Board
Threshold Performance
AFFO: 25% Vesting
For AFFO, a ‘threshold’ set by the Board for FY21 only
ROCE: Nil vesting
Not applicable to ROCE
Target performance
50% vesting
Set between the ‘through the cycle’ range set by the
Board of:
– AFFO per security growth 3% to 5%
– ROCE 7% to 10%
Between Target and Outperformance
Straight line vesting
Outperformance
100% vesting
Within or above the ‘through the cycle’ hurdle range
LTI plan structure
How is the number of Performance Rights determined?
The number of Performance Rights granted is equal to the participant’s LTI grant value (based on a percentage of fixed
remuneration) divided by the VWAP of Dexus Securities ten trading days either side of the first trading day of the new financial
year. The methodology calculates grants based on ‘face value’ rather than ‘fair value’.
The maximum LTI opportunity at grant is set at 150% of fixed remuneration for the CEO and 75% for Other Executive KMP.
Do participants receive distributions on unvested LTI awards?
Participants are not entitled to distributions paid on underlying Dexus Securities during the performance period prior to
Performance Rights being tested for vesting.
What discretion does the Board have to determine outcomes?
The Board has the discretion to adjust LTI outcomes upward or downward, including to zero, where:
– The LTI outcome does not reflect the participant’s performance or conduct, the performance of the Executive KMP’s business
unit or functional unit, or the overall Group performance
– There have been unintended consequences or outcomes as a result of the Executive KMP’s actions, including where the
original performance outcomes are later found to be unrealised or not in line with the original performance assessment
– The LTI outcome is materially misaligned with the experience of Security holders
The Board would typically exercise its discretion in situations where performance assessment has not resulted in remuneration
outcomes that reflect actual Group performance or the experience of Security holders. The Board can apply its discretion on
Group outcomes or at the individual level.
When are LTI awards forfeited?
If the performance hurdles are not met, Performance Rights relating to that tranche will be forfeited. There is no retesting of
forfeited Performance Rights. The Board maintains the discretion to forfeit unvested Performance Rights in the case of significant
misconduct or material misstatement of performance.
Additionally, forfeiture will occur should the participant’s employment terminate within 12 months of the grant date for any
reason, or if the participant voluntarily resigns or is terminated for cause prior to the vesting date.
Notwithstanding the above, if a participant’s employment is terminated and they are deemed a “Good Leaver” (i.e. in
circumstances of retirement, redundancy, death, illness, serious disability or permanent incapacity, or other unforeseen
circumstances), the PRC may recommend that the Board exercise its discretion to vest some or all of the Performance Rights at
the time of termination.
How is the LTI Plan administered?
The administration of the LTI plan is supported by the LTI plan rules.
Dexus Securities are purchased on market (for all participants including the CEO) to satisfy the Performance Rights for the LTI
plan and held in trust. The Board retains the right to amend, suspend or cancel the LTI plan at any time.
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3.4 Once-off awards made in FY21
As announced to the Australian Securities Exchange on 25 May 2021, the Board has introduced once-off awards to retain three
Executive KMP, including the CEO, over the next three and four years. The Board believes these individuals have the highly
sought-after skills required to support Dexus in navigating the challenges being experienced in the Australian office market and
the shift in focus to deliver our revised strategic objectives.
These awards comprise a once-off CEO Incentive Award to our CEO, Darren Steinberg, and a once-off Retention Equity Award
to both Deborah Coakley (EGM, Funds Management) and Ross Du Vernet (CIO).
CEO Incentive Award
Why has this award been made for FY21?
Darren Steinberg is well regarded as one of Australia’s leading CEOs and has a proven track record of creating value for
investors. Over Darren’s tenure, Dexus has delivered an annual compound TSR of 12.9% versus the ASX 200 REIT sector of 11.7%.
The Board unanimously supports retaining and rewarding Darren, which will provide the necessary leadership and experiences
to help Dexus navigate the challenges and capitalise on the opportunities expected across the Australian real estate market by
delivering on critical strategic objectives set by the Board. Specifically, the award aims to:
– Maintain the stability of our Executive team in a competitive employment market, which is critical to minimise any disruption to
the execution of the Group’s current and future strategic growth initiatives;
– Provide stability to Dexus as Darren leads our internal CEO successor development; and
– Provide further alignment with our investors due to the increase in potential equity ownership, rather than an increase in fixed
remuneration
How is the award delivered?
The CEO Incentive Award was granted on 1 June 2021 and was issued in the form of Dexus Performance Rights with a face value
of $3.5 million. The number of performance rights was determined by the VWAP of Dexus Securities over a three-month period
ending 31 May 2021. Dexus Securities for this award were acquired on-market and are held in trust. The table below provides an
overview of the number of performance rights held under the CEO Incentive Award.
Executive KMP
Darren J Steinberg
Grant date
1 June 2021
Number of
performance
rights granted
VWAP value per
performance right
Face value of
grant
Vesting date
356,335
$9.82
$3,500,000
1 July 2024
Does the participant receive distributions on the unvested award?
The CEO is not entitled to distributions paid on underlying Dexus Securities during the performance period prior to Performance
Rights being tested for vesting.
What are the performance conditions?
Performance under the Award will be based on the Board’s overall assessment of how well the CEO has supported Dexus in
navigating the challenges in the office market, maintaining a market leading position in ESG and delivering long-term value
for our investors. The Board will determine the percentage of Performance Rights to vest with reference to these over-arching
criteria and the successful delivery of key strategic measures over the three-year period, specifically:
– Diversification of capital partners and investors, and overall growth in funds management
– Strategic acquisition and divestment of assets across the Dexus investment portfolio, and
– Progressing the Group development pipeline
More detail on how these measures will be assessed is outlined in section 5.3 of this report.
How is vesting of the award determined?
The Performance Rights will vest after three years, subject to the achievement of the performance conditions outlined above,
service continuity and behavioural and governance standards being met. Where the CEO ceases employment prior to the end
of the vesting period, good leaver provisions may apply on unvested Performance Rights at the discretion of the Board.
90 Directors’ report – Remuneration Report
Retention Equity Award (CIO and EGM, Funds Management)
Why has this award been introduced for FY21?
The Board also approved a once-off Retention Equity Award for Deborah Coakley and Ross Du Vernet.
Dexus is currently moving into a growth phase consistent with the Group’s strategic objective of being a wholesale partner of
choice, and its focus on expanding and diversifying the funds management business. The Board believes that the Retention
Equity Award recognises the importance of Deborah Coakley and Ross Du Vernet to the leadership of Dexus and minimises any
disruption to delivering on this growth strategy.
The Board also believes that there is a need to strengthen our succession planning within our senior leadership talent and
maintain the stability of our executive team in a competitive employment market.
How are the awards delivered?
The Retention Equity Award was granted on 14 December 2020 and was issued in the form of Dexus Security Rights with a face
value of $1.5 million for each participant. The number of Security Rights was determined by the VWAP of Dexus Securities 10
trading days either side of 1 December 2020. Dexus Securities for this award were acquired on-market and are held in trust. The
table below provides an overview of the number of Security Rights held under the Retention Equity Award.
Executive KMP
Grant date
Number of
rights granted
VWAP value per
performance
right
Face value of
grant
1st vesting
date
(50% of award)
2nd vesting
date
(50% of award)
Deborah C Coakley
Ross G Du Vernet
14 December
2020
14 December
2020
153,480
153,480
$9.77
$1,500,000
$9.77
$1,500,000
14 December
2023
14 December
2024
Do participants receive distributions on unvested awards?
Participants are not entitled to distributions paid on underlying Dexus Securities during the performance period prior to Security
Rights being tested for vesting.
How is vesting of the awards determined?
The Security Rights will vest after three and four years (50% each year), subject to service continuity and behavioural and
governance standards being met. No “good leaver” provisions will apply, with the award being forfeited in full upon the
cessation of employment, unless the Board at its discretion determines otherwise.
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Remuneration Report continued
4. FY21 performance and remuneration outcomes
The following sections outlines Dexus’s performance outcomes and subsequent remuneration outcomes for Executive KMP.
4.1 Group scorecard performance outcomes
For the FY21 STI, the Board considered a range of financial and non-financial performance measures and hurdles that, if
achieved, would be key indicators of company performance and drivers of Security holder value. The unprecedented conditions
experienced in 2020 meant that the Board set performance targets for the FY21 STI in line with business forecasts in November
2020. These targets were again reviewed in February 2021, with no adjustments to performance expectations made at that
time. This differed from our typical approach of setting the targets at the commencement of the performance period.
Financial performance (75%)
Category Measurements
Group performance (50%)
– AFFO per security growth
Threshold: Behavioural Gateway and –1%
Target: 0%
Outperformance: 3% or greater
Balance Sheet Office Portfolio (12.5%)
– Dexus’s office portfolio performance versus external
benchmarks over 3 and 5 years
Threshold: 0.5% below index
Target: In-line with index
Outperformance: 0.5% above index
Funds’ performance (12.5%)
– Performance relative to external/industry benchmarks
over three and five years
– All other funds outperforming financial objectives and
hurdles
Threshold: At least 60% of unlisted Funds outperforming
benchmark or financial objectives/hurdles
Target: At least 70% of unlisted Funds outperforming
benchmark or financial objectives/hurdles
Outperformance: At least 80% of unlisted Funds
outperforming benchmark or financial objectives/hurdles
Non-financial performance (25%)
Customer (10%)
– Customer Net Promoter Score (NPS)
Threshold: +30
Target: +41 to +45
Outperformance: +45
People & capabilities (10%)
FY21 result Highlights
– AFFO per security of 51.8 cents, reflecting
3% growth on FY20 (50.3 cents) was above
the target which was to achieve AFFO per
security consistent with FY20 (0% growth)
(Outperformance achieved)
– Dexus’s office portfolio underperformed
the external office benchmark over 3
and 5 years, by -0.7% and less than -0.1%
respectively. The 5-year return was within
the threshold of 0.5% below the index
(Threshold achieved)
– Five out of seven funds within the funds
management business outperformed
their external benchmark or the financial
objectives and measures agreed with
fund partners
(Target achieved)
– Customer NPS of +46
(Outperformance achieved)
62.5%
5%
12.5%
12.5%
– Safety audit score and zero fatalities from incidents
Threshold: Zero fatalities and 85% safety audit score
Target: Zero fatalities and 90% safety audit score
Outperformance: Zero fatalities and 95% safety audit score
– Zero fatalities and a safety audit score
of 100% across Dexus’s corporate and
management workplaces
(Outperformance achieved)
– Employee NPS hurdle
Threshold: +30
Target: +41 to +45
Outperformance: +45
– Implementation of Program One (multi-year technology
systems upgrade and consolidation project)
Threshold: Technology implemented
Target: Efficiencies met
Outperformance: Program completed
Environment (5%)
– Performance relative to four ESG benchmarks: PRI, GRESB,
DJSI and CDP
Threshold: Strong performance against all 4 benchmarks
Target: Threshold plus leading performance against 2 of 4
benchmarks
Outperformance: Threshold plus leading performance
against all 4 benchmarks
7.4%
– Employee NPS +43
(Target achieved)
– Delivery of Phase four of Program One
has been delayed due to COVID-19 and
transactional priorities
(Threshold not achieved)
– Dexus achieved leading performance
against all four of its ESG benchmarks
for FY21
(Outperformance achieved)
6.3%
106.2%
Actual Group scorecard outcome
Key
Category
Culture
FY21 Result
Outperformance
(above target)
92 Directors’ report – Remuneration Report
Alignment
to performance
Target
(full achievement
against targets)
Market competitive
Sustainable
Partial
(between Threshold and
Target achievement)
Threshold
(minimum achievement
against targets)
Simple and
transparent
Not achieved
4.2 FY21 STI remuneration outcomes
The PRC reviewed FY21 STI outcomes against company performance and determined that the Group scorecard outcome was
106.2% of target. The PRC deemed these results consistent with the objectives of the STI and recommended to the Board that
the final Group scorecard outcome be 106.2%, which was subsequently approved.
As part of the FY21 performance assessment, the Board considered whether any discretion on the STI outcomes should be
applied, in light of the challenges in setting targets, and the better-than-expected AFFO performance. However, the Board is
confident that the 3% growth in AFFO and Dexus’s performance against the other STI measures, outlined above, were achieved
as a result of active portfolio management and the successful execution of key strategic initiatives. As such, the Board did not
exercise any discretion (upward or downward) to adjust the FY21 Group scorecard outcome.
Additionally, the Executive KMPs’ Individual Contribution Factors ranged from 100% to 125% and were determined with reference to
each Executive KMP’s personalised scorecard of performance measures and leadership contribution during FY21.
This resulted in the Board awarding the CEO 100% of the maximum STI in FY21. For other Executive KMP, the STI awards ranged
from 85% to 100% of maximum STI.
The STI awards made to each Executive KMP with respect to their performance during the year ended 30 June 2021 are
provided below. The 75% cash component will be paid in August 2021 following the approval of the statutory accounts and
announcement of the Group’s annual results. This payment will form a part of the FY22 cash earnings for Executive KMP.
STI target
% of fixed
remuneration
STI max
% of fixed
remuneration
STI
award
($)
% of
target STI
awarded
% of
maximum
STI awarded
% of
maximum
STI forfeited
% of STI
award
deferred
100%
100%
100%
100%
100%
125% $2,000,000
125%
125%
125%
125%
$906,250
$937,500
$937,500
$796,500
125%
125%
125%
125%
106.2%
100%
100%
100%
100%
85%
0%
0%
0%
0%
15%
25%
25%
25%
25%
25%
Executive KMP
Darren J Steinberg
Deborah C Coakley
Ross G Du Vernet
Kevin L George
Alison C Harrop
Deferred STI
The number of Security Rights granted to Executive KMP is determined by dividing the Deferred STI value by the VWAP of
Dexus Securities ten trading days either side of the first trading day of the new financial year, which was $10.67.
The below details the number of Security Rights granted to Executive KMP on 1 July 2021 under the Deferred STI plan. Dexus
Securities relating to Deferred STI are purchased on-market in accordance with ASX Listing Rule 10.15B and are held by the
Dexus Performance Rights Plan Trust until required.
Executive KMP
Darren J Steinberg
Deborah C Coakley
Ross G Du Vernet
Kevin L George
Alison C Harrop
Value of deferred STI
$
Number of Security
Rights granted
1st vesting date
50%
2nd vesting date
50%
$500,000
$226,562
$234,375
$234,375
$199,125
46,876
21,240
21,973
21,973
18,668
1 July 2022
1 July 2023
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Remuneration Report continued
4.3 LTI awards which vested during FY21
AFFO per security growth and average ROCE were established as the performance measures in 2016.
As disclosed in last year’s Remuneration Report, the second tranche of the FY17 LTI plan and the first tranche of the FY18 LTI plan
vested for participating Executive KMP on 1 July 2020. The vesting outcomes of 100% and 100% respectively were determined by
the Board, referencing the previously approved hurdle ranges.
The vesting outcomes outlined below were not impacted by COVID-19, as only a small proportion of the three and four-year
performance periods were impacted (i.e. three months for each tranche).
Results of each performance measure for the second tranche of the FY17 LTI Plan:
Performance measure
AFFO per security growth1
Average ROCE2
Weighting
Hurdle range
Group result
Vesting outcome
50%
50%
3.5% – 4.5%
7.5% – 8.0%
Overall result due to weighting
5.1%
8.6%
100%
100%
100%
Results of each performance measure for the first tranche of the FY18 LTI Plan:
Performance measure
Weighting
Hurdle range
Group result
Vesting outcome
AFFO per security growth3
Average ROCE4
50%
50%
3.0% – 4.0%
7.5% – 8.0%
Overall result due to weighting
4.3%
8.9%
100%
100%
100%
1 AFFO growth for the FY17 LTI Plan was measured on a linear scale for testing, with a 3.5% CAGR set as the target hurdle (where 50% would
vest) and 4.5% set as the outperformance hurdle (where 100% would vest). Dexus’s AFFO growth result over the four-year performance period
was 5.1%, resulting in full vesting from this performance measure.
2 Average ROCE for the FY17 LTI Plan was measured on a linear scale for testing, with a 7.5% ROCE average set as the target hurdle (where 50%
would vest) and 8.0% set as the outperformance hurdle (where 100% would vest). Dexus’s ROCE growth result over the four-year period was
8.6%, resulting in full vesting from this performance measure.
3 AFFO growth for the FY18 LTI Plan was measured on a linear scale for testing, with a 3.0% CAGR set as the target hurdle (where 50% would
vest) and 4.0% set as the outperformance hurdle (where 100% would vest). Dexus’s AFFO growth result over the four-year performance period
was 4.3%, resulting in full vesting from this performance measure.
4 Average ROCE for the FY18 LTI Plan was measured on a linear scale for testing, with a 7.5% ROCE average set as the target hurdle (where 50%
would vest) and 8.0% set as the outperformance hurdle (where 100% would vest). Dexus’s ROCE growth result over the four-year period was
8.9%, resulting in full vesting from this performance measure.
4.4 LTI awards which will vest in FY22
On 1 July 2021, the second tranche of the FY18 LTI plan and the first tranche of the FY19 LTI plan were eligible for vesting for
participating Executive KMP.
The vesting outcome was determined by the Board, referencing the previously approved hurdle ranges set and communicated
to participants upon the original grant dates of 1 July 2017 and 1 July 2018 respectively.
Despite our strong performance during much of the performance period, our AFFO growth and ROCE performance were
adversely impacted by the COVID-19 pandemic given that a significant proportion of the three and four-year performance
periods were impacted (i.e. more than 12 months). These outcomes are lower than our historical outcomes, which have typically
vested between 95% and 100% over the past three financial years.
We expect to see this trend of lower vesting outcomes continue for future LTI tranches as the impact of the pandemic
encompasses a greater proportion of the respective performance periods.
Results of each performance measure within tranche 2 of the FY18 LTI plan:
Performance measure
AFFO per security growth
Average ROCE
Weighting
Hurdle range
Group result
Vesting outcome
50%
50%
3.0% – 4.0%
7.5% – 8.0%
Overall result due to weighting
3.9%
8.8%
97.4%
94.7%
100%
Results of each performance measure within tranche 1 of the FY19 LTI plan:
Performance measure
Weighting
Hurdle range
Group result
Vesting outcome
AFFO per security growth
Average ROCE
50%
50%
3.0% – 4.0%
8.5% – 9.5%
Overall result due to weighting
3.1%
9.2%
69.5%
56.4%
82.5%
Further details of these vesting tranches will be provided in the FY22 Remuneration Report.
94 Directors’ report – Remuneration Report
4.5 Actual remuneration based on performance and service through FY21
The actual remuneration awarded during the year comprises the following elements:
– Cash salary including any salary sacrifice arrangements
– Superannuation benefits
– Other short-term benefits comprised of the wellbeing allowance and insurance arrangements provided to all employees
– STI cash payment to be made in August 2021 in recognition of performance during FY21 (noting that 25% of the award is
deferred and will be reported in future years)
– The value of the deferred STI from prior years that vested on 1 July 2021 (being the number of Security Rights that vested
multiplied by the VWAP for the five days prior to the vesting date)
– The value of Performance Rights that vested in relation to the LTI on 1 July 2021 (being the number of Performance Rights that
vested multiplied by the VWAP for the five days prior to the vesting date)
– Note, the once-off CEO Incentive award and Retention Equity award outlined in section 3.4 are not included in the table
below, as no Performance Rights or Security Rights had vested in FY21 and, consequently the value would not be realised until
future financial years
These values differ from the Executive statutory remuneration table which has been prepared in accordance with statutory
requirements and accounting standards.
Executive
Base salary
($)
Darren J Steinberg
1,578,306
Deborah C Coakley
Ross G Du Vernet
Kevin L George
Alison C Harrop
703,308
728,306
728,306
728,306
Superannuation
benefits
Other
short-term
benefits
($)
21,694
21,694
21,694
21,694
21,694
($)
6,489
2,950
2,621
7,190
5,847
STI cash
payment
Deferred
STI vested
LTI vested
($)
($)
($)
Total
($)
1,500,000
388,638
1,953,472
5,448,599
679,688
703,125
703,125
597,375
153,613
182,184
166,626
163,592
358,160
1,919,413
441,609
2,079,539
441,609
2,068,550
410,123
1,926,937
4.6 Historical performance outcomes
The following table outlines Dexus’s historical financial performance. These results flow into the Group scorecard outcomes for
the STI, as well as LTI vesting results.
Five-year financial performance
Funds From Operations (FFO)
Adjusted Funds From Operations (AFFO)
Net Profit After Tax (NPAT)
AFFO per security
AFFO per security growth
Distribution per security (DPS)
Return on Contributed Equity (ROCE)
Closing Dexus security price
NTA per security
($m)
($m)
($m)
(cents)
(%)
(cents)
(%)
($)
($)
FY21
717.0
561.7
1,138.4
51.8
3.0
51.8
8.3
10.67
11.42
FY20
730.2
550.5
927.71
50.3
0
50.3
9.0
9.20
10.86
FY19
681.5
517.2
1,281.0
50.3
5.5
50.2
10.1
12.98
10.48
FY18
653.3
485.5
1,728.9
47.7
5.1
47.8
7.6
9.71
9.64
FY17
617.7
439.7
1,264.2
45.4
6.3
45.47
7.6
9.48
8.45
1 Includes a prior year $10.3m (post tax) restatement for IFRIC SaaS customisation expenses.
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Remuneration Report continued
Total Security holder Return performance
The below provides an overview of Dexus’s total Security holder return performance for the periods to 30 June 2021 compared
to 30 June 2020 and the performance of the S&P/ASX 200 Property Accumulation Index over the same periods. Dexus delivered
an improved total Security holder return of 22.0% for the year to 30 June 2021, however underperformed the S&P/ASX 200
Property Accumulation Index due to the strong performance of fund managers and residential exposed peers. Dexus maintains
its outperformance of the index over three, five and ten year time horizons, delivering an annual compound return of 13.0% over
the past ten years.
1 Year
3 Years*
5 Years*
10 Years*
Performance as at
30 June
2021
30 June
2020
30 June
2021
30 June
2020
30 June
2021
30 June
2020
30 June
2021
30 June
2020
Dexus
22.0%
-25.7%
S&P/ASX 200 Property
Accumulation Index
33.2%
-21.3%
8.1%
7.7%
3.7%
2.0%
8.4%
5.8%
9.8%
4.4%
13.0%
11.8%
12.9%
9.2%
Source: UBS Australia and Factset at 30 June 2021 and 30 June 2020.
*Annual compound returns.
4.7 Statutory remuneration
The total remuneration paid to Executive KMP for FY21 and FY20 is calculated in accordance with AASB 124 Related Party
Disclosures. Amounts shown under Long-term benefits reflect the accounting expense recorded during the year with respect to
prior year deferred remuneration and awards that have vested or are yet to vest.
Short term benefits
Long term benefits
Security-based benefits
Executive
KMP
Year
Base
salary1
STI
award
Annual
leave
movement2
Other
short
term
benefits
Super-
annuation
benefits
Long
service
leave
movement2
Termination
benefits
Deferred
STI plan
accrual
LTI plan
accrual
Once-off
incentive
awards3
Total
Darren J
Steinberg
Deborah
C Coakley
Ross G
Du Vernet
Kevin L
George
Alison C
Harrop
Total
FY21
1,578,306 1,500,000
FY20
1,519,785 855,000
FY21
703,308
679,688
FY20
637,647
360,703
9,053
6,367
19,636
-7,826
FY21
728,306
703,125
-21,049
FY20
710,772
400,781
-14,034
FY21
728,306
703,125
FY20
710,772
384,750
FY21
728,306
597,375
-1,498
19,688
13,924
6,489
6,132
2,950
2,503
2,621
2,512
7,190
5,342
5,847
21,694
21,003
21,694
21,003
21,694
21,003
21,694
21,003
21,694
FY20
710,772
384,750
-51
5,807
21,003
FY21 4,466,532 4,183,313
20,066
25,097
108,470
FY20 4,289,750 2,385,984
4,144
22,296
105,015
-
-
-
-
-
-
-
-
-
-
-
-
45,344
404,713 1,561,533
78,596 5,205,728
40,480
420,478 1,402,755
- 4,272,000
23,394
173,424
335,574
199,749
2,159,417
17,743
160,902
275,082
-
1,467,757
20,662
189,712
368,749
199,749 2,213,569
18,444
193,005
318,192
- 1,650,675
18,778
182,974 363,566
- 2,024,135
16,483
178,021
320,130
- 1,656,189
13,891
167,191
357,053
- 1,905,281
33,305
174,259
304,774
- 1,634,618
122,069 1,118,014 2,986,475
478,094 13,508,130
126,455 1,126,665 2,620,932
- 10,681,241
1. FY20 base salary was reduced due to COVID-19 by 15% for the CEO and 10% for Other Executive KMP for a three-month period. FY21 base
salaries returned to prior levels effective 1 July 2020.
2. The accounting value of leave movements may be negative; for example, where an Executive’s annual leave balance decreases as a result of
taking more than the 20 days’ annual leave they accrue during the current year. Long service leave accrues from five years of service and the
accrual may seem high in the first year.
3. The once-off incentive awards reflect the CEO Incentive Award and Retention Equity Award as outlined in section 3.4.
96 Directors’ report – Remuneration Report
4.8 Future LTI grants with respect to FY22 (FY22 LTI grant)
The number of Performance Rights to be granted to Executive KMP is determined by dividing the LTI grant value by the VWAP
of Dexus Securities 10 trading days either side of the first trading day of the new financial year, which was $10.67. The minimum
value of the LTI grant is nil if the performance measures are not met. The maximum value is based on the estimated fair value
calculated at the time of the LTI grant and amortised in accordance with the accounting standard requirements.
The table below details the number of Performance Rights to be granted to Executive KMP on 1 July 2021 under the FY22
LTI plan, noting the CEO grant is subject to Security holder vote at the 2021 AGM. Dexus Securities relating to LTI grants are
purchased on-market in accordance with ASX Listing Rule 10.15B and are held by the Dexus Performance Rights Plan Trust
until required.
The performance hurdles for the FY22 LTI grant will be set by the Board as referred in section 5 on page 99 of this report.
Executive
KMP
Grant
value as a
% of fixed
remuneration
Performance
measure
Number of
Performance
Rights
granted
VWAP
value per
Performance
Right
Fair value per
Performance
Right1
Maximum
total value
of grant2
1st
vesting
date
50%
2nd
vesting
date
50%
Darren J
Steinberg
150%
Deborah C
Coakley
Ross G Du
Vernet
Kevin L
George
Alison C
Harrop
75%
75%
75%
75%
ROCE
ATSR
Strategic
measures
ROCE
ATSR
Strategic
measures
ROCE
ATSR
Strategic
measures
ROCE
ATSR
Strategic
measures
ROCE
ATSR
Strategic
measures
90,002
90,002
45,000
22,500
22,500
11,251
22,500
22,500
11,251
21,094
21,094
10,547
21,094
21,094
10,547
$10.67
$10.67
$10.67
$10.67
$10.67
$10.67
$10.67
$10.67
$10.67
$10.67
$10.67
$10.67
$10.67
$10.67
$10.67
$8.95
$2.91
$8.95
$8.95
$2.91
$8.95
$8.95
$2.91
$8.95
$8.95
$2.91
$8.95
$8.95
$2.91
$8.95
805,068
261,906
402,525
201,263
65,475
100,640
201,263
65,475
100,640
188,686
61,384
94,343
188,686
61,384
94,343
1 July
2024
1 July
2025
1 Fair value for the LTI reflects the average valuation of Tranche 1 ($9.17) and Tranche 2 ($8.72) for ROCE and Strategic Measures and the average valuation
of Tranche 1 ($3.03) and Tranche 2 ($2.79) for ATSR. Valuations were provided by EY under the Black-Scholes Analytic model.
2 The maximum total value of the grant reflects the numbers of Performance Rights granted multiplied by the fair value per Right.
Dexus 2021 Annual Report 97
OverviewApproachGovernanceDirectors’ reportFinancial reportInvestor informationPerformance
Remuneration Report continued
5. FY22 remuneration changes
5.1 Executive remuneration components
In FY21, the PRC reviewed the appropriateness of the executive remuneration framework so that it remains fit for purpose with
our refreshed strategy, addresses market competitiveness and provides an appropriate balance of components to encourage
our executives to deliver sustainable returns to our investors. This review assessed:
– Fixed remuneration, STI and LTI opportunity levels; and
– The STI and LTI structure
The PRC reviewed the framework in light of the uncertainty of the economic recovery, the operating challenges Dexus is likely to
face going forward and feedback from Security holders and proxy advisers in relation to the duplication of AFFO in the STI and
LTI plan. The changes that have been introduced from FY22 and beyond are outlined below.
Fixed Remuneration
There will be two increases to Executive KMP fixed remuneration, being our EGM, Funds
Management who will receive a fixed remuneration increase of 10.3% to $800,000 and
Chief Investment Officer who will receive a fixed remuneration increase of 6.7% to $800,000.
Following this increase, both KMPs’ fixed remuneration level will remain below equivalent roles
among A-REIT peers. However, their overall remuneration packages will be broadly aligned
to market. This increase has been made to reflect their enhanced contribution to Dexus’s
senior leadership team and the revised strategic objectives. Recent activity led by both KMP
has resulted in an increase in funds under management of approximately $9 billion.
STI
There will be no changes to the STI opportunity or structure for FY22, as the Board believes
the STI remains appropriate and fit for purpose.
LTI
From FY22 onwards, the Board has made the decision to change the LTI performance
measures. The FY22 LTI plan will be subject to three, rather than two, LTI performance
measures, with 40% of the award based on ATSR, 40% on Average ROCE and 20% on
strategic measures. There are no other changes proposed to the LTI opportunity or structure
for FY22.
The Board believes that the three performance measures focus on providing enhanced
value creation to our investors, a clear linkage between pay and performance and
encouraging our Executive KMP to drive sustainable business performance. This change has
resulted in:
– Removing the AFFO growth measure to address investor feedback in relation to the
duplication of AFFO in the STI and LTI. However, we note that AFFO remains a business
metric as reflected in the LTI’s Average ROCE measure and the STI plan.
– Introducing an ATSR measure, which will focus executives on creating value for our
investors. The Board believes that using an absolute TSR measure, rather than a relative
measure, provides greater focus on the fundamentals of Dexus’s business. ATSR also
removes the challenge in setting an appropriate peer group, which would be required
under a relative measure. The ATSR measure performance expectations will encompass
a “through the cycle” target range of 6-12% and be measured on a compound annual
growth rate (CAGR) basis.
– Retaining the average ROCE performance measure, as ROCE remains a relevant business
metric for Dexus. The average ROCE performance vesting schedule will continue to be
within the “through the cycle” target range of 7% and 10% annualised.
– Introducing a measure related to the achievement of strategic objectives, collectively
weighted at 20%, to focus participants on the execution of Dexus’s strategy. Specifically,
the strategic measures were chosen to reward executives for the future delivery of
initiatives that position Dexus for sustained long-term growth and creation of Security
holder value. The Board believes that there are non-financial outcomes (in addition to
financial outcomes), which help to create value for all stakeholders (investors, customers
and team members), support long-term sustainable performance and reinforce the
Group’s strong corporate reputation. The strategic measures are outlined in more detail
below.
98 Directors’ report – Remuneration Report
5.2 Return on Contributed Equity
The Board have decided to retain the average ROCE performance measure within the LTI plan for FY22. More information on our
ROCE methodology can be found in section 3.3
5.3 Absolute Total Security holder Return
ATSR performance will be measured using a Compound Annual Growth Rate (CAGR) over the respective 3 or 4 year LTI plan
periods, with distributions considered to be reinvested.
The ATSR calculation used for the LTI plan period will be: Closing Price x Distribution Reinvestment Factor / (divided by) Starting
Price - 1.
Where:
CAGR = (1 + ATSR)^(1/n) - 1
n: The length of the performance period (years).
“Closing Price” is the Volume Weighted Average Price (VWAP), adjusted for capital changes, of Dexus securities for the
20 trading days prior to the completion of the LTI plan period.
“Distribution Reinvestment Factor” assumes distributions paid during the LTI plan period are reinvested at the ex-
distribution date, resulting in an increased notional holding.
“Starting Price” is the VWAP, adjusted for capital changes, of Dexus securities for the 20 trading days prior to the
commencement of the LTI plan period.
5.4 Strategic measures
The Board believes that the strategic measures should be assessed over a three and four-year period as this allows decisions
to be made and assessed over the long term. The strategic measures will be outlined in the Remuneration Report at the
beginning of the assessment period. At the end of each financial year, the Board will consider the Group’s progress against the
strategic measures set at the beginning of the performance period and provide an annual update of this assessment to our
investors through our Remuneration Report.
At the conclusion of the three and four year periods, the Board will make a final assessment of the extent to which strategic
measures have been met. The strategic measures selected for FY22 are key objectives that the Board believes will be
fundamental to Dexus creating value for Security holders over the period ahead and include a focus on navigating the
challenges in the office market and maintaining a market leading position in ESG. The specific strategic measures for FY22 to
FY24/25 are outlined below and collectively equate to 20% of the total FY22 LTI grant.
Strategic Measures – FY22 to FY24/25
Examples of assessment criteria
Funds Management
Diversification of capital
partners and investors,
and overall growth in
funds management
– Number of new capital partners and funds
– Investor composition of funds management business
– Group funds under management (FUM) growth
Transactions
Developments
Strategic acquisitions
and divestments of
assets across the Dexus
investment portfolio
Progressing the Group
development pipeline
– Performance of funds against benchmarks and/or hurdle rates
– Volume and value of completed transactions
– Original business case met or exceeded for transactions
– Achievement of portfolio and fund objectives via transactional activity
– Milestone delivery for committed major projects
– Amount of income growth attributable to completed projects
– Successful conversion of non-committed Group pipeline
– Securing development partnerships with capital partners and funds
Dexus 2021 Annual Report 99
OverviewApproachGovernanceDirectors’ reportFinancial reportInvestor informationPerformance
Remuneration Report continued
6. Terms of Executive KMP service agreements
Executive KMP service agreements detail the individual terms and conditions of employment applying to Executive KMP. The
quantum and structure of remuneration arrangements are detailed elsewhere in this report, with the termination scenarios and
other key employment terms detailed below.
Employment
agreement
Resignation by the
Executive
CEO
Other Executive KMP
An ongoing Executive Service Agreement.
Resignation by the CEO requires a six-month
notice period. The Group may choose to place
the CEO on leave or make a payment in lieu of
notice at the Board’s discretion.
All unvested incentive awards are forfeited.
An ongoing Executive Service Agreement or
individual contract.
Resignation by other Executive KMP requires
a three-month notice period. The Group
may choose to place the Executive on leave
or make a payment in lieu of notice at the
Board’s discretion.
All unvested incentive awards are forfeited.
In the case of resignation, through mutual agreement (e.g. retirement), the Board has the ability to
treat the Executive KMP as a ‘Good Leaver’, which may result in the Executive KMP retaining some or
all of the unvested deferred STI or LTI grants.
As outlined in section 3.4, ‘Good Leaver’ provisions will also apply under the CEO Incentive Award
but not under the Retention Equity award.
Termination by the
Group without cause
If the Group terminates an Executive KMP without cause, they are entitled to a combined maximum
notice and severance payment of 12 months’ fixed remuneration. The Board may (in its absolute
discretion) also approve a pro-rata STI payment.
Depending on the circumstances, the Board has the ability to treat the Executive as a ‘Good
Leaver’, which may result in the Executive retaining some or all of the unvested incentive awards
(except in the case of the Retention Equity Award as outlined above).
Termination by the
Group with cause
Other contractual
provisions and
restrictions
No notice or severance is payable.
All Executive KMP service agreements include standard clauses covering intellectual property,
confidentiality, moral rights and disclosure obligations.
100 Directors’ report – Remuneration Report
7. Non-Executive Directors’ (NED) remuneration
NED fees are reviewed annually by the Committee using information from a variety of sources, including:
– Publicly available remuneration data from ASX-listed companies with similar market capitalisation and complexity
– Publicly available remuneration data from ASX 100 A-REITs
– Information supplied by external remuneration advisors, including EY
Other than the Chair, who receives a single base fee, NEDs receive a base fee plus additional fees for membership of Board
Committees. NEDs do not participate in incentive plans or receive any retirement benefits other than statutory superannuation
contributions.
The total fees paid to NEDs for the year ended 30 June 2021 remained within the aggregate fee pool of $2,500,000 per annum,
which was approved by Security holders at the AGM in October 2017.
7.1 Fee structure
In FY20, NEDs’ fees were temporarily reduced by 15% for the period 1 April 2020 to 30 June 2020. This action was taken to assist
in absorbing the financial impact of COVID-19. Fees reverted to prior levels on 1 July 2020. No changes were made to the Chair,
Non-Executive or Board committee policy fees in FY21.
The Board fee structure (inclusive of statutory superannuation contributions) for FY20 and FY21 is provided below, noting that the
temporary reduction in NEDs’ fees by 15% for the period 1 April 2020 to 30 June 2020 is not reflected.
NED base fees (DXFM)1
Board Risk Committee
Board Audit Committee
Board Nomination Committee2
Board People & Remuneration Committee
Board Environmental, Social & Governance Committee
DWPL Board
Year
FY21
FY20
FY21
FY20
FY21
FY20
FY21
FY20
FY21
FY20
FY21
FY20
FY21
FY20
Chair
($)
450,000
450,000
Member
($)
175,000
175,000
35,000
35,000
35,000
35,000
N/A
N/A
35,000
35,000
35,000
35,000
N/A
N/A
17,500
17,500
17,500
17,500
N/A
N/A
17,500
17,500
17,500
17,500
35,000
35,000
1 The Board Chair receives a single fee for service, including service on Board Committees.
2 No fees applied to the Board Nomination Committee in FY21.
In FY22, the Board made the decision to increase Board and Committee fees by approximately 2% and the Chair fee by
approximately 5%, which reflects the Board’s desire to make incremental changes to NED fees in line with general market
movements. NED fees were last increased two years ago.
7.2 Security holding requirement
NEDs are expected to hold the equivalent of 100% of their base fees in Dexus Securities, to be acquired over five years from
appointment date. To further facilitate NEDs’ ability to acquire Dexus equity, a fee sacrifice program was introduced in FY20.
The plan allows NEDs to sacrifice a percentage of their pre-tax base fees in return for a grant of Rights to the equivalent value.
The minimum percentage a NED can sacrifice is 20% of base fees, up to a maximum of 100%. The number of Rights allocated
is calculated based on the VWAP of Securities over the first five trading days of the Trading Window immediately following the
release of full-year results. Rights vest in two equal tranches over the subsequent 6-month and 12-month period.
Securities held by NEDs are subject to the Group’s Security and insider trading policies. No additional remuneration is provided to
NEDs to purchase these Securities.
Dexus 2021 Annual Report 101
OverviewApproachGovernanceDirectors’ reportFinancial reportInvestor informationPerformance
Remuneration Report continued
7.3 Security movements
NED KMP
W Richard Sheppard
Patrick Allaway
Penny Bingham-Hall
John C Conde AO1
Tonianne Dwyer
Mark H Ford2
Warwick M Negus3
The Hon. Nicola Roxon
Peter St George1
Number of
Securities held at
1 July 2020
Number of
Securities held at
30 June 2021
Meets minimum
requirement
Movement
88,019
20,000
32,773
17,906
16,667
10,000
0
6,369
18,573
11,981
Nil
Nil
Nil
5,833
Nil
Nil
14,928
Nil
100,000
20,000
32,773
17,906
22,500
10,000
0
21,297
18,573
Yes
Yes
Yes
Yes
Yes
N/A
N/A
Yes
Yes
1 John Conde and Peter St George retired during FY21.
2 Mark H Ford was appointed in FY17 and has until the end of FY22 to reach the requirement.
3 Warwick M Negus was appointed in FY21 and has additional time to reach the requirement.
7.4 Actual remuneration
This summary of the actual cash and benefits received by each NED for the year ended 30 June 2021 is prepared in accordance
with AASB 124 Related Party Disclosures.
NED KMP
Year
Short term
benefits1, 2
($)
Post-employment
benefits
(superannuation)
($)
Other long-term
benefits
W Richard Sheppard
Patrick Allaway3
Penny Bingham-Hall4
John C Conde AO5
Tonianne Dwyer
Mark H Ford
Warwick M Negus6
The Hon. Nicola Roxon7
Peter St George
Total
FY21
FY20
FY21
FY20
FY21
FY20
FY21
FY20
FY21
FY20
FY21
FY20
FY21
FY20
FY21
FY20
FY21
FY20
FY21
FY20
428,306
412,910
188,994
60,597
227,500
214,115
35,821
202,911
242,985
237,219
235,299
200,744
66,591
–
227,500
206,297
191,781
201,769
1,844,776
1,736,562
21,694
21,003
17,954
6,326
0
9,977
3,403
19,846
21,694
21,003
21,368
19,484
6,326
–
0
13,158
18,219
19,737
110,658
130,534
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
Total
($)
450,000
433,913
206,948
66,923
227,500
224,092
39,224
222,757
264,679
258,222
256,667
220,228
72,917
–
227,500
219,455
210,000
221,506
1,955,435
1,867,096
Includes Director fees and insurance contributions.
1
2 FY20 fees were reduced by 15% between 1 April 2021 and 30 June 2020 due to COVID-19.
3 Patrick Allaway joined the Board on 1 February 2020.
4 Penny Bingham-Hall received a superannuation guarantee exemption in FY20 (part-year) and FY21.
5 John Conde retired from the Board on 2 September 2020. The figures in the above table represent earnings for the portion of the year that
John Conde was a director of the Board.
6 Warwick M Negus joined the Board on 1 February 2021.
7 Nicola Roxon’s FY20 & FY21 short term benefits include a salary sacrifice amount under the NED fee sacrifice program and a superannuation
guarantee exemption for FY20 (part-year) and FY21.
102 Directors’ report – Remuneration Report
8. Additional disclosures
8.1 Deferred STI and LTI awards which vested during FY21
The summary below outlines the number of Rights which vested under the Deferred STI and LTI plans during FY21. The vesting
date for all Rights was 1 July 2020. No Rights lapsed during FY21.
Executive KMP
Plan name
Grant date
Tranche
Number of Rights
which vested
Market value at
vesting ($)1
Darren Steinberg
Deborah C Coakley
Ross Du Vernet
Kevin L George
Alison C Harrop
Deferred STI
LTI
Deferred STI
LTI
Deferred STI
LTI
Deferred STI
LTI
Deferred STI
LTI
1/07/2018
1/07/2019
1/07/2016
1/07/2017
1/07/2018
1/07/2019
1/07/2016
1/07/2017
1/07/2018
1/07/2019
1/07/2016
1/07/2017
1/07/2018
1/07/2019
1/07/2016
1/07/2017
1/07/2018
1/07/2019
1/07/2016
1/07/2017
2
1
2
1
2
1
2
1
2
1
2
1
2
1
2
1
2
1
2
1
25,893
19,591
98,466
98,426
8,496
7,347
17,231
17,686
10,836
9,183
19,693
21,531
10,343
8,082
21,006
21,531
9,974
7,812
18,052
19,224
250,060
189,199
950,930
950,543
82,050
70,953
166,407
170,802
104,648
88,684
190,184
207,934
99,887
78,051
202,864
207,934
96,323
75,444
174,336
185,655
1. Market value at vesting is the VWAP of DXS Securities for the five-day period before the vesting date.
Dexus 2021 Annual Report 103
OverviewApproachGovernanceDirectors’ reportFinancial reportInvestor informationPerformance
Remuneration Report continued
8.2 Executive KMP unvested Rights outstanding
The table below shows the number of unvested Rights held by Executive KMP as at 30 June 2021 under the Deferred STI and
LTI plans. The STI and LTI awards in respect of which the elements below are deferred elements were disclosed in prior year
Remuneration Reports.
Executive KMP
Plan name
Grant date
Vesting date
Tranche
Number of unvested
Rights outstanding
Deferred STI
Darren Steinberg
LTI
Retention Award
Deferred STI
Deborah C Coakley
LTI
Retention Award
Deferred STI
Ross Du Vernet
LTI
Retention Award
Deferred STI
Kevin L George
LTI
Deferred STI
Alison C Harrop
LTI
104 Directors’ report – Remuneration Report
1/07/2019
1/07/2020
1/07/2020
1/07/2017
1/07/2018
1/07/2018
1/07/2019
1/07/2019
1/07/2020
1/07/2020
1/06/2021
1/07/2019
1/07/2020
1/07/2020
1/07/2017
1/07/2018
1/07/2018
1/07/2019
1/07/2019
1/07/2020
1/07/2020
14/12/2020
14/12/2020
1/07/2019
1/07/2020
1/07/2020
1/07/2017
1/07/2018
1/07/2018
1/07/2019
1/07/2019
1/07/2020
1/07/2020
14/12/2020
14/12/2020
1/07/2019
1/07/2020
1/07/2020
1/07/2017
1/07/2018
1/07/2018
1/07/2019
1/07/2019
1/07/2020
1/07/2020
1/07/2019
1/07/2020
1/07/2020
1/07/2017
1/07/2018
1/07/2018
1/07/2019
1/07/2019
1/07/2020
1/07/2020
1/07/2021
1/07/2021
1/07/2022
1/07/2021
1/07/2021
1/07/2022
1/07/2022
1/07/2023
1/07/2023
1/07/2024
1/07/2024
1/07/2021
1/07/2021
1/07/2022
1/07/2021
1/07/2021
1/07/2022
1/07/2022
1/07/2023
1/07/2023
1/07/2024
14/12/2023
14/12/2024
1/07/2021
1/07/2021
1/07/2022
1/07/2021
1/07/2021
1/07/2022
1/07/2022
1/07/2023
1/07/2023
1/07/2024
14/12/2023
14/12/2024
1/07/2021
1/07/2021
1/07/2022
1/07/2021
1/07/2021
1/07/2022
1/07/2022
1/07/2023
1/07/2023
1/07/2024
1/07/2021
1/07/2021
1/07/2022
1/07/2021
1/07/2021
1/07/2022
1/07/2022
1/07/2023
1/07/2023
1/07/2024
2
1
2
2
1
2
1
2
1
2
1
2
1
2
2
1
2
1
2
1
2
1
2
2
1
2
2
1
2
1
2
1
2
1
2
2
1
2
2
1
2
1
2
1
2
2
1
2
2
1
2
1
2
1
2
18,551
14,770
14,770
98,426
121,487
121,487
89,047
89,047
124,381
124,380
356,335
6,956
6,231
6,231
17,686
22,779
22,778
18,783
18,783
28,180
28,179
76,740
76,740
8,696
6,924
6,923
21,530
28,474
28,473
20,870
20,870
29,152
29,151
76,740
76,740
7,652
6,647
6,646
21,530
28,474
28,473
20,870
20,870
29,152
29,151
7,397
6,647
6,646
19,224
27,524
27,524
20,870
20,870
29,152
29,151
8.3 Equity investments
Held at 1 July 2020
Net change
Held at 30 June 2021
Securities
Deferred
Rights
Total
balance1
Securities
Deferred
Rights
Total
balance1 Securities
Deferred
Rights
Total
balance1
Market
value as
at 30 June
20212
$
Minimum
security
holding3
$
Darren J
Steinberg
Deborah C
Coakley
Ross G
Du Vernet
Kevin L
George
Alison C
Harrop
748,622
60,388
809,010
242,376
-12,297
230,079
990,998
48,091
1,039,089
11,258,140 2,400,000
51,388
21,553
72,941
36,915
151,345
188,260
88,303
172,898
261,201
2,830,015
450,000
83,601
27,136
110,737
18,243
148,887
167,130
101,844
176,023
277,867
3,010,585
562,500
85,612
24,606
110,2184
33,354
-3,661
29,693
118,966
20,945
139,911
1,515,883
562,500
53,445
23,763
77,208
35,062
-3,073
31,989
88,507
20,690
109,197
1,183,109
543,750
1 The following Securities are included in the balance for the purpose of the guideline (1) Any Dexus Securities that the Executive or their related
person or entity hold (e.g. Family Trust), (2) Securities that the Executive acquires on vesting of awards granted under Dexus’s equity incentive
plans; and (3) Unvested equity granted that the Executive holds under Dexus’s equity incentive plans which are not subject to performance
hurdles (e.g. deferred short-term incentives and Retention Equity Award for CIO and EGM, Funds Management).
2 Market value as at 30 June 2021 is the VWAP of Dexus Securities for the five-day period up to and including 30 June 2021 $10.8346.
3 A minimum Security holding guideline was introduced on 1 July 2018, with all Executive KMP expected to attain the minimum Security holding
by 1 July 2023. The Security holding value is calculated by reference to the 12-month average fixed remuneration for FY18 per the policy.
4 Kevin George’s opening balance includes the sale of 40,000 shares that occurred in FY20 that were reported in the closing balance of the
2020 remuneration report.
8.4 Other transactions
There were no transactions involving an equity instrument (other than share based payment compensation) to KMP or related
parties.
8.5 Loans
No loans were provided to KMP or related parties.
Dexus 2021 Annual Report 105
OverviewApproachGovernanceDirectors’ reportFinancial reportInvestor informationPerformance
Financial
Report
Contents
Directors’ Report
Auditor’s Independence Declaration
Consolidated Statement of Comprehensive Income
Consolidated Statement of Financial Position
Consolidated Statement of Changes in Equity
Consolidated Statement of Cash Flows
Notes to the Consolidated Financial Statements
Group performance
Note 1 Operating segments
Note 2 Property revenue and expenses
Note 3 Management operations, corporate and administration expenses
Note 4 Finance costs
Note 5 Taxation
Note 6 Earnings per unit
Note 7 Distributions paid and payable
Property portfolio assets
Note 8
Investment properties
Note 9
Investments accounted for using the equity method
Note 10 Inventories
Note 11 Non-current assets classified as held for sale
Note 12 Financial assets at fair value through profit or loss
Capital and financial risk management and working capital
Note 13 Capital and financial risk management
Note 14 Lease liabilities
Note 15
Interest bearing liabilities
Note 16 Commitments and contingencies
Note 17 Contributed equity
Note 18 Reserve
Note 19 Working capital
Other disclosures
Note 20 Intangible assets
Note 21 Audit, taxation and transaction service fees
Note 22 Cash flow information
Note 23 Security-based payments
Note 24 Related parties
Note 25 Parent entity disclosures
Note 26 Change in accounting policy
Note 27 Subsequent events
Director’s Declaration
Independent Auditor’s Report
106 Financial report
107
113
114
115
116
117
118
121
121
127
128
128
129
131
131
132
132
136
142
143
143
144
144
154
155
157
158
159
160
163
163
164
165
166
167
168
169
170
171
172
Directors’
Report
The Directors of Dexus Funds Management Limited (DXFM) as Responsible Entity of Dexus Diversified Trust (DDF or the Trust)
present their Directors’ Report together with the Consolidated Financial Statements for the year ended 30 June 2021. The
Consolidated Financial Statements represents DDF and its consolidated entities, Dexus (DXS or the Group).
The Trust together with Dexus Industrial Trust (DIT), Dexus Office Trust (DOT) and Dexus Operations Trust (DXO) form the Dexus
stapled security.
Directors and Secretaries
Directors
The following persons were Directors of DXFM at all times during the year and to the date of this Directors’ Report, unless
otherwise stated:
Directors
W Richard Sheppard, BEc (Hons), FAICD
Patrick N J Allaway, BA/LLB
Penny Bingham-Hall, BA (Industrial Design), FAICD, SF Fin
John C Conde, AO BSc, BE (Hons), MBA, FAICD1
Tonianne Dwyer, BJuris (Hons), LLB (Hons)
Mark H Ford, Dip. Tech (Commerce), CA, FAICD
Warwick Negus, BBus (UTS), MCom (UNSW), SF Fin2
The Hon. Nicola L Roxon, BA/LLB (Hons), GAICD
Darren J Steinberg, BEc, FRICS, FAPI, FAICD
Peter B St George, CA (SA), MBA3
Appointed
1 January 2012
1 February 2020
10 June 2014
29 April 2009
24 August 2011
1 November 2016
1 February 2021
1 September 2017
1 March 2012
29 April 2009
1 John C Conde retired from the Board of DXFM, effective 2 September 2020.
2 Warwick Negus was appointed to the Board of DXFM, effective 1 February 2021.
3 Peter B St George retired from the Board of DXFM, effective 30 June 2021.
Company Secretaries
The names and details of the Company Secretaries of DXFM as at 30 June 2021 are as follows:
Brett D Cameron LLB/BA (Science and Technology), GAICD, FGIA
Appointed: 31 October 2014
Brett is the General Counsel and a Company Secretary of Dexus companies and is responsible for the legal function, company
secretarial services and compliance, risk and governance systems and practices across the Group.
Prior to joining Dexus, Brett was Head of Legal for Macquarie Real Estate (Asia) and has held senior legal positions at Macquarie
Capital Funds in Hong Kong and Minter Ellison in Sydney and Hong Kong. Brett has 24 years’ experience as in-house counsel
and in private practice in Australia and in Asia, where he worked on real estate structuring and operations, funds management,
mergers and acquisitions, private equity and corporate finance across a number of industries.
Brett graduated from The University of New South Wales and holds a Bachelor of Laws and a Bachelor of Arts (Science
and Technology) and is a member of the Law Societies of New South Wales and Hong Kong. Brett is also a graduate of the
Australian Institute of Company Directors and a Fellow of the Governance Institute of Australia.
Scott Mahony BBus (Acc), Grad Dip (Business Administration), MBA (eCommerce),
Grad Dip (Applied Corporate Governance) FGIA, FCIS
Appointed: 5 February 2019
Scott is the Head of Governance of Dexus and is responsible for the development, implementation and oversight of Dexus’s
governance policies and practices. Prior to being appointed the Head of Governance in 2018, Scott had oversight of Dexus’s risk
and compliance programs.
Scott joined Dexus in October 2005 after two years with Commonwealth Bank of Australia as a Senior Compliance Manager.
Prior to this, Scott worked for over 11 years for Assure Services & Technology (part of AXA Asia Pacific) where he held various
management roles.
Dexus 2021 Annual Report 107
Dexus 2021 Annual Report 107
OverviewApproachGovernanceFinancial reportInvestor informationPerformanceDirectors’ report
Directors’ Report (continued)
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 12 times during the year, of which one was a special meeting.
Main meetings
held
Main meetings
attended
Specific meetings
held
Specific meetings
attended
W Richard Sheppard
Patrick N J Allaway
Penny Bingham-Hall
John C Conde, AO1
Tonianne Dwyer
Mark H Ford
Warwick Negus2
The Hon. Nicola L Roxon
Darren J Steinberg
Peter B St George4
11
11
11
2
11
11
5
11
11
11
11
10
11
2
11
11
5
11
11
11
1
1
1
–
1
1
1
1
1
1
–
1
1
1
Recused3
Recused3
1
1
1
1
1 John C Conde retired from the Board of DXFM, effective 2 September 2020.
2 Warwick Negus was appointed to the Board of DXFM, effective 1 February 2021.
3 Recused from special meeting due to potential conflict.
4 Peter B St George retired from the Board of DXFM, effective 30 June 2021.
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.
The table below shows Non-Executive Directors’ attendances1 at Board Committee meetings of which they were a member
during the year ended 30 June 2021.
Board Audit
Committee
Board Risk
Committee
Board
People and
Remuneration
Committee
Board
Environmental,
Social and
Governance
Committee
Board
Nomination
Committee
Joint
“Organisational
Risk” Session
Held
Attended
Held
Attended
Held
Attended
Held
Attended
Held
Attended
Held Attended
W Richard Sheppard
Patrick N J Allaway2
Penny Bingham-Hall
John C Conde, AO3
Tonianne Dwyer
Mark H Ford
Warwick Negus4
The Hon. Nicola L Roxon
Peter B St George5
–
4
–
1
5
5
–
–
5
–
4
–
1
5
5
–
–
5
–
4
–
–
4
–
–
–
4
–
3
–
–
4
–
–
–
4
3
3
3
–
3
3
2
3
3
3
3
3
–
3
3
2
3
2
8
–
8
–
–
–
–
8
–
8
–
8
–
–
–
–
8
–
–
–
4
–
–
4
–
4
–
–
–
4
–
–
4
–
4
–
2
2
2
–
2
-
–
2
2
2
1
2
–
2
–
–
2
2
1 All Non-Executive Directors have a standing invitation to attend any or all Board Committee meetings.
2 Patrick N J Allaway replaced John C Conde as member, effective 2 September 2020.
3 John C Conde retired from the Board of DXFM, effective 2 September 2020.
4 Warwick Negus was appointed to the Board of DXFM, effective 1 February 2021, and immediately became a member of the
Board Nomination Committee.
5 Peter B St George retired from the Board of DXFM, effective 30 June 2021.
108 Financial report
Directors’ relevant interests
The relevant interests of each Director in DXS stapled securities as at the date of this Directors’ Report are shown below:
Directors
W Richard Sheppard
Patrick N J Allaway
Penny Bingham-Hall
John C Conde, AO1
Tonianne Dwyer
Mark H Ford
Warwick Negus2
The Hon. Nicola L Roxon3
Darren J Steinberg4
Peter B St George5
No. of securities
100,000
20,000
32,773
–
22,500
10,000
–
21,297
990,998
30,573
1 John C Conde retired from the Board of DXFM, effective 2 September 2020.
2 Warwick Negus was appointed to the Board of DXFM, effective 1 February 2021.
3 Includes interests held directly and through Non-Executive Director (NED) Plan rights.
4 Includes interests held directly and through performance rights (refer note 23).
5 Peter B St George retired from the Board of DXFM, effective 30 June 2021.
Operating and financial review
Information on the operations and financial position of the Group and its business strategies and prospects is set out on
pages 28 to 41 of the Annual Report and forms part of this Directors’ Report.
Remuneration Report
The Remuneration Report is set out on pages 78 to 105 of the Annual Report and forms part of this Directors’ Report.
Directors’ directorships in other listed entities
The following table sets out directorships of other ASX listed entities (unless otherwise stated), 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
W Richard Sheppard
Patrick N J Allaway
Penny Bingham-Hall
John C Conde, AO1
Tonianne Dwyer
Mark H Ford
Warwick Negus4
The Hon. Nicola L Roxon
Peter B St George5
Darren J Steinberg
Company
Star Entertainment Group
Bank of Queensland
Allianz Australia
Adobe International Advisory Board
BlueScope Steel Limited
Fortescue Metals Group Ltd
Whitehaven Coal Limited
Cooper Energy Limited
Metcash Limited2
ALS Limited
Oz Minerals Limited
Incitec Pivot Limited
Kiwi Property Group Limited3
Pengana Capital Group Limited (Chairman)
Bank of Queensland
Washington H. Soul Pattison and Company Ltd
Lifestyle Communities Limited
First Quantum Minerals Limited6
VGI Partners Limited
1 John C Conde retired from the Board of DXFM, effective 2 September 2020.
2 Tonianne Dwyer retired from the Board of Metcash, effective 28 June 2021.
3 Listed for trading on the New Zealand Stock Exchange.
4 Warwick Negus was appointed to the Board of DXFM, effective 1 February 2021.
5 Peter B St George retired from the Board of DXFM, effective 30 June 2021.
6 Listed for trading on the Toronto Stock Exchange in Canada.
Date Appointed
21 November 2012
1 May 2019
1 July 2020
24 March 2021
29 March 2011
16 November 2016
3 May 2007
25 February 2013
24 June 2014
1 July 2016
21 March 2017
20 May 2021
16 May 2011
1 June 2017
22 September 2016
1 November 2014
1 September 2017
20 October 2003
12 May 2019
Dexus 2021 Annual Report 109
OverviewApproachGovernanceFinancial reportInvestor informationPerformanceDirectors’ report
Directors’ Report (continued)
Principal activities
During the year the principal activity of the Group was to
own, manage and develop high quality real estate assets and
manage real estate funds on behalf of third party investors.
There were no significant changes in the nature of the Group’s
activities during the year.
Total value of Trust assets
The total value of the assets of the Group as at 30 June
2021 was $18,099.6 million (2020: $17,580.5 million). Details of
the basis of this valuation are outlined in the Notes to the
Consolidated Financial Statements and form part of this
Directors’ Report.
Likely developments and expected results
of operations
In the opinion of the Directors, disclosure of any further
information regarding business strategies and future
developments or results of the Group, other than the
information already outlined in this Directors’ Report or
the Consolidated Financial Statements accompanying
this Directors’ Report would be unreasonably prejudicial
to the Group.
Significant changes in the state of affairs
During the financial year, the Group announced the following
significant corporate transactions:
1. On 27 April 2021, Unitholders in both Dexus Wholesale
Property Fund (“DWPF”) and AMP Capital Diversified
Property Fund (“ADPF”) approved the merger of the two
funds. In support of the merger Dexus agreed to contribute
funding to facilitate liquidity for ADPF investors and protect
DWPF from value dilution resulting from transaction costs.
The impacts of the merger for Dexus include:
– Dexus Wholesale Property Limited, a wholly owned
subsidiary of Dexus, replacing AMP Capital Funds
Management Limited as the Responsible Entity of ADPF
on 28 April 2021;
2. On 23 March 2021, Dexus announced plans to simplify the
corporate structure (the “Simplification”) from a complex
quadruple stapled trust structure to a group comprising
two stapled trusts. Dexus Security holders voted in favour
of the Simplification at an Extraordinary General Meeting
on 22 April 2021. The Simplification was implemented on 6
July 2021 following the receipt of certain determinations
in respect of stamp duty payable under the Simplification
and the Responsible Entity considering that it is in the best
interest of Security holders.
The key advantages to the Simplification include an
improved ability and flexibility for Dexus to execute on
one of its key strategic initiatives to expand and diversify
its funds management business, deliver reporting and
administrative efficiencies for both Security holders and
Dexus and may potentially result in broader eligibility for
CGT rollover relief as a result of any merger and acquisition
activity that Dexus subsequently engages in.
3. On 11 May 2021, Dexus announced that it had entered into
a binding Scheme Implementation Deed (‘SID’) with APN
Property Group (‘APN’) in relation to a proposal for Dexus to
acquire all of the stapled securities in APN (the ‘Proposal’) for
an all-cash consideration of 91.5 cents per security. This will
be reduced by the value of any distribution declared from
the date of the announcement and prior to 30 September
2021, up to 1.5 cents per security.
On 27 July 2021, Dexus announced the Proposal was
approved by APN security holders and implementation of
the transaction occurred on 13 August 2021.
The takeover of APN is underpinned by a strong investment
rationale for Dexus which includes:
– Access to a complementary and scalable business with a
high-quality team and like-minded investment philosophy;
– Ability to utilise Dexus’s market leading funds and property
management platform to drive growth and performance for
new and existing APN funds;
– Provides Dexus with a range of new growth opportunities
via access to new investor groups and products;
– A commitment to provide circa $400 million of liquidity to
– Adds $2.9 billion of incremental FUM which will be
redeeming ADPF Unitholders; and
– Funding circa $50 million of transaction costs for both
ADPF and DWPF. As at 30 June 2021, Dexus has incurred
approximately $15.5 million of transaction costs.
The merger will be accretive to Dexus’s Adjusted Funds
from Operations (AFFO) and Net Asset Value (NAV) in FY22.
In addition, the merger will provide the opportunity to
generate further upside through the active management,
leasing and development of ADPF assets.
immediately accretive to Adjusted Funds From Operations
(AFFO) per security on completion of the transaction in FY22;
and
– Potential to realise cost and revenue synergies and achieve
margin expansion across the platform.
Apart from the aforementioned, the Directors are not aware
of any matter or circumstance not otherwise dealt with in this
Directors’ Report or the Consolidated Financial Statements
that has significantly or may significantly affect the operations
of the Group, the results of those operations, or the state of
the Group’s affairs in future financial years.
110 Financial report
Matters subsequent to the end of the
financial year
On 6 July 2021, Dexus implemented the Simplification from a
quadruple stapled trust structure (comprised of DDF, DIT, DOT
and DXO) to a dual stapled trust structure. This was achieved
by “top-hatting” three of the existing trusts (DDF, DIT and DOT)
with a newly established trust, Dexus Property Trust (DPT).
Effective from this date, the Simplified Group now comprises
a unit in each of DXO and DPT, with DXFM appointed as the
Responsible Entity of DPT.
On 8 July 2021, Mercatus Dexus Australia Partnership (MDAP),
a joint venture with Mercatus Co-operative Limited (Mercatus)
settled on the acquisition of a 33.33% interest in 1 Bligh Street,
Sydney for $375.0 million excluding acquisition costs.
On 20 July 2021, Dexus entered into binding terms which
provide a framework to fund, develop and invest in Atlassian’s
new headquarters at 8-10 Lee Street, Sydney. As part of the
arrangements Dexus will act as development manager and
take responsibility for delivering the project, fund 100% of the
project costs during construction, and retain a long-term
equity interest in the asset with Atlassian. The total project
costs are expected to be $1.4 billion.
On 22 July 2021, Dexus acquired a 49% interest in a holding
unit trust that owns Capital Square Tower 1 at 98 Mounts
Bay Road in Perth, for a total consideration of $339.0 million.
A portion of Dexus’s contribution will be utilised by the
holding trust as a new receivable loan to the co-owner, to
be repaid in four years. Dexus’s share in the loan receivable is
approximately $77.0 million.
On 27 July 2021, APN Property Group security holders
approved the Scheme of Arrangement for Dexus to acquire all
of the stapled securities in APN for an all cash-consideration
of 90 cents per security. On 13 August 2021, the Scheme was
implemented. Effective from this date, APN is now a wholly
owned subsidiary of Dexus.
On 3 August 2021, settlement occurred for the disposal of
60 Miller Street, North Sydney for $273.0 million excluding
transaction costs.
On 9 August 2021, settlement occurred for the disposal of
436-484 Victoria Road, Gladesville for $55.0 million excluding
transaction costs.
On 13 August 2021, Dexus entered into a put and call option
arrangement to sell 22 Business Park Drive, Ravenhall for
$13.5 million excluding transaction costs.
On 15 August 2021, Dexus entered into a put and call option
arrangement to acquire 1-21 McPhee Drive, Berrinba and
116-130 Gilmore Road, Berrinba for $117.0 million excluding
acquisition costs.
On 15 August 2021, Dexus exchanged contracts to acquire 2
Maker Place, Truganina for $69.0 million excluding acquisition
costs.
On 16 August 2021, Dexus entered into a put and call option
arrangement to acquire 113-153 Aldington Road, Kemps Creek
for $125.5 million excluding acquisition costs.
There remains significant uncertainty regarding how the
COVID-19 pandemic will evolve, including the duration of the
pandemic, the severity of the downturn and the speed of
economic recovery. In accordance with AASB 110 Events after
the Reporting Date, the Group considered whether events
after the reporting period confirmed conditions that existed
before the reporting date, e.g. bankruptcy of customers.
Consideration was given to the macro-economic impact of
any lockdowns or border closures since 30 June 2021, and
the Group concluded that the amounts recognised in the
Consolidated Financial Statements and the disclosures therein
are appropriate. The economic environment is subject to rapid
change and updated facts and circumstances continue to be
closely monitored by the Group.
Since the end of the year other than the matters disclosed
above, the Directors are not aware of any matter or
circumstance not otherwise dealt with in their Directors’
Report or the Consolidated Financial Statements that has
significantly or may significantly affect the operation of the
Group, the results of those operations, or state of the Group’s
affairs in future financial periods.
Distributions
Distributions paid or payable by the Group for the year ended
30 June 2021 were 51.8 cents per security (2020: 50.3 cents per
security) as outlined in note 7 of the Notes to the Consolidated
Financial Statements.
DXFM fees
Details of fees paid or payable by the Group to DXFM are
eliminated on consolidation for the year ended 30 June 2021.
Details are outlined in note 24 of the Notes to the
Consolidated Financial Statements and form part of this
Directors’ Report.
Interests in DXS securities
The movement in securities on issue in the Group during the
year and the number of securities on issue as at 30 June
2021 are detailed in note 17 of the Notes to the Consolidated
Financial Statements and form part of this Directors’ Report.
The number of interests in the Group held by DXFM or its
associates as at the end of the financial year is nil (2020: nil).
The DXFM Board has approved a grant of performance rights
of DXS stapled securities to eligible participants. Details of
the performance rights awarded during the financial year are
outlined in note 23 of the Notes the Consolidated Financial
Statements. The Group did not have any options on issue as
at 30 June 2021 (2020: nil).
Environmental regulation
The Board Risk Committee oversees 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
material breaches of these requirements.
Dexus 2021 Annual Report
111
OverviewApproachGovernanceFinancial reportInvestor informationPerformanceDirectors’ report
Directors’ Report (continued)
Indemnification and insurance
Directors’ authorisation
The insurance premium for a policy of insurance indemnifying
Directors, officers and others (as defined in the relevant policy
of insurance) is paid by Dexus Holdings Pty Limited (DXH).
The Directors’ Report is made in accordance with a resolution
of the Directors. The Consolidated Financial Statements were
authorised for issue by the Directors on 16 August 2021.
PricewaterhouseCoopers (PwC or the Auditor), is indemnified
out of the assets of the Group pursuant to the Dexus Specific
Terms of Business agreed for all engagements with PwC, to
the extent that the Group inappropriately uses or discloses a
report prepared by PwC. The Auditor, PwC, is not indemnified
for the provision of services where such an indemnification is
prohibited by the Corporations Act 2001.
Audit
Auditor
PricewaterhouseCoopers continues in office in accordance
with section 327 of the Corporations Act 2001.
W Richard Sheppard
Chair
16 August 2021
Darren J Steinberg
Chief Executive Officer
16 August 2021
Non-audit services
The Group may decide to employ the Auditor on assignments,
in addition to its statutory audit duties, where the Auditor’s
expertise and experience with the Group are important.
Details of the amounts paid or payable to the Auditor for
audit and non-audit services provided during the year are
set out in note 21 of the Notes to the Consolidated 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:
– all non-audit services have been reviewed by the Board
Audit Committee to ensure that they do not impact the
impartiality and objectivity of the auditor; and
– none of the services undermine the general principles
relating to auditor independence as set out in APES 110
Code of Ethics for Professional Accountants.
The above Directors’ statements are in accordance with the
advice received from the Board Audit Committee.
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 on
page 113 and forms part of this Directors’ Report.
Corporate governance
DXFM’s Corporate Governance Statement is available at:
www.dexus.com/corporategovernance
Rounding of amounts and currency
As the Group is an entity of the kind referred to in ASIC
Corporations (Rounding in Financial/Directors’ Reports)
Instrument 2016/191, the Directors have chosen to round
amounts in this Directors’ Report and the accompanying
Financial Report to the nearest tenth of a million dollars, unless
otherwise indicated. The Group is an entity to which the
Instrument applies. All figures in this Directors’ Report and the
Consolidated Financial Statements, except where otherwise
stated, are expressed in Australian dollars.
112 Financial report
Auditor’s Independence
Declaration
Auditor’s Independence Declaration
As lead auditor for the audit of Dexus Diversified Trust (the Trust) for the year ended 30 June
2021, I declare that to the best of my knowledge and belief, there have been:
in relation to the audit; and
(a) no contraventions of the auditor independence requirements of the Corporations Act 2001
Auditor’s Independence Declaration
(b) no contraventions of any applicable code of professional conduct in relation to the audit.
As lead auditor for the audit of Dexus Diversified Trust (the Trust) for the year ended 30 June
2021, I declare that to the best of my knowledge and belief, there have been:
This declaration is in respect of the Trust and its controlled entities, Dexus Industrial Trust and
its controlled entities, Dexus Office Trust and its controlled entities, and Dexus Operations Trust
(a) no contraventions of the auditor independence requirements of the Corporations Act 2001
and its controlled entities, during the period.
in relation to the audit; and
(b) no contraventions of any applicable code of professional conduct in relation to the audit.
This declaration is in respect of the Trust and its controlled entities, Dexus Industrial Trust and
its controlled entities, Dexus Office Trust and its controlled entities, and Dexus Operations Trust
and its controlled entities, during the period.
Matthew Lunn
Partner
PricewaterhouseCoopers
Matthew Lunn
Partner
PricewaterhouseCoopers
Sydney
16 August 2021
Sydney
16 August 2021
PricewaterhouseCoopers, ABN 52 780 433 757
One International Towers Sydney, Watermans Quay, Barangaroo, GPO BOX 2650, SYDNEY NSW
2001
T: +61 2 8266 0000, F: +61 2 8266 9999, www.pwc.com.au
Level 11, 1PSQ, 169 Macquarie Street, Parramatta NSW 2150, PO Box 1155 Parramatta NSW 2124
T: +61 2 9659 2476, F: +61 2 8266 9999, www.pwc.com.au
PricewaterhouseCoopers, ABN 52 780 433 757
Liability limited by a scheme approved under Professional Standards Legislation.
One International Towers Sydney, Watermans Quay, Barangaroo, GPO BOX 2650, SYDNEY NSW
2001
T: +61 2 8266 0000, F: +61 2 8266 9999, www.pwc.com.au
Level 11, 1PSQ, 169 Macquarie Street, Parramatta NSW 2150, PO Box 1155 Parramatta NSW 2124
T: +61 2 9659 2476, F: +61 2 8266 9999, www.pwc.com.au
Dexus 2021 Annual Report
113
Liability limited by a scheme approved under Professional Standards Legislation.
OverviewApproachGovernanceFinancial reportInvestor informationPerformanceDirectors’ report
Consolidated Statement of Comprehensive Income
For the year ended 30 June 2021
Revenue from ordinary activities
Property revenue
Development revenue
Interest revenue
Management fees and other revenue
Total revenue from ordinary activities
Net fair value gain of investment properties
Share of net profit of investments accounted for using the equity method
Net gain on sale of investment properties
Net fair value gain of foreign currency interest bearing liabilities
Net fair value gain of derivatives
Net foreign exchange gain
Reversal of impairment on inventories
Other income
Total income
Expenses
Property expenses
Development costs
Finance costs
Impairment of investments accounted for using the equity method
Impairment of intangibles
Net loss on sale of investment properties
Net fair value loss of financial assets at fair value through profit or loss
Net fair value loss of foreign currency interest bearing liabilities
Net fair value loss of derivatives
Net foreign exchange loss
Transaction costs
Management operations, corporate and administration expenses
Total expenses
Profit/(loss) before tax
Income tax expense
Profit/(loss) for the year
Other comprehensive income/(loss):
Items that may be reclassified to profit or loss
Changes in the fair value of cash flow hedges
Changes in the foreign currency basis spread reserve
Total comprehensive income/(loss) for the year
Profit/(loss) for the year attributable to:
Unitholders of the parent entity
Unitholders of other stapled entities (non-controlling interests)
Profit/(loss) for the year
Total comprehensive income/(loss) for the year attributable to:
Unitholders of the parent entity
Unitholders of other stapled entities (non-controlling interests)
Total comprehensive income/(loss) for the year
Note
2
10
9
13(c)
2
10
4
9
20
12
13(c)
3
5(a)
18
18
Earnings per unit on profit/(loss) attributable to unitholders of the Trust (parent entity)
Basic earnings per unit
Diluted earnings per unit
Earnings per stapled security on profit/(loss) attributable to stapled security holders
Basic earnings per security
Diluted earnings per security
6
6
6
6
2021
$m
2020
Restated1
$m
523.8
316.6
1.3
174.2
1,015.9
273.7
565.6
0.3
115.2
–
–
4.7
1.7
1,977.1
(165.1)
(244.6)
(131.7)
–
–
–
–
–
(102.4)
(0.1)
(10.3)
(143.2)
(797.4)
1,179.7
(41.3)
1,138.4
(14.5)
(1.5)
1,122.4
525.0
613.4
1,138.4
509.0
613.4
1,122.4
Cents
48.41
47.18
104.97
104.73
533.5
275.8
0.5
182.1
991.9
386.5
494.7
–
–
3.0
0.1
–
2.0
1,878.2
(163.3)
(225.3)
(139.7)
(12.2)
(5.6)
(0.4)
(2.7)
(168.3)
–
–
(1.1)
(150.4)
(869.0)
1,009.2
(36.5)
972.7
6.2
(4.2)
974.7
284.6
688.1
972.7
286.6
688.1
974.7
Cents
25.99
25.33
88.82
87.72
1. Restatement to 2020 required to comply with recently issued guidance from the International Financial Reporting Interpretations
Committee (IFRIC) regarding the treatment of “Configuration or Customisation Costs in a Cloud Computing Arrangement”. Refer to
note 26 for further details.
The above Consolidated Statement of Comprehensive Income should be read in conjunction with the accompanying notes.
114 Financial report
Consolidated Statement of Financial Position
As at 30 June 2021
Current assets
Cash and cash equivalents
Receivables
Non-current assets classified as held for sale
Inventories
Derivative financial instruments
Current tax receivable
Other
Total current assets
Non-current assets
Investment properties
Plant and equipment
Right-of-use assets
Inventories
Investments accounted for using the equity method
Derivative financial instruments
Intangible assets
Financial assets at fair value through profit or loss
Loans to related parties
Other
Total non-current assets
Total assets
Current liabilities
Payables
Interest bearing liabilities
Lease liabilities
Derivative financial instruments
Provisions
Other
Total current liabilities
Non-current liabilities
Interest bearing liabilities
Lease liabilities
Derivative financial instruments
Deferred tax liabilities
Provisions
Other
Total non-current liabilities
Total liabilities
Net assets
Equity
Equity attributable to unitholders of the Trust (parent entity)
Contributed equity
Reserves
Retained profits
Parent entity unitholders’ interest
Equity attributable to unitholders of other stapled entities
Contributed equity
Reserves
Retained profits
Other stapled unitholders’ interest
Total equity
Note
19(a)
19(b)
11
10
13(c)
19(c)
8
10
9
13(c)
20
12
24
19(d)
15
14
13(c)
19(e)
15
14
13(c)
5(e)
19(e)
17
18
17
18
2021
$m
43.5
121.0
272.8
137.2
13.8
21.2
28.3
637.8
8,476.8
10.1
13.6
41.0
8,070.4
333.3
305.4
180.5
30.7
-
17,461.8
18,099.6
173.8
50.0
3.5
7.2
291.2
7.8
533.5
4,874.7
20.5
42.9
92.9
2.7
23.4
5,057.1
5,590.6
12,509.0
2,341.4
(0.8)
1,463.9
3,804.5
4,813.7
37.4
3,853.4
8,704.5
12,509.0
2020
Restated1
$m
31.8
132.2
530.0
179.5
91.9
2.6
28.3
996.3
8,215.9
12.8
13.4
156.3
7,287.4
604.3
291.8
0.4
-
1.9
16,584.2
17,580.5
179.8
364.3
4.8
13.4
279.8
3.0
845.1
4,473.7
19.5
54.8
92.5
2.5
11.2
4,654.2
5,499.3
12,081.2
2,381.4
15.2
1,051.9
3,448.5
4,909.5
35.4
3,687.8
8,632.7
12,081.2
1. Restatement to 2020 required to comply with recently issued guidance from the International Financial Reporting Interpretations
Committee (IFRIC) regarding the treatment of “Configuration or Customisation Costs in a Cloud Computing Arrangement”.
Refer to note 26 for further details.
The above Consolidated Statement of Financial Position should be read in conjunction with the accompanying notes.
Dexus 2021 Annual Report
115
OverviewApproachGovernanceFinancial reportInvestor informationPerformanceDirectors’ report
Consolidated Statement of Changes in Equity
For the year ended 30 June 2021
Attributable to unitholders
of the Trust (parent entity)
Attributable to unitholders
of other stapled entities
Con-
tributed
equity
$m
2,399.0
Note
Reserves
$m
13.2
Retained
profits
$m
923.4
Total
$m
3,335.6
Con-
tributed
equity
$m
4,954.5
Reserves
$m
40.5
Retained
profits
$m
3,412.7
Total
$m
8,407.7
Total
equity
$m
11,743.3
26
–
–
–
–
–
–
(18.8)
(18.8)
(18.8)
2,399.0
13.2
923.4
3,335.6
4,954.5
40.5
3,393.9
8,388.9
11,724.5
–
–
–
–
284.6
284.6
2.0
–
2.0
2.0
284.6
286.6
–
–
–
–
–
–
688.2
688.2
972.8
–
–
2.0
688.2
688.2
974.8
17
(17.6)
–
–
–
(17.6)
7
–
–
–
–
–
–
(17.6)
(45.0)
–
–
(45.0)
(62.6)
–
–
–
–
(156.1)
(156.1)
–
–
–
(10.9)
5.8
–
–
(10.9)
(10.9)
5.8
5.8
–
(394.2)
(394.2)
(550.3)
(156.1)
(173.7)
(45.0)
(5.1)
(394.2)
(444.3)
(618.0)
2,381.4
15.2
1,051.9 3,448.5
4,909.5
35.4
3,687.8
8,632.7
12,081.2
2,381.4
15.2
1,051.9 3,448.5
4,909.5
35.4
3,716.9
8,661.8
12,110.3
26
–
–
–
–
–
–
(29.1)
(29.1)
(29.1)
2,381.4
15.2
1,051.9 3,448.5
4,909.5
35.4
3,687.8
8,632.7
12,081.2
–
–
–
–
525.0
525.0
(16.0)
–
(16.0)
(16.0)
525.0
509.0
–
–
–
–
(40.0)
(95.8)
–
613.4
613.4
1,138.4
–
–
–
–
–
(16.0)
613.4
613.4
1,122.4
–
(95.8)
(135.8)
17
(40.0)
–
–
–
7
–
–
–
–
–
–
–
–
(113.0)
(113.0)
–
–
–
(7.3)
9.3
–
–
(7.3)
(7.3)
9.3
9.3
–
(447.9)
(447.9)
(561.0)
(40.0)
–
(113.0)
(153.0)
(95.8)
2.0
(447.9)
(541.7)
(694.8)
2,341.4
(0.8)
1,463.9 3,804.5
4,813.7
37.4
3,853.4 8,704.5
12,509.0
Opening balance as at
1 July 2019
Change in accounting
policy
Restated opening balance
as at 1 July 2019
Net profit/(loss) for
the year
Other comprehensive
income/(loss) for the year
Total comprehensive
income for the year
Transactions with owners in
their capacity as owners
Buy-back of contributed
equity, net of transaction
cost
Purchase of securities, net
of transaction costs
Security-based payments
expense
Distributions paid or
provided for
Total transactions with
owners in their capacity
as owners
Closing balance as per
30 June 2020
Opening balance as at
1 July 2020
Change in accounting
policy
Restated opening balance
as at 1 July 2020
Net profit/(loss) for
the year
Other comprehensive
income/(loss) for the year
Total comprehensive
income for the year
Transactions with owners in
their capacity as owners
Buy-back of contributed
equity, net of transaction
costs
Purchase of securities, net
of transaction costs
Security-based payments
expense
Distributions paid or
provided for
Total transactions with
owners in their capacity
as owners
Closing balance as at 30
June 2021
The above Consolidated Statement of Changes in Equity should be read in conjunction with the accompanying notes.
116 Financial report
Consolidated Statement of Cash Flows
For the year ended 30 June 2021
Note
2021
$m
2020
Restated1
$m
Cash flows from operating activities
Receipts in the course of operations (inclusive of GST)
Payments in the course of operations (inclusive of GST)
Interest received
Finance costs paid
Distributions received from investments accounted for using the equity method
Income tax paid
Proceeds from sale of property classified as inventory and development services
Payments for property classified as inventory and development services
Net cash inflow/(outflow) from operating activities
22
Cash flows from investing activities
Proceeds from sale of investment properties
Proceeds from sale of investments accounted for using the equity method
Payments for capital expenditure on investment properties
Payments for termination and restructure of derivatives
Payments for investments accounted for using the equity method
Payments for financial assets at fair value through profit or loss
Payments for acquisition of investment properties
Payments for plant and equipment
Payments for intangibles
Net cash inflow/(outflow) from investing activities
Cash flows from financing activities
Proceeds from borrowings
Repayment of borrowings
Payment for termination and restructure of derivatives
Payment of lease liabilities
Payments for buy-back of contributed equity, net of transaction costs
Purchase of securities for security-based payments plans
Distributions paid to security holders
Net cash inflow/(outflow) from financing activities
Net increase/(decrease) in cash and cash equivalents
Cash and cash equivalents at the beginning of the year
Cash and cash equivalents at the end of the year
762.1
(315.6)
1.3
(147.4)
478.1
(59.6)
367.1
(86.7)
999.3
534.9
–
(110.7)
–
(727.8)
(180.5)
(197.5)
(0.7)
(15.7)
(698.0)
8,405.0
(7,983.3)
–
(0.3)
(135.8)
(7.3)
(567.9)
(289.6)
11.7
31.8
43.5
725.2
(277.1)
0.5
(145.9)
312.2
(49.1)
235.4
(87.1)
714.1
224.4
215.5
(240.7)
(124.3)
(496.8)
–
(176.2)
(1.8)
(4.1)
(604.0)
5,244.8
(4,686.1)
(42.5)
(2.5)
(62.6)
(10.9)
(548.3)
(108.1)
2.0
29.8
31.8
1. Restatement to 2020 required to comply with recently issued guidance from the International Financial Reporting Interpretations
Committee (IFRIC) regarding the treatment of “Configuration or Customisation Costs in a Cloud Computing Arrangement”.
Refer to note 26 for further details.
The above Consolidated Statement of Cash Flows should be read in conjunction with the accompanying notes.
Dexus 2021 Annual Report
117
OverviewApproachGovernanceFinancial reportInvestor informationPerformanceDirectors’ report
Notes to the Consolidated
Financial Statements
In this section
This section sets out the basis upon which the Group’s Consolidated Financial Statements are prepared.
Specific accounting policies are described in their respective Notes to the Consolidated Financial Statements. This
section also shows information on new or amended accounting standards and their impact on the financial position and
performance of the Group.
Basis of preparation
Change in Accounting Policies
The Consolidated Financial Statements are general purpose
financial reports which have been prepared in accordance
with the requirements of the Constitutions of the entities within
the Group, the Corporations Act 2001, AASB’s issued by the
Australian Accounting Standards Board and International
Financial Reporting Standards adopted by the International
Accounting Standard Board.
Unless otherwise stated the Consolidated Financial
Statements have been prepared using consistent accounting
policies in line with those of the previous financial year and
corresponding interim reporting period. Where required,
comparative information has been restated for consistency
with the current year’s presentation.
The Consolidated Financial Statements are presented in
Australian dollars, with all values rounded to the nearest tenth
of a million dollars in accordance with ASIC Corporations
(Rounding in Financial/Directors’ Reports) Instrument 2016/191,
unless otherwise stated.
The Consolidated Financial Statements have been prepared
on a going concern basis using historical cost conventions,
except for investment properties, investment properties
within the equity accounted investments, derivative financial
instruments, share based payments, and other financial assets
or liabilities which are stated at their fair value.
Dexus stapled securities are quoted on the Australian
Securities Exchange under the “DXS” code and comprise one
unit in each of DDF, DIT, DOT and DXO. In accordance with
Australian Accounting Standards, the entities within the Group
must be consolidated for financial reporting purposes. DDF is
the parent entity and deemed acquirer of DIT, DOT and DXO.
These Consolidated Financial Statements therefore represent
the consolidated results of DDF and include DDF and its
controlled entities, DIT and its controlled entities, DOT and
its controlled entities, and DXO and its controlled entities. All
entities within the Group are for-profit entities.
Equity attributable to other trusts stapled to DDF is a form
of non-controlling interest and represents the equity of
DIT, DOT and DXO. The amount of non-controlling interest
attributable to stapled security holders is disclosed in the
Consolidated Statement of Financial Position. DDF is a for-
profit entity for the purpose of preparing the Consolidated
Financial Statements.
Each entity forming part of the Group 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 (DXFM) as Responsible Entity for DDF, DIT, DOT and
DXO may only unstaple the Group if approval is obtained by a
special resolution of the stapled security holders.
118 Financial report
On 27 April 2021, the International Financial Reporting
Interpretations Committee (IFRIC) issued an addendum
regarding the treatment of “Configuration or Customisation
Costs in a Cloud Computing Arrangement”. The focus of the
addendum was to clarify how a customer should account for
the cost of configuring or customising a supplier’s software
when it is a “Software as a Service” (SaaS) product. In
response to this clarification, the Group has retrospectively
changed its accounting policy for the amount of any SaaS
arrangements previously recorded as intangible assets.
Refer to note 20 Intangible assets and note 26 Change in
accounting policy for impacts on the Consolidated Financial
Statements.
Critical accounting estimates
The preparation of the Consolidated Financial Statements
requires the use of certain critical accounting estimates and
management to exercise its judgement in the process of
applying the Group’s accounting policies.
The economic impacts resulting from the Government
imposed lockdowns in a response to the COVID-19 pandemic
have the potential to impact various financial statement line
items including: Investment properties, Property revenue and
expenses, and Receivables (included within Working capital).
The COVID-19 pandemic continued to create unprecedented
challenges through unanticipated Government imposed
lockdowns that varied in their level of impact across Australian
cities. Despite the disruption, Australia’s economic activity in
the year ended 30 June 2021 has been resilient supported by
Government stimulus and historically low interest rates, with
growing employment numbers, increasing house prices and
strong business and consumer confidence.
During the year, Dexus leased 184,029 square metres of office
space, in addition to 11,068 square metres of space across
office developments which highlights the demand for quality
workspace in well located CBD assets. Dexus office portfolio
occupancy reduced to 95.2% (FY20: 96.5%).
Across the Dexus industrial portfolio, economic tailwinds from
Government stimulus are feeding demand from ecommerce,
retail, essential services, pharmaceuticals and infrastructure
tenants, with these sectors requiring more space to
accommodate growth. Dexus industrial portfolio occupancy
increased to 97.7% (FY20: 95.6%).
Retail tenants located at the base of Dexus’s office buildings
continue to be impacted with lower foot traffic and sales
as a result of government imposed lockdowns, and Dexus
continues to work with small business tenants impacted by
lockdowns on rent relief measures.
In the process of applying the Group’s accounting policies,
management has made a number of judgements and applied
estimates in relation to COVID-19 related uncertainties. The
judgements and estimates which are material to the Financial
Report are discussed in the following notes.
Note 2
Note 8
Property revenue and expenses
Investment properties
Note 10
Inventories
Note 12
Financial assets at fair value through
profit or loss
Note 13 Capital and financial risk
management
Note 19 Working capital
Note 20
Intangible assets
Note 23
Security-based payments
Page 127
Page 132
Page 142
Page 143
Page 144
Page 160
Page 163
Page 166
Principles of consolidation
These Consolidated Financial Statements incorporate
the assets, liabilities and results of all subsidiaries as at
30 June 2021.
a. Controlled entities
Subsidiaries are all entities over which the Group has control.
The Group controls an entity when the Group is exposed to,
or has rights to, variable returns from its involvement with the
entity and has the ability to affect those returns through its
power to direct the activities of the entity. Subsidiaries are fully
consolidated from the date on which control is transferred
to the Group. They are deconsolidated from the date that
control ceases.
b. Joint arrangements
Investments in joint arrangements are classified as either joint
operations or joint ventures depending on the contractual
rights and obligations each investor has, rather than the legal
structure of the joint arrangement.
Joint operations
Where assets are held directly as tenants in common,
the Group’s proportionate share of revenues, expenses,
assets and liabilities are included in their respective items
of the Consolidated Statement of Financial Position and
Consolidated Statement of Comprehensive Income.
Joint ventures
Investments in joint ventures are accounted for using the
equity method. Under this method, the Group’s share of the
joint ventures’ post-acquisition profits or losses is recognised
in the Consolidated Statement of Comprehensive Income and
distributions received from joint ventures are recognised as a
reduction of the carrying amount of the investment.
c. Employee share trust
The Group has formed a trust to administer the Group’s
security-based employee benefits. The employee share trust
is consolidated as the substance of the relationship is that the
trust is controlled by the Group.
Foreign currency
The Consolidated Financial Statements are presented
in Australian dollars.
Foreign currency transactions are translated into the
Australian dollars 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 Consolidated
Statement of Comprehensive Income.
As at 30 June 2021, the Group had no investments in
foreign operations.
Goods and services tax
Revenues, expenses and capital assets are recognised net
of any amount of Australian Goods and Services Tax (GST),
except where the amount of GST incurred is not recoverable.
In these circumstances the GST is recognised as part of the
cost of acquisition of the asset or as part of the expense.
Cash flows are included in the Consolidated Statement of
Cash Flows on a gross basis. The GST component of cash
flows arising from investing and financing activities that is
recoverable from or payable to the Australian Taxation Office
is classified as cash flows from operating activities.
Dexus 2021 Annual Report
119
OverviewApproachGovernanceFinancial reportInvestor informationPerformanceDirectors’ report
Notes to the Consolidated Financial Statements (continued)
The notes include information which is required to understand the Consolidated Financial Statements and is material and
relevant to the operations, financial position and performance of the Group.
The notes are organised into the following sections:
Group performance
1. Operating segments
Property portfolio assets
Investment properties
8.
2. Property revenue
and expenses
9.
3. Management operations,
10.
Investments accounted for
using the equity method
Inventories
Capital and financial
risk management and
working capital
13. Capital and financial risk
management
14. Lease liabilities
Other disclosures
20.
Intangible assets
21. Audit, taxation and
transaction service fees
15.
Interest bearing liabilities
22. Cash flow information
corporate and
administration expenses
4. Finance costs
5. Taxation
6. Earnings per unit
7. Distributions paid
and payable
11. Non-current assets
classified as held for sale
12. Financial assets at fair
value through profit or loss
16. Commitments and
contingencies
17. Contributed equity
18. Reserves
19. Working capital
23. Security-based payments
24. Related parties
25. Parent entity disclosures
26. Change in accounting
policy
27. Subsequent events
120 Financial report
Group performance
In this section
This section explains the results and performance of the Group.
It provides additional information about those individual line items in the Consolidated Financial Statements that the
Directors consider most relevant in the context of the operations of the Group, including: results by operating segment,
property revenue and expenses, management operations, corporate and administration expenses, finance costs, taxation,
earnings per unit and distributions paid and payable.
Note 1 Operating segments
Description of segments
The Group’s operating segments have been identified based on the sectors analysed within the management reports reviewed
in order to monitor performance across the Group and to appropriately allocate resources. Refer to the table below for a brief
description of the Group’s operating segments.
Segment
Office
Industrial
Description
Domestic office space with any associated retail space; as well as car parks and office
developments.
Domestic industrial properties, industrial estates and industrial developments.
Property management
Property management services for third party clients and owned assets.
Funds management
Funds management of third party client assets.
Development and trading
Revenue earned and costs incurred by the Group on development services for third party
clients and inventory.
All other segments
Corporate expenses associated with maintaining and operating the Group. This segment
also includes the centralised treasury function, direct property portfolio value of the Group’s
healthcare investments and minority equity interests in Australian unlisted entities and
managed property funds.
Dexus 2021 Annual Report
121
OverviewApproachGovernanceFinancial reportInvestor informationPerformanceDirectors’ report
Industrial
$m
Property
management
$m
Funds management
trading
All other segments
Eliminations
$m
$m
$m
Total
$m
Development and
146.1
–
–
–
146.1
(37.2)
–
(3.4)
–
–
–
15.4
–
1.3
122.2
376.8
–
–
–
–
–
(15.7)
–
–
–
483.3
1,489.9
–
–
1,235.5
–
2,725.4
–
41.7
–
26.3
68.0
(26.2)
(30.3)
–
–
–
–
–
–
–
11.5
–
–
–
–
–
–
–
–
–
–
11.5
–
–
–
–
–
–
73.2
73.2
(28.1)
45.1
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
316.6
16.1
332.7
(15.0)
(244.6)
(21.6)
51.5
4.7
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
178.2
–
–
178.2
45.1
56.2
–
–
–
–
–
–
–
–
–
(35.4)
1.8
(132.3)
(16.5)
10.8
(171.6)
17.1
–
(102.4)
(11.6)
115.2
–
–
(2.2)
(3.2)
5.1
(158.6)
8.6
–
–
289.1
180.5
478.2
$m
(4.8)
(4.8)
4.8
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
903.6
41.7
316.6
115.6
1,377.5
(311.4)
(73.4)
(47.9)
(244.6)
1.8
(132.3)
154.4
(38.1)
31.0
717.0
583.4
4.7
(102.4)
(11.6)
6.0
115.2
(154.7)
(2.2)
(3.2)
(13.8)
1,138.4
8,476.8
967.0
178.2
7,474.6
180.5
17,277.1
Group performance (continued)
Note 1 Operating segments (continued)
30 June 2021
Segment performance measures
Property revenue
Property management fees
Development revenue
Management fee revenue
Total operating segment revenue
Property expenses & property management salaries
Management operations expenses
Corporate and administration expenses
Development costs
Interest revenue
Finance costs
Incentive amortisation and rent straight-line
FFO tax expense
Rental guarantees, coupon income and other
Funds From Operations (FFO)
Net fair value gain/(loss) of investment properties
Reversal of impairment of inventories
Net fair value gain/(loss) of derivatives
Transaction costs and other significant items
Net gain/(loss) on sale of investment properties
Net fair value gain/(loss) of interest bearing liabilities
Incentive amortisation and rent straight-line
Amortisation of intangible assets
Non FFO tax income/(expense)
Rental guarantees, coupon income and other
Net profit/(loss) attributable to stapled security holders
Investment properties
Non-current assets held for sale
Inventories
Equity accounted investment properties
Financial assets at fair value through profit or loss
Property portfolio
Office
$m
762.3
–
–
–
762.3
(248.0)
–
(13.9)
–
–
–
139.0
–
18.9
658.3
189.5
–
–
–
6.0
–
(139.0)
–
–
(18.9)
695.9
6,978.3
967.0
–
5,950.0
–
13,895.3
122 Financial report
30 June 2021
Segment performance measures
Property revenue
Property management fees
Development revenue
Management fee revenue
Total operating segment revenue
Property expenses & property management salaries
Management operations expenses
Corporate and administration expenses
Development costs
Interest revenue
Finance costs
FFO tax expense
Incentive amortisation and rent straight-line
Rental guarantees, coupon income and other
Funds From Operations (FFO)
Net fair value gain/(loss) of investment properties
Reversal of impairment of inventories
Net fair value gain/(loss) of derivatives
Transaction costs and other significant items
Net gain/(loss) on sale of investment properties
Net fair value gain/(loss) of interest bearing liabilities
Incentive amortisation and rent straight-line
Amortisation of intangible assets
Non FFO tax income/(expense)
Rental guarantees, coupon income and other
Net profit/(loss) attributable to stapled security holders
Investment properties
Non-current assets held for sale
Inventories
Office
$m
762.3
–
–
–
762.3
(248.0)
(13.9)
–
–
–
–
–
–
–
–
–
–
–
–
139.0
18.9
658.3
189.5
6.0
–
(139.0)
(18.9)
695.9
6,978.3
967.0
Industrial
$m
146.1
146.1
(37.2)
(3.4)
15.4
1.3
122.2
376.8
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
(15.7)
483.3
1,489.9
Equity accounted investment properties
5,950.0
1,235.5
Financial assets at fair value through profit or loss
Property portfolio
13,895.3
2,725.4
41.7
–
–
26.3
68.0
(26.2)
(30.3)
11.5
11.5
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
Property
management
$m
Funds management
$m
Development and
trading
$m
All other segments
$m
Eliminations
$m
Total
$m
–
–
–
73.2
73.2
–
(28.1)
–
–
–
–
–
–
–
45.1
–
–
–
–
–
–
–
–
–
–
45.1
–
–
–
–
–
–
–
–
316.6
16.1
332.7
–
(15.0)
–
(244.6)
–
–
–
(21.6)
–
51.5
–
4.7
–
–
–
–
–
–
–
–
56.2
–
–
178.2
–
–
178.2
–
–
–
–
–
–
–
(35.4)
–
1.8
(132.3)
–
(16.5)
10.8
(171.6)
17.1
–
(102.4)
(11.6)
–
115.2
–
(2.2)
(3.2)
5.1
(158.6)
8.6
–
–
289.1
180.5
478.2
(4.8)
–
–
–
(4.8)
–
–
4.8
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
903.6
41.7
316.6
115.6
1,377.5
(311.4)
(73.4)
(47.9)
(244.6)
1.8
(132.3)
154.4
(38.1)
31.0
717.0
583.4
4.7
(102.4)
(11.6)
6.0
115.2
(154.7)
(2.2)
(3.2)
(13.8)
1,138.4
8,476.8
967.0
178.2
7,474.6
180.5
17,277.1
Dexus 2021 Annual Report 123
OverviewApproachGovernanceFinancial reportInvestor informationPerformanceDirectors’ report
Group performance (continued)
Note 1 Operating segments (continued)
30 June 2020
Segment performance measures
Property revenue
Property management fees
Development revenue
Management fee revenue
Total operating segment revenue
Property expenses & property management salaries
Management operations expenses
Corporate and administration expenses
Development costs
Interest revenue
Finance costs
Incentive amortisation and rent straight-line
FFO tax expense
Rental guarantees, coupon income and other
Funds From Operations (FFO)
Net fair value gain/(loss) of investment properties
Net fair value gain/(loss) of derivatives
Transaction costs and other significant items
Net gain/(loss) on sale of investment properties
Net fair value gain/(loss) of interest bearing liabilities
Incentive amortisation and rent straight-line
Amortisation of intangible assets
Non FFO tax income/(expense)
Rental guarantees, coupon income and other
Net profit/(loss) attributable to stapled security holders
Investment properties
Non-current assets held for sale
Inventories
Equity accounted investment properties
Property portfolio
Office
$m
787.5
–
–
–
787.5
(242.1)
–
(13.2)
–
–
–
113.4
–
25.8
671.4
490.6
–
–
0.1
–
(113.4)
–
–
(25.8)
1,022.9
6,978.6
561.0
–
6,510.6
14,050.2
Industrial
$m
Property
management
$m
Funds management
trading
All other segments
Eliminations
Development and
154.4
–
–
–
154.4
(41.0)
–
(3.3)
–
–
–
14.1
–
–
124.2
111.4
–
–
–
–
(14.1)
–
–
–
221.5
1,228.1
15.4
–
774.9
2,018.4
–
42.3
–
36.2
78.5
(26.6)
(30.8)
–
–
–
–
–
–
–
21.1
–
–
–
–
–
–
–
–
–
21.1
–
–
–
–
–
$m
73.6
73.6
(26.6)
47.0
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
$m
–
–
275.8
15.7
291.5
(12.3)
(225.3)
(15.2)
-
38.7
–
-
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
335.8
335.8
$m
–
–
–
–
–
–
–
(33.0)
–
1.5
(128.9)
–
(22.4)
10.6
(172.2)
10.4
(2.5)
(19.4)
(168.3)
–
–
(28.2)
(3.3)
5.0
(378.5)
9.2
–
–
147.9
157.1
47.0
38.7
$m
(5.0)
(5.0)
5.0
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
Total
Restated1
$m
936.9
42.3
275.8
125.5
1,380.5
(309.7)
(69.7)
(44.5)
(225.3)
1.5
(128.9)
127.5
(37.6)
36.4
730.2
612.4
(2.5)
(19.4)
0.1
(168.3)
(127.5)
(28.2)
(3.3)
(20.8)
972.7
8,215.9
576.4
335.8
7,433.4
16,561.5
1. Restatement to 2020 required to comply with recently issued guidance from the International Financial Reporting Interpretations Committee
(IFRIC) regarding the treatment of “Configuration or Customisation Costs in a Cloud Computing Arrangement”. Refer to note 26 for further
details.
124 Financial report
30 June 2020
Segment performance measures
Property revenue
Property management fees
Development revenue
Management fee revenue
Total operating segment revenue
Property expenses & property management salaries
Management operations expenses
Corporate and administration expenses
Development costs
Interest revenue
Finance costs
FFO tax expense
Incentive amortisation and rent straight-line
Rental guarantees, coupon income and other
Funds From Operations (FFO)
Net fair value gain/(loss) of investment properties
Net fair value gain/(loss) of derivatives
Transaction costs and other significant items
Net gain/(loss) on sale of investment properties
Net fair value gain/(loss) of interest bearing liabilities
Incentive amortisation and rent straight-line
Amortisation of intangible assets
Non FFO tax income/(expense)
Rental guarantees, coupon income and other
Net profit/(loss) attributable to stapled security holders
Investment properties
Non-current assets held for sale
Inventories
Equity accounted investment properties
Property portfolio
Office
$m
787.5
–
–
–
–
–
–
–
–
787.5
(242.1)
(13.2)
113.4
25.8
671.4
490.6
–
–
0.1
–
–
–
(113.4)
(25.8)
1,022.9
6,978.6
561.0
–
6,510.6
14,050.2
Industrial
$m
154.4
154.4
(41.0)
(3.3)
14.1
124.2
111.4
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
(14.1)
221.5
1,228.1
15.4
–
774.9
2,018.4
42.3
–
–
36.2
78.5
(26.6)
(30.8)
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
21.1
21.1
1. Restatement to 2020 required to comply with recently issued guidance from the International Financial Reporting Interpretations Committee
(IFRIC) regarding the treatment of “Configuration or Customisation Costs in a Cloud Computing Arrangement”. Refer to note 26 for further
details.
Property
management
$m
Funds management
$m
Development and
trading
$m
All other segments
$m
Eliminations
$m
–
–
–
73.6
73.6
–
(26.6)
–
–
–
–
–
–
–
47.0
–
–
–
–
–
–
–
–
–
47.0
–
–
–
–
–
–
–
275.8
15.7
291.5
–
(12.3)
-
(225.3)
–
–
–
(15.2)
-
38.7
–
–
–
–
–
–
–
–
–
38.7
–
–
335.8
–
335.8
–
–
–
–
–
–
–
(33.0)
–
1.5
(128.9)
–
(22.4)
10.6
(172.2)
10.4
(2.5)
(19.4)
–
(168.3)
–
(28.2)
(3.3)
5.0
(378.5)
9.2
–
–
147.9
157.1
(5.0)
–
–
–
(5.0)
–
–
5.0
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
Total
Restated1
$m
936.9
42.3
275.8
125.5
1,380.5
(309.7)
(69.7)
(44.5)
(225.3)
1.5
(128.9)
127.5
(37.6)
36.4
730.2
612.4
(2.5)
(19.4)
0.1
(168.3)
(127.5)
(28.2)
(3.3)
(20.8)
972.7
8,215.9
576.4
335.8
7,433.4
16,561.5
Dexus 2021 Annual Report 125
OverviewApproachGovernanceFinancial reportInvestor informationPerformanceDirectors’ report
Group performance (continued)
Note 1 Operating segments (continued)
Other segment information
Funds from Operations (FFO)
The Directors consider the Property Council of Australia’s (PCA) definition of FFO to be a measure that reflects the underlying
performance of the Group. FFO comprises net profit/loss after tax attributable to stapled security holders, calculated in
accordance with Australian Accounting Standards and adjusted for: property revaluations, impairments and reversal of
impairments, derivative and foreign exchange mark-to-market impacts, fair value movements of interest bearing liabilities,
amortisation of tenant incentives, gain/loss on sale of certain assets, straight line rent adjustments, non-FFO tax expenses,
certain transaction costs, one-off significant items (including write off of IFRIC SaaS customisation expenses), amortisation of
intangible assets, movements in right-of-use assets and lease liabilities, rental guarantees and coupon income.
Reconciliation of segment revenue to the Consolidated Statement of Comprehensive Income
Property lease revenue
Property services revenue
Property revenue
Property management fees
Development revenue
Management fee revenue
Total operating segment revenue
Share of property lease revenue from joint ventures
Share of property services revenue from joint ventures
Share of management fees charged to joint ventures
Interest revenue
Total revenue from ordinary activities
Reconciliation of segment assets to the Consolidated Statement of Financial Position
Direct property portfolio1
Cash and cash equivalents
Receivables
Intangible assets
Financial assets at fair value through profit or loss
Derivative financial instruments
Plant and equipment
Right-of-use assets
Prepayments and other assets2
Total assets
2021
$m
793.9
109.7
903.6
41.7
316.6
115.6
1,377.5
(341.4)
(48.7)
27.2
1.3
1,015.9
2021
$m
17,096.6
43.5
121.0
305.4
180.5
347.1
10.1
13.6
(18.2)
2020
$m
825.9
111.0
936.9
42.3
275.8
125.5
1,380.5
(347.7)
(55.7)
14.3
0.5
991.9
2020
$m
16,561.5
31.8
132.2
291.8
0.4
696.2
12.8
13.4
(159.6)
18,099.6
17,580.5
Includes the Group’s portion of investment properties accounted for using the equity method.
1
2 Other assets include the Group’s share of total net assets of its investments accounted for using the equity method less the Group’s share of
the investment property value which is included in the direct property portfolio.
126 Financial report
Note 2 Property revenue and expenses
The Group’s main revenue stream is property rental revenue and is derived from holding properties as investment properties and
earning rental yields over time. Rental revenue is recognised on a straight-line basis over the lease term for leases with fixed rent
review clauses.
Prospective tenants may be offered incentives as an inducement to enter into operating leases. The costs of incentives are
recognised as a reduction of rental revenue on a straight-line basis from 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.
Within its lease arrangements, the Group provides certain services to tenants (such as utilities, cleaning, maintenance and
certain parking arrangements) which are accounted for within AASB 15 Revenue from Contracts with Customers. A portion of the
consideration within the lease arrangements is therefore allocated to revenue for the provision of services.
Rent and recoverable outgoings
Services revenue
Incentive amortisation
Other revenue
Total property revenue
Impact of COVID-19 on Property revenue
2021
$m
484.1
61.0
(78.9)
57.6
523.8
2020
$m
488.3
62.3
(78.4)
61.3
533.5
The rent relief measures outlined in the Australian Government National Code of Conduct (Code of Conduct) concluded during
the period as follows:
– NSW – extension until 31 December 2020 from the initial expiry date of 24 October 20201
– VIC – extension until 28 March 2021 from the initial expiry date of 29 September 2020
– WA – extension until 28 March 2021 from the initial expiry date of 29 September 2020
– QLD – extension until 31 December 2020 from the initial expiry date of 30 September 2020
1 For retail tenants that had a turnover of less than $5.0 million in the 2018/2019 financial year, there was an extension to 28 March 2021.
Dexus continues to work with impacted tenants to finalise rent relief packages in accordance with the Code of Conduct.
The various rent relief measures have been accounted for as follows in line with ASIC guidance ‘20-157MR Focuses for financial
reporting under COVID-19 conditions’ published on 7 July 2020.
When a rent waiver agreement is made between the landlord and tenant:
– rent waived that relates to future occupancy is spread over the remaining lease term and recognised on a straight-line basis;
and
– rent waived that relates to past occupancy is expensed immediately, except to the extent there exists a pre-existing
provision for expected credit losses relating to unpaid rent.
Property revenue has been recognised for occupancy up to the date of a waiver agreement. Where there was no agreement
at 30 June 2021, a provision for expected credit losses per AASB 9 Financial Instruments has been recognised against any
receivable for unpaid rent for past occupancy.
The provision for expected credit losses is recognised with a corresponding expense in Property expenses. The provision
covers the difference between contractual cash flows that are due and cash flows expected to be received. Accordingly, the
provision includes both that part of the rent receivable that is likely to be waived and any additional amount relating to credit
risk associated with the financial condition of the tenant. Refer to note 19 Working capital for the amount of the provision for
expected credit losses recognised at the reporting date.
In the circumstance where the tenant has fully paid rent for the period of occupancy up to balance date, there is no rent
receivable against which to make a provision. Where it is expected that some of the rent already paid by the tenant will be
waived, there is no basis to recognise a liability at balance date.
Rent deferrals, where in substance the deferral is a delay in the timing of payments, have no impact on property revenue
recognition. A separate assessment of the recoverability of rent receivable is performed in accordance with the policy outlined
in note 19 Working capital.
Dexus 2021 Annual Report 127
OverviewApproachGovernanceFinancial reportInvestor informationPerformanceDirectors’ report
Group performance (continued)
Note 2 Property revenue and expenses (continued)
Property expenses
Property expenses include rates, taxes, expected credit losses on receivables and other property outgoings incurred in relation
to investment properties. These expenses are recognised in the Consolidated Statement of Comprehensive Income on an
accrual basis. If these items are recovered from a tenant by the Group, they are recorded within Services revenue or recoverable
outgoings within Property revenue.
Recoverable outgoings and direct recoveries
Other non recoverable property expenses
Total property expenses
Note 3 Management operations, corporate and administration expenses
Audit, taxation, legal and other professional fees
Depreciation and amortisation
Employee benefits expense
Administration and other expenses
Software customisation expenses
Total management operations, corporate and administration expenses
2021
$m
126.1
39.0
165.1
2021
$m
6.7
9.1
95.3
20.9
11.2
143.2
2020
$m
130.4
32.9
163.3
2020
Restated1
$m
9.3
9.9
92.4
20.8
18.0
150.4
1 Restatement to 2020 required to comply with recently issued guidance from the International Financial Reporting Interpretations
Committee (IFRIC) regarding the treatment of “Configuration or Customisation Costs in a Cloud Computing Arrangement”.
Refer to note 26 for further details.
Note 4 Finance costs
Finance costs include interest, amortisation or other costs incurred in connection with arrangement of borrowings, finance costs
on lease liabilities and realised interest rate swaps. Finance costs are expensed as incurred unless they relate to qualifying assets.
A qualifying asset is an asset under development which takes a substantial period of time, where the works being carried out to
bring it to its intended use or sale are expected to exceed 12 months in duration. Finance costs incurred for the acquisition and
construction of a qualifying asset are capitalised to the cost of the asset for the period of time that is required to complete the
asset. To the extent that funds are borrowed generally to fund development, the amount of borrowing costs to be capitalised to
qualifying assets must be determined by using an appropriate capitalisation rate.
Interest paid/payable
Amount capitalised
Realised (gain)/loss of interest rate derivatives
Finance costs - leases
Debt modification
Other finance costs
Total finance costs
2021
$m
113.9
(1.8)
22.3
0.7
(13.2)
9.8
131.7
2020
$m
120.2
(9.5)
16.9
0.8
1.8
9.5
139.7
The average capitalisation rate used to determine the amount of finance costs eligible for capitalisation is 3.25% (2020: 4.00%).
128 Financial report
Note 5 Taxation
Under current Australian income tax legislation, DDF, DIT and DOT are not liable for income tax provided they satisfy certain
legislative requirements, which were met in the current and previous financial years. DXO is liable for income tax and has formed
a tax consolidated group with its wholly owned and controlled Australian entities. As a consequence, these entities are taxed as
a single entity.
Income tax expense is comprised of current and deferred tax expense. Current and deferred tax is recognised in profit or loss,
except to the extent that it relates to items recognised in other comprehensive income or directly in equity, in which case it is
recognised in other comprehensive income or directly in equity, respectively.
Current tax expense represents the expense relating to the expected taxable income at the applicable rate of the
financial year.
Deferred tax expense represents the tax expense in respect of the future tax consequences of recovering or settling the
carrying amount of an asset or liability. Deferred income tax liabilities are recognised for all taxable temporary differences.
Deferred income tax assets are recognised for all deductible temporary differences and unused tax losses, to the extent that
it is probable that future taxable profit will be available to utilise them.
Deferred income tax assets and liabilities are measured at the tax rates that are expected to apply to the year when the asset
is realised or the liability is settled, based on tax rates and tax laws that have been enacted or substantively enacted at the
balance sheet date.
The carrying amount of deferred income tax assets is reviewed at balance sheet date and reduced to the extent that it is no
longer probable that sufficient taxable profit will be available to utilise them.
Attribution managed investment trust regime
Dexus made an election for DDF, DOT and DIT to be attribution managed investment trusts (AMITs) for the year ended 30 June
2017 and future years. The AMIT regime is intended to reduce complexity, increase certainty and minimise compliance costs for
AMITs and their investors.
a. Income tax (expense)/benefit
Current income tax expense
Deferred income tax (expense)/benefit
Total income tax expense
Deferred income tax expense included in income tax (expense)/benefit comprises:
(Decrease)/increase in deferred tax assets
(Increase)/decrease in deferred tax liabilities
Total deferred tax benefit/(expense)
b. Reconciliation of income tax (expense)/benefit to net profit
Profit before income tax
Less: profit attributed to entities not subject to tax
Profit subject to income tax
Prima facie tax expense at the Australian tax rate of 30% (2020: 30%)
2021
$m
(40.9)
(0.4)
(41.3)
9.9
(10.3)
(0.4)
2021
$m
1,179.7
(1,045.0)
134.7
(40.4)
Tax effect of amounts which are not deductible/(assessable) in calculating taxable income:
(Non-assessable)/non-deductible items
Income tax expense
(0.9)
(41.3)
2020
Restated1
$m
(25.3)
(11.2)
(36.5)
3.3
(14.5)
(11.2)
2020
Restated1
$m
1,009.2
(891.7)
117.5
(35.3)
(1.2)
(36.5)
1
Restatement to 2020 required to comply with recently issued guidance from the International Financial Reporting Interpretations Committee
(IFRIC) regarding the treatment of “Configuration or Customisation Costs in a Cloud Computing Arrangement”. Refer to note 26 for
further details.
Dexus 2021 Annual Report 129
OverviewApproachGovernanceFinancial reportInvestor informationPerformanceDirectors’ report
Group performance (continued)
Note 5 Taxation (continued)
c. Deferred tax assets
The balance comprises temporary differences attributable to:
Employee provisions
Software expenditure
Other
Total non-current assets - deferred tax assets
Movements:
Opening balance at the beginning of the year
Movement in deferred tax asset arising from temporary differences
(Charged)/credited to the Consolidated Statement of Comprehensive Income
Closing balance at the end of the year
d. Deferred tax liabilities
The balance comprises temporary differences attributable to:
Intangible assets
Investment properties
Other
Total non-current liabilities - deferred tax liabilities
Movements
Opening balance at the beginning of the year
Movement in deferred tax liability arising from temporary differences
Charged/(credited) to the Consolidated Statement of Comprehensive Income
Closing balance at the end of the year
e. Net deferred tax liabilities
Deferred tax assets
Deferred tax liabilities
Net deferred tax liabilities
2021
$m
19.1
13.3
6.7
39.1
29.2
9.9
9.9
39.1
2021
$m
76.5
46.5
9.0
132.0
121.7
10.3
10.3
132.0
2021
$m
39.1
132.0
92.9
2020
Restated1
$m
13.9
12.5
2.8
29.2
25.9
3.3
3.3
29.2
2020
Restated1
$m
72.4
42.3
7.0
121.7
107.2
14.5
14.5
121.7
2020
Restated1
$m
29.2
121.7
92.5
1
Restatement to 2020 required to comply with recently issued guidance from the International Financial Reporting Interpretations Committee
(IFRIC) regarding the treatment of “Configuration or Customisation Costs in a Cloud Computing Arrangement”. Refer to note 26 for
further details.
130 Financial report
Note 6 Earnings per unit
Earnings per unit are determined by dividing the net profit attributable to unitholders by the weighted average number of
ordinary units outstanding during the year. Diluted earnings per unit are adjusted from the basic earnings per unit by taking
into account the impact of dilutive potential units.
a. Net profit used in calculating basic and diluted earnings per security
Profit attributable to unitholders of the Trust (parent entity)
for basic and diluted earnings per security
Profit attributable to stapled security holders for basic earnings per security
Effect on exchange of Exchangeable Notes
Profit attributable to stapled security holders for diluted earnings per security
2021
$m
525.0
1,138.4
27.1
1,165.5
2020
Restated1
$m
284.6
972.7
12.7
985.4
1. Restatement to 2020 required to comply with recently issued guidance from the International Financial Reporting Interpretations Committee
(IFRIC) regarding the treatment of “Configuration or Customisation Costs in a Cloud Computing Arrangement”. Refer to note 26 for further
details.
b. Weighted average number of securities used as a denominator
Weighted average number of units outstanding used in calculation
of basic earnings per unit
Effect on exchange of Exchangeable Notes
Weighted average number of units outstanding used in calculation
of diluted earnings per unit
Note 7 Distributions paid and payable
Distributions are recognised when declared.
a. Distribution to security holders
31 December (paid 26 February 2021)
30 June (payable 30 August 2021)
Total distribution to security holders
b. Distribution rate
31 December (paid 26 February 2021)
30 June (payable 30 August 2021)
Total distributions
c. Franked dividends
Opening balance at the beginning of the year
Income tax paid during the year
Franking credits utilised for payment of distribution
Closing balance at the end of the year
2021
No. of securities
2020
No. of securities
1,084,536,777
1,095,096,969
28,333,333
1,112,870,110
28,333,333
1,123,430,302
2021
$m
313.6
247.4
561.0
2020
$m
296.0
254.3
550.3
2021
Cents per security
2020
Cents per security
28.8
23.0
51.8
2021
$m
94.3
59.6
(21.4)
132.5
27.0
23.3
50.3
2020
$m
66.3
49.4
(21.4)
94.3
As at 30 June 2021, the Group had a current tax asset of $21.2 million, which will be added to the franking account balance
once payment is made.
Dexus 2021 Annual Report
131
OverviewApproachGovernanceFinancial reportInvestor informationPerformanceDirectors’ report
Property portfolio
assets
In this section
The following table summarises the property portfolio assets detailed in this section.
30 June 2021
Investment properties
Investments accounted for
using the equity method
Inventories
Non-current assets classified
as held for sale
Financial assets at fair value
through profit or loss
Total
Note
8
9
10
11
12
Leased
Asset
$m
Office
$m
Industrial
$m
Healthcare
$m
Other
$m
8.6
7.4
6,978.3
5,950.0
1,489.9
1,235.5
–
281.7
–
–
–
–
178.2
967.0
–
–
–
–
–
–
Total
$m
8,476.8
7,474.6
178.2
967.0
–
–
–
–
180.5
180.5
16.0
13,895.3
2,903.6
281.7
180.5
17,277.1
Property portfolio assets are used to generate the Group’s performance and are considered to be the most relevant to the
understanding of the operating performance of the Group. The assets are detailed in the following notes:
– Investment properties: relates to investment properties, both stabilised and under development.
– Investments accounted for using the equity method: provides summarised financial information on the joint ventures and
investments with significant influence. The Group’s interests in its joint venture property portfolio assets are held through
investments in trusts.
– Inventories: relates to the Group’s ownership of industrial and office assets or land held for repositioning, development and
sale.
– Non-current assets classified as held for sale: relates to investment properties and investment properties included within
equity accounted investments which are expected to be sold within 12 months of the reporting date and are currently
being marketed for sale.
– Financial assets at fair value through profit or loss: relates to minority interests in unlisted managed property funds.
Note 8 Investment properties
The Group’s investment properties consist of properties held for long-term rental yields and/or capital appreciation and
property that is being constructed or developed for future use as investment property. Investment properties are initially
recognised at cost including transaction costs. Investment properties are subsequently recognised at fair value.
The basis of valuations of investment properties is fair value, being the price that would be received to sell the asset in an
orderly transaction between market participants at the measurement date.
Changes in fair values are recorded in the Consolidated Statement of Comprehensive Income. 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 Consolidated Statement of Comprehensive Income 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.
Leasing fees incurred and incentives provided are capitalised and amortised over the lease periods to which they relate.
132 Financial report
Note 8 Investment properties (continued)
a. Reconciliation
Note
2020
$m
8,170.0
240.7
171.7
60.4
(84.7)
14.8
(223.3)
(530.0)
–
386.5
9.8
8,215.9
2021
$m
8,215.9
101.4
197.5
43.9
(83.8)
(1.2)
(13.0)
(272.8)
6.9
282.0
–
8,476.8
Office
$m
6,987.8
78.2
92.6
36.5
(75.2)
0.8
–
(272.8)
–
139.0
–
6,986.9
Industrial
$m
1,228.1
23.2
104.9
7.4
(8.6)
(2.0)
(13.0)
–
6.9
143.0
–
1,489.9
Opening balance at the beginning of the year
Additions
Acquisitions
Lease incentives
Amortisation of lease incentives
Rent straightlining
Disposals
Transfer to non-current assets classified as held for sale
Transfer to investment properties from inventories
Net fair value gain/(loss) of investment properties1
Ground leases of investment properties
Closing balance at the end of the year
1 Excludes the fair value loss recognised on the sale of 45 Clarence Street, Sydney, NSW. At 30 June 2020 this asset was recognised as a part of
11
Non-current assets classified as held for sale.
Leased assets
The Group holds leasehold interests in a number of properties. Leasehold land that meets the definition of investment property
under AASB 140 Investment Property is measured at fair value and presented within Investment property. The leased asset is
measured initially at an amount equal to the corresponding lease liability. Subsequent to initial recognition, the leased asset is
recognised at fair value in the Consolidated Statement of Financial Position. Refer to note 14 for details of the Lease liabilities.
Acquisitions
On 3 August 2020, settlement occurred for the acquisition of 155, 159, 171 Edward Street, Brisbane QLD for $87.0 million excluding
acquisition costs.
On 11 September 2020, settlement occurred for the acquisition of 141 Anton Road, Hemmant QLD for $31.8 million excluding
acquisition costs.
On 8 April 2021, settlement occurred for the acquisition of 84 Lahrs Road, Ormeau QLD, 18 Motorway Circuit, Ormeau QLD, and
47 Acanthus Street, Darra QLD for $67.2 million excluding acquisition costs.
Disposals
On 1 April 2021, settlement occurred for the disposal of a 24% interest in 250 Forest Road South, Lara VIC for $13.2 million
excluding transaction costs.
b. Valuations process
It is the policy of the Group to perform independent valuations for each individual property at least once every three years by a
member of the Australian Property Institute of Valuers. It has been the Group’s practice to have such valuations performed every
six months. Each valuation firm and its signatory valuer are appointed on the basis that they are engaged for no more than
three years except for properties under development and co-owned properties. Independent valuations may be undertaken
earlier where the Responsible Entity believes there is potential for a change in the fair value of the property, being 5% of the
asset value. At 30 June 2021, 117 out of 128 investment properties were independently externally valued.
The Group’s policy requires investment properties to be internally valued at least every six months at each reporting period
(interim and full-year) unless they have been independently externally valued. Internal valuations are compared to the carrying
value of investment properties at the reporting date. Where the Directors determine that the internal valuations present a more
reliable estimate of fair value the internal valuation is adopted as book value. Internal valuations are performed by the Group’s
internal valuers who hold recognised relevant professional qualifications and have previous experience as property valuers from
major real estate valuation firms.
An appropriate valuation methodology is utilised according to asset class. In relation to office and industrial assets this includes
the capitalisation approach (market approach) and the discounted cash flow approach (income approach). The valuation is also
compared to, and supported by, direct comparison to recent market transactions. The adopted capitalisation rates and discount
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 revenue from current leases and assumptions about future leases, as well as any
expected operational cash outflows in relation to the property, are also built into each asset assessment of fair value.
In relation to development properties under construction for future use as investment property, where reliably measurable,
fair value is determined based on the market value of the property on the assumption it had already been completed at
the valuation date (using the methodology as outlined above) less costs still required to complete the project, including an
appropriate adjustment for industry benchmarked profit and development risk.
Dexus 2021 Annual Report 133
OverviewApproachGovernanceFinancial reportInvestor informationPerformanceDirectors’ report
Property portfolio assets (continued)
Note 8 Investment properties (continued)
c. Fair value measurement, valuation techniques and inputs
The following table represents the level of the fair value hierarchy and the associated unobservable inputs utilised in the fair
value measurement for each class of investment property including investment property held within investments accounted for
using the equity method.
Class of
property
Office1
Fair value
hierarchy
Level 3
Inputs used to measure fair value
Adopted capitalisation rate
Adopted discount rate
Adopted terminal yield
Range of unobservable inputs
2021
4.00% – 6.25%
5.50% – 6.75%
4.25% – 6.50%
2020
4.00% – 6.25%
5.75% – 7.50%
4.25% – 6.63%
Current net market rental (per sqm)
$223 – $1,662
$228 – $1,452
Industrial
Level 3
Adopted capitalisation rate
Adopted discount rate
Adopted terminal yield
Current net market rental (per sqm)
Leased asset
Level 3
Adopted discount rate
Current net market rental (per sqm)
1 Includes office developments and excludes car parks, retail and other.
3.88% – 9.75%
5.50% – 9.75%
4.13% – 9.75%
$40 – $850
3.50% – 8.15%
$100 – $478
4.75% – 10.50%
6.00% – 10.50%
4.75% – 10.50%
$40 – $610
3.50% – 8.15%
$100 – $478
Key estimates: inputs used to measure fair value of investment properties
Judgement is required in determining the following key assumptions:
– Adopted capitalisation rate: The rate at which net market rental revenue is capitalised to determine the value of a
property. The rate is determined with regard to market evidence and the prior external valuation.
– Adopted discount rate: The rate of return used to convert cash flows, payable or receivable in the future, into present value.
It reflects the opportunity cost of capital, that is, the rate of return the cash can earn if put to other uses having similar risk.
The rate is determined with regard to market evidence and the prior external valuation.
– Adopted terminal yield: The capitalisation rate used to convert the future net market rental revenue into an indication
of the anticipated value of the property at the end of the holding period when carrying out a discounted cash flow
calculation. The rate is determined with regard to market evidence and the prior external valuation.
– Net market rental (per sqm): The net market rent is the estimated amount for which a property should lease between a
lessor and a lessee on appropriate lease terms in an arm’s length transaction.
d. Impact of COVID-19 on fair value of investment properties
There is a continuing level of uncertainty regarding the ultimate impact of COVID-19 on the Group’s investment property
valuations. As a result, the independent valuations incorporate a range of assumptions used in determining appropriate fair
values for investment properties as at 30 June 2021. The assumptions that have had the greatest impact on the valuations are
listed below:
– Valuers have adjusted market rental growth, downtime and incentive assumptions within their discounted cashflow (DCF)
method of valuing to reflect current market uncertainty;
– Some valuers have incorporated an allowance for the uncertainty in relation to the payment of rent with regards to the
Government’s Code of Conduct where the tenant pool comprises small to medium enterprises (SMEs) or where operating
hours have been impacted; and,
– Capitalisation and discount rates have generally remained relatively stable for office assets and firmed for industrial assets.
Some of the independent valuations obtained by the Group also include significant valuation uncertainty clauses due to the
unknown impacts ongoing lockdowns and limited interstate travel may have on the investment property assets in the various
markets. These clauses have been removed from most industrial valuations due to the current transaction volumes and market
pricing. The Group considers that the assumptions used in the valuations are materially appropriate for the purposes of
determining fair value of investment properties at 30 June 2021.
134 Financial report
Note 8 Investment properties (continued)
e. Sensitivity information
Significant movement in any one of the inputs listed in the table above may result in a change in the fair value of the
Group’s investment properties, including investment properties within investments accounted for using the equity method,
as shown below.
The estimated impact of a change in certain significant unobservable inputs would result in a change in the fair value as follows:
A decrease of 25 basis points in the adopted capitalisation rate
An increase of 25 basis points in the adopted capitalisation rate
A decrease of 25 basis points in the adopted discount rate
An increase of 25 basis points in the adopted discount rate
A decrease of 5% in the net market rental (per sqm)
An increase of 5% in the net market rental (per sqm)
Industrial
Office
2021
$m
146.0
(131.8)
117.6
(108.3)
(136.3)
136.3
2020
$m
93.6
(85.6)
78.4
(72.7)
(100.2)
100.2
2021
$m
694.0
(626.7)
554.2
(510.4)
(646.4)
646.4
2020
$m
736.3
(663.8)
568.7
(524.5)
(674.5)
674.5
Generally, a change in the assumption made for the adopted capitalisation rate is often accompanied by a directionally similar
change in the adopted terminal yield. The adopted capitalisation rate forms part of the capitalisation approach whilst the
adopted terminal yield forms part of the discounted cash flow approach.
Under the capitalisation approach, the net market rental has a strong interrelationship with the adopted capitalisation rate as
the fair value of the investment property is derived by capitalising, in perpetuity, the total net market rent receivable. An increase
(softening) in the adopted capitalisation rate may offset the impact to fair value of an increase in the total net market rent. A
decrease (tightening) in the adopted capitalisation rate may also offset the impact to fair value of a decrease in the total net
market rent. A directionally opposite change in the total net market rent and the adopted capitalisation rate may increase the
impact to fair value.
The discounted cash flow is primarily made up of the discounted cash flow of net income over the cash flow period and the
discounted terminal value (which is largely based upon market rents grown at forecast market rental growth rates capitalised
at an adopted terminal yield). An increase (softening) in the adopted discount rate may offset the impact to fair value of a
decrease (tightening) in the adopted terminal yield. A decrease (tightening) in the discount rate may offset the impact to fair
value of an increase (softening) in the adopted terminal yield. A directionally similar change in the adopted discount rate and
the adopted terminal yield may increase the impact to fair value.
A decrease (softening) in the forecast rental growth rate may result in a negative impact on the discounted cash flow approach
value while a strengthening may have a positive impact on the value under the same approach.
f. Investment properties pledged as security
Refer to note 15 for information on investment properties pledged as security.
Dexus 2021 Annual Report 135
OverviewApproachGovernanceFinancial reportInvestor informationPerformanceDirectors’ report
Property portfolio assets (continued)
Note 9 Investments accounted for using the equity method
a. Interest in joint ventures and associates
Investments are accounted for in the Consolidated Financial Statements using the equity method of accounting (refer to
the ‘Principles of Consolidation’ section). The proportion of ownership interest and the carrying amount of Dexus’s interest in
these entities is set out below. The below entities were formed in Australia and their principal activity is property investment
in Australia.
Ownership interest
Name of entity
Dexus Office Trust Australia (DOTA)
Dexus 80C Trust
Dexus Martin Place Trust
Dexus Australian Logistics Trust (DALT)
Grosvenor Place Holding Trust1, 2
Dexus 480 Q Holding Trust
Bent Street Trust
Dexus Australian Logistics Trust No.2 (DALT2)
Dexus Kings Square Trust
Dexus Industrial Trust Australia (DITA)
Dexus Creek Street Trust
Dexus Healthcare Property Fund (DHPF)3
Site 7 Homebush Bay Trust1
Dexus Australian Logistics Trust No.3 (DALT3)4, 5
Dexus Australia Commercial Trust (DACT)
Site 6 Homebush Bay Trust1
Dexus Eagle Street Pier Trust
SAHMRI 2 Holding Trust6
RealTech Ventures
Dexus Walker Street Trust
Divvy Parking Pty Limited7
2021
%
50.0
75.0
50.0
51.0
50.0
50.0
33.3
51.0
50.0
50.0
50.0
23.1
50.0
51.0
10.0
50.0
50.0
50.0
62.1
50.0
24.8
2020
%
50.0
75.0
50.0
51.0
50.0
50.0
33.3
51.0
50.0
50.0
50.0
27.8
50.0
–
10.0
50.0
50.0
–
62.1
50.0
16.4
2021
$m
2,573.1
1,154.5
986.7
559.3
454.6
385.7
375.6
373.2
251.4
238.6
205.7
157.6
87.4
77.0
62.9
43.8
35.5
26.1
11.5
9.2
1.0
2020
$m
2,696.4
830.1
926.5
465.1
483.2
390.1
358.8
130.1
234.5
218.4
199.5
126.2
62.1
–
68.6
46.3
33.0
–
8.9
9.6
–
Total assets - investments accounted for using the equity method8
8,070.4
7,287.4
1 These entities are 50% owned by Dexus Office Trust Australia (DOTA). The Group’s economic interest is therefore 75% when combined with
the interest held by DOTA.
2 Grosvenor Place Holding Trust owns 50% of Grosvenor Place, at 225 George Street, Sydney, NSW. The Group’s economic interest in this
property is therefore 37.5%. On 18 November 2020, contracts were conditionally exchanged to sell interests in Grosvenor Place.
3 Previously Healthcare Wholesale Property Fund (HWPF). The Group’s interest in DHPF was diluted as a result of DHPF issuing units to other
existing and new unitholders. On 30 October 2020, settlement occurred on the acquisition of a 50% interest in SAHMRI 2, Adelaide, SA for
$26.5 million excluding transaction costs.
4 Dexus Australian Logistics Trust No.3 (DALT3) was formed on 22 July 2020.
5 On 21 December 2020, settlement occurred on the acquisition of a 50% interest in 11 Lord Street, Botany for $48.0 million excluding
acquisition costs.
6 On 30 October 2020, settlement occurred on the acquisition of a 50% interest in SAHMRI 2, Adelaide, SA for $26.5 million excluding transaction
costs. The Group’s economic interest in this property is therefore 61.5% when combined with the interest held by DHPF.
7 The investment in Divvy Parking Pty Limited was previously classified as a financial asset at fair value through profit and loss. During the
current financial year, the Group increased its ownership interest above 20% resulting in the Group obtaining significant influence over the
investment and adopting the equity method of accounting. The principal activity of Divvy Parking Pty Limited is to provide parking software
and hardware solutions to landlords which drive increased utilisation of paid parking bays.
8 The Group’s share of investment properties in the investments accounted for using the equity method was $7,474.6 million (June 2020: $7,433.4
million). Additionally, held for sale assets in the investments accounted for using the equity method was $694.2 million (June 2020: $46.4
million). These investments are accounted for using the equity method as a result of contractual arrangements requiring unanimous decisions
on all relevant matters.
136 Financial report
Note 9 Investments accounted for using the equity method (continued)
b. Impact of COVID-19 on Investments accounted for using the equity method
The carrying values of the above investments accounted for using the equity method have been tested for impairment under
AASB 136 Impairment of Assets to take into consideration the impact of COVID-19.
The main risk to the value of the investments accounted for using the equity method is the fair value of the underlying
investment properties. Note 8 gives further explanation of the approach taken to measure the fair value of investment
properties in light of COVID-19. Any fair value movements are recorded within share of net profit of investments accounted for
using the equity method in the Consolidated Statement of Comprehensive Income. During the year, there were no impairment
losses recorded (June 2020: $12.2 million).
c. Summarised financial information for individually material joint ventures and associates and equity accounted investments
The following table provides summarised financial information for the joint ventures and associates and equity accounted
investments which, in the opinion of the directors, are material to the Group. The information disclosed reflects the amounts
presented in the Financial Statements of the relevant joint ventures and associates and not Dexus’ share of those amounts.
Dexus 2021 Annual Report 137
OverviewApproachGovernanceFinancial reportInvestor informationPerformanceDirectors’ report
Property portfolio assets (continued)
Note 9 Investments accounted for using the equity method (continued)
d. Summarised financial information for individually material joint ventures and associates
Summarised Statement of Financial Position
Current assets
Cash and cash equivalents
Other current assets
Total current assets
Non-current assets
Investment properties
Investments accounted for using the equity method
Loans with related parties
Other non-current assets
Total non-current assets
Current liabilities
Provision for distribution
Borrowings
Other current liabilities
Total current liabilities
Non-current liabilities
Borrowings
Other non current liabilities
Total non-current liabilities
Net assets
Reconciliation to carrying amounts:
Dexus Office
Trust Australia
2021
$m
2020
$m
47.2
20.0
67.2
4,559.8
585.7
–
48.4
55.0
82.3
137.3
4,729.6
591.6
–
48.6
Dexus 80C Trust
2021
$m
5.4
48.2
53.6
2020
$m
9.0
18.5
27.5
1,566.5
1,352.5
1,920.5
1,861.8
1,096.6
912.0
975.0
775.5
780.0
1,130.0
1,100.0
–
–
–
–
–
–
76.0
0.5
5,193.9
5,369.8
1,566.5
1,352.5
1,996.5
1,862.3
1,097.2
1,130.0
1,100.0
33.1
0.1
59.1
92.3
22.6
–
22.6
30.2
0.1
61.5
91.8
22.5
–
22.5
2.8
–
78.0
80.8
–
–
–
4.0
234.0
35.2
273.2
–
–
–
5,146.2
5,392.8
1,539.3
1,106.8
1,973.3
1,853.0
1,096.7
912.0
909.2
966.4
771.4
780.1
1,126.9
1,076.3
Opening balance at the beginning of the year
5,392.8
4,836.8
1,106.8
1,164.6
1,853.0
1,653.7
912.0
876.7
966.4
939.4
780.1
1,076.3
1,049.6
Additions
Profit for the year
Distributions received/receivable
Closing balance at the end of the year
Group’s share in $m
Notional goodwill
Group’s carrying amount
Summarised Statement of Comprehensive Income
Property revenue
Property revaluations
Gain/(loss) on sale of investment properties
Interest income
Share of net profit of investments accounted for using the equity
method
Other income
Property expenses
Finance costs
Other expenses
Net profit/(loss) for the year
Total comprehensive income/(loss) for the year
138 Financial report
64.2
235.8
(546.6)
5,146.2
2,572.4
–
387.6
389.0
(220.6)
5,392.8
2,696.4
–
436.1
52.8
(56.4)
1,539.3
1,154.5
–
–
(6.3)
(51.5)
1,106.8
830.1
–
80.4
173.4
(54.5)
237.0
(52.3)
1,853.0
1,096.7
926.5
559.3
(15.7)
(41.5)
909.2
454.6
–
72.5
(45.5)
966.4
483.2
–
31.4
(40.1)
771.4
385.7
–
2,572.4
2,696.4
1,154.5
830.1
986.7
926.5
559.3
465.1
454.6
483.2
385.7
390.1
375.6
358.8
278.3
50.3
–
–
16.4
0.7
(92.4)
(1.5)
(16.0)
235.8
235.8
297.7
155.6
–
0.3
46.2
0.4
(90.0)
(5.2)
(16.0)
389.0
389.0
46.6
29.5
–
0.1
–
(0.1)
(14.9)
–
(8.4)
52.8
52.8
28.1
(19.5)
–
0.4
–
–
(7.9)
–
(7.4)
(6.3)
(6.3)
Dexus Martin
Place Trust
Dexus Australian
Logistics Trust
Grosvenor Place
Holding Trust
Dexus 480Q
Holding Trust
Bent Street Trust
2020
$m
2021
$m
2020
$m
2020
$m
10.6
10.7
21.3
2.4
–
28.2
30.6
–
–
–
–
–
–
–
–
–
91.5
115.2
1.0
0.1
2021
$m
4.5
5.2
9.7
–
–
–
–
–
6.7
–
26.2
32.9
116.0
50.4
(46.1)
1,973.3
986.7
–
82.2
(3.8)
11.4
–
–
0.1
(28.9)
–
(10.6)
50.4
50.4
2021
$m
10.6
3.8
14.4
–
–
0.6
8.4
–
6.5
14.9
–
–
–
–
–
–
–
–
–
–
2020
$m
2021
$m
2020
$m
9.3
3.8
13.1
1.3
927.5
928.8
0.8
3.2
4.0
–
–
0.6
912.6
7.6
–
6.1
13.7
–
–
–
–
–
–
–
–
74.4
(39.1)
912.0
465.1
–
60.8
33.7
0.2
–
–
–
0.1
0.1
16.1
–
3.6
19.7
–
–
–
–
–
–
–
–
–
–
975.0
5.9
–
6.7
12.6
–
–
–
–
–
–
–
–
–
–
–
–
2021
$m
5.6
3.0
8.6
–
–
0.2
775.7
4.5
–
8.4
12.9
–
–
–
–
–
–
–
–
–
4.0
1.3
5.3
–
–
0.2
780.2
0.8
–
4.6
5.4
–
–
–
773.0
5.1
42.2
(40.2)
780.1
390.1
–
52.5
9.0
–
–
–
0.1
(15.1)
–
(4.3)
42.2
42.2
3.8
2.1
5.9
–
–
–
–
–
–
4.6
–
4.4
9.0
3.7
2.0
5.7
20.2
–
9.2
29.4
–
–
–
–
–
–
–
–
–
–
–
–
–
20.2
89.4
(59.0)
1,126.9
375.6
–
83.5
(56.8)
1,076.3
358.8
–
–
–
–
–
–
0.1
(13.3)
89.4
89.4
83.5
83.5
(24.6)
(16.4)
(16.5)
(13.2)
(13.4)
(16.0)
(14.6)
(9.8)
173.4
173.4
(4.1)
237.0
237.0
(3.8)
74.4
74.4
(15.7)
(15.7)
(0.1)
72.5
72.5
(4.4)
31.4
31.4
62.3
195.2
46.3
(48.8)
51.5
34.5
49.9
1.9
56.6
47.4
54.8
41.9
Current assets
Cash and cash equivalents
Other current assets
Total current assets
Non-current assets
Investment properties
Loans with related parties
Other non-current assets
Total non-current assets
Current liabilities
Provision for distribution
Borrowings
Other current liabilities
Total current liabilities
Non-current liabilities
Borrowings
Other non current liabilities
Total non-current liabilities
Net assets
Reconciliation to carrying amounts:
Additions
Profit for the year
Distributions received/receivable
Closing balance at the end of the year
Summarised Statement of Comprehensive Income
Gain/(loss) on sale of investment properties
Share of net profit of investments accounted for using the equity
Group’s share in $m
Notional goodwill
Group’s carrying amount
Property revenue
Property revaluations
Interest income
method
Other income
Property expenses
Finance costs
Other expenses
Net profit/(loss) for the year
Total comprehensive income/(loss) for the year
47.2
20.0
67.2
4,559.8
585.7
–
48.4
33.1
0.1
59.1
92.3
22.6
–
22.6
64.2
235.8
(546.6)
5,146.2
2,572.4
–
–
–
278.3
50.3
16.4
0.7
(92.4)
(1.5)
(16.0)
235.8
235.8
55.0
82.3
137.3
4,729.6
591.6
–
48.6
30.2
0.1
61.5
91.8
22.5
–
22.5
387.6
389.0
(220.6)
5,392.8
2,696.4
–
297.7
155.6
–
0.3
46.2
0.4
(90.0)
(5.2)
(16.0)
389.0
389.0
2.8
–
78.0
80.8
4.0
234.0
35.2
273.2
–
–
–
–
–
–
436.1
52.8
(56.4)
1,539.3
1,154.5
–
46.6
29.5
0.1
–
–
(0.1)
(14.9)
–
(8.4)
52.8
52.8
–
–
–
–
–
–
–
–
–
–
–
–
(6.3)
(51.5)
1,106.8
830.1
28.1
(19.5)
0.4
(7.9)
(7.4)
(6.3)
(6.3)
d. Summarised financial information for individually material joint ventures and associates
Summarised Statement of Financial Position
Dexus Office
Trust Australia
2021
$m
2020
$m
Dexus 80C Trust
2021
$m
5.4
48.2
53.6
2020
$m
9.0
18.5
27.5
Dexus Martin
Place Trust
Dexus Australian
Logistics Trust
Grosvenor Place
Holding Trust
Dexus 480Q
Holding Trust
Bent Street Trust
2021
$m
4.5
5.2
9.7
2020
$m
10.6
10.7
21.3
2021
$m
10.6
3.8
14.4
2020
$m
2021
$m
2020
$m
9.3
3.8
13.1
1.3
927.5
928.8
0.8
3.2
4.0
2021
$m
5.6
3.0
8.6
2020
$m
2021
$m
2020
$m
4.0
1.3
5.3
3.8
2.1
5.9
3.7
2.0
5.7
1,566.5
1,352.5
1,920.5
1,861.8
1,096.6
912.0
Investments accounted for using the equity method
5,193.9
5,369.8
1,566.5
1,352.5
1,996.5
1,862.3
1,097.2
–
–
–
–
76.0
0.5
–
–
0.6
6.7
–
26.2
32.9
–
–
–
2.4
–
28.2
30.6
–
–
–
8.4
–
6.5
14.9
–
–
–
–
–
0.6
912.6
7.6
–
6.1
13.7
–
–
–
–
–
–
0.1
0.1
16.1
–
3.6
19.7
–
–
–
975.0
775.5
780.0
1,130.0
1,100.0
–
–
–
975.0
5.9
–
6.7
12.6
–
–
–
–
–
0.2
775.7
4.5
–
8.4
12.9
–
–
–
–
–
0.2
780.2
0.8
–
4.6
5.4
–
–
–
–
–
–
–
–
–
1,130.0
1,100.0
4.6
–
4.4
9.0
–
–
–
20.2
–
9.2
29.4
–
–
–
5,146.2
5,392.8
1,539.3
1,106.8
1,973.3
1,853.0
1,096.7
912.0
909.2
966.4
771.4
780.1
1,126.9
1,076.3
Opening balance at the beginning of the year
5,392.8
4,836.8
1,106.8
1,164.6
1,853.0
1,653.7
912.0
876.7
966.4
939.4
780.1
116.0
50.4
(46.1)
1,973.3
986.7
–
80.4
173.4
(54.5)
–
237.0
(52.3)
1,853.0
1,096.7
926.5
559.3
–
–
–
74.4
(39.1)
912.0
465.1
–
–
(15.7)
(41.5)
909.2
454.6
–
–
72.5
(45.5)
966.4
483.2
–
–
31.4
(40.1)
771.4
385.7
–
773.0
5.1
42.2
(40.2)
780.1
390.1
–
1,076.3
1,049.6
20.2
89.4
(59.0)
1,126.9
375.6
–
–
83.5
(56.8)
1,076.3
358.8
–
2,572.4
2,696.4
1,154.5
830.1
986.7
926.5
559.3
465.1
454.6
483.2
385.7
390.1
375.6
358.8
82.2
(3.8)
11.4
–
–
0.1
(28.9)
–
(10.6)
50.4
50.4
91.5
115.2
1.0
0.1
–
–
(24.6)
–
(9.8)
173.4
173.4
62.3
195.2
–
–
–
–
(16.4)
–
(4.1)
237.0
237.0
60.8
33.7
–
0.2
–
–
(16.5)
–
(3.8)
74.4
74.4
46.3
(48.8)
51.5
34.5
49.9
1.9
–
–
–
–
(13.2)
–
–
(15.7)
(15.7)
–
–
–
–
(13.4)
–
(0.1)
72.5
72.5
–
–
–
–
(16.0)
–
(4.4)
31.4
31.4
52.5
9.0
–
–
–
0.1
(15.1)
–
(4.3)
42.2
42.2
56.6
47.4
–
–
–
–
(14.6)
–
–
89.4
89.4
54.8
41.9
–
–
–
0.1
(13.3)
–
–
83.5
83.5
Dexus 2021 Annual Report 139
OverviewApproachGovernanceFinancial reportInvestor informationPerformanceDirectors’ report
Property portfolio assets (continued)
Note 9 Investments accounted for using the equity method (continued)
d. Summarised financial information for individually material joint ventures and associates (continued)
Summarised Statement of Financial Position
Current assets
Cash and cash equivalents
Other current assets
Total current assets
Non-current assets
Investment properties
Investments accounted for using the equity method
Loans with related parties
Other non-current assets
Total non-current assets
Current liabilities
Provision for distribution
Borrowings
Other current liabilities
Total current liabilities
Non-current liabilities
Borrowings
Other non current liabilities
Total non-current liabilities
Net assets
Reconciliation to carrying amounts:
Opening balance at the beginning of the year
Additions
Profit for the year
Distributions received/receivable
Closing balance at the end of the year
Group’s share in $m
Notional goodwill
Group’s carrying amount
Summarised Statement of Comprehensive Income
Property revenue
Property revaluations
Gain/(loss) on sale of investment properties
Interest income
Share of net profit of investments accounted for using the equity method
Other income
Property expenses
Finance costs
Other expenses
Net profit/(loss) for the year
Total comprehensive income/(loss) for the year
Dexus Australian
Logistics Trust No. 2
Dexus Kings
Square Trust
Dexus Industrial
Trust Australia
Dexus Creek
Street Trust
Dexus Healthcare
Property Fund
Other1
2021
$m
35.7
1.2
36.9
2020
$m
57.2
0.4
57.6
2021
$m
3.5
0.7
4.2
2020
$m
4.3
0.1
4.4
719.9
211.8
507.5
477.0
474.9
403.6
418.0
400.0
522.4
1,262.5
991.4
15,319.7
14,717.1
–
–
–
–
–
–
–
–
–
–
–
–
719.9
211.8
507.5
477.0
474.9
403.6
522.4
1,272.5
996.8
16,097.5
15,364.2
1.5
–
23.6
25.1
–
–
–
0.1
–
14.2
14.3
–
–
–
3.6
–
5.4
9.0
–
–
–
4.7
–
7.7
12.4
–
–
–
731.7
255.1
502.7
469.0
477.1
436.8
411.4
399.0
1,206.1
996.8
16,575.2
15,097.7
255.1
277.3
203.1
(3.8)
731.7
372.8
–
127.8
131.9
(4.5)
(0.1)
255.1
130.1
–
469.0
441.4
436.8
404.9
399.0
–
60.8
(27.1)
502.7
251.4
–
0.8
51.7
(24.9)
469.0
234.5
–
372.8
130.1
251.4
234.5
238.9
218.4
372.8
199.5
158.0
126.2
354.8
228.5
8,070.4
7,287.4
7.9
197.9
–
0.1
–
(0.1)
(1.4)
–
(1.3)
203.1
203.1
–
(4.6)
–
0.2
–
–
–
–
(0.1)
(4.5)
(4.5)
36.4
38.3
36.0
29.4
–
–
–
–
(11.2)
–
(2.7)
60.8
60.8
–
–
–
–
(11.1)
–
(2.6)
51.7
51.7
2021
$m
8.4
0.9
9.3
4.7
–
2.4
7.1
–
–
–
–
–
–
–
90.5
(50.2)
477.1
238.9
–
24.0
72.6
–
–
–
–
–
(4.7)
(1.4)
90.5
90.5
2020
$m
7.2
31.9
39.1
–
–
–
–
–
–
4.2
1.7
5.9
7.0
40.7
(15.8)
436.8
218.4
–
23.6
22.7
(0.1)
–
–
–
0.1
(4.3)
(1.3)
40.7
40.7
2021
$m
3.0
1.9
4.9
–
–
0.2
418.2
4.7
–
7.0
11.7
–
–
–
6.0
21.0
(14.6)
411.4
205.7
–
–
–
–
–
–
(2.3)
21.0
21.0
2020
$m
2.2
1.2
3.4
–
–
0.2
400.2
0.6
–
4.0
4.6
–
–
–
353.7
30.7
29.6
(15.0)
399.0
199.5
–
–
–
–
–
–
(2.2)
29.6
29.6
22.4
9.1
21.9
17.2
(8.3)
(7.3)
2021
$m
9.2
10.2
19.4
2020
$m
123.7
2.3
126.0
888.0
26.0
–
30.6
944.6
7.5
–
7.2
14.7
246.3
19.8
266.1
683.3
453.6
170.0
84.8
(25.1)
683.3
158.0
–
30.7
67.0
1.3
(0.3)
–
–
(3.1)
(6.0)
(4.8)
84.8
84.8
–
–
–
4.6
–
17.6
22.2
152.8
19.8
172.6
453.6
183.7
245.1
40.1
(15.3)
453.6
126.2
–
20.6
26.7
0.5
–
–
2.1
(1.6)
(5.2)
(3.0)
40.1
40.1
2021
$m
41.5
18.1
59.6
0.1
0.4
9.5
5.7
0.5
37.2
43.4
16.9
65.7
82.6
996.8
189.5
36.8
(17.0)
1,206.1
351.7
3.1
58.2
6.2
–
–
–
2.5
(23.3)
(0.2)
(6.6)
36.8
36.8
2020
$m
13.1
3.6
16.7
0.1
0.3
5.0
1.9
0.6
9.4
11.9
–
4.8
4.8
256.6
736.7
12.9
(9.4)
996.8
225.3
3.2
22.2
4.5
–
–
–
0.1
(11.7)
(0.2)
(2.0)
12.9
12.9
Total
2021
$m
179.7
1,042.8
1,222.5
611.8
0.4
165.6
103.9
0.6
269.0
373.5
285.8
85.5
371.3
2020
$m
300.1
161.3
461.4
591.7
0.3
55.1
87.2
234.7
206.1
528.0
175.3
24.6
199.9
15,097.7
13,061.9
1,279.2
1,178.1
(979.8)
1,625.3
999.2
(588.7)
16,575.2
15,097.7
8,067.3
7,284.2
3.1
3.2
801.8
662.8
11.4
1.5
16.1
3.2
(248.4)
(7.7)
(62.6)
1,178.1
1,178.1
761.2
466.3
0.9
1.7
46.2
2.9
(216.8)
(10.6)
(52.6)
999.2
999.2
1 The Group also has interests in a number of individually immaterial joint ventures that are accounted for using the equity method.
140 Financial report
Current assets
Cash and cash equivalents
Other current assets
Total current assets
Non-current assets
Investment properties
Loans with related parties
Other non-current assets
Total non-current assets
Current liabilities
Provision for distribution
Borrowings
Other current liabilities
Total current liabilities
Non-current liabilities
Borrowings
Other non current liabilities
Total non-current liabilities
Net assets
Reconciliation to carrying amounts:
Opening balance at the beginning of the year
Additions
Profit for the year
Distributions received/receivable
Closing balance at the end of the year
Summarised Statement of Comprehensive Income
Gain/(loss) on sale of investment properties
Share of net profit of investments accounted for using the equity method
Group’s share in $m
Notional goodwill
Group’s carrying amount
Property revenue
Property revaluations
Interest income
Other income
Property expenses
Finance costs
Other expenses
2021
$m
35.7
1.2
36.9
–
–
–
–
–
–
1.5
–
23.6
25.1
255.1
277.3
203.1
(3.8)
731.7
372.8
–
7.9
197.9
0.1
–
–
(0.1)
(1.4)
–
(1.3)
203.1
203.1
2020
$m
57.2
0.4
57.6
–
–
–
–
–
–
0.1
–
14.2
14.3
127.8
131.9
(4.5)
(0.1)
255.1
130.1
–
–
–
–
–
(4.6)
0.2
–
–
(0.1)
(4.5)
(4.5)
2021
$m
3.5
0.7
4.2
2020
$m
4.3
0.1
4.4
3.6
–
5.4
9.0
4.7
–
7.7
12.4
60.8
(27.1)
502.7
251.4
–
0.8
51.7
(24.9)
469.0
234.5
–
36.4
38.3
36.0
29.4
(11.2)
(11.1)
(2.7)
60.8
60.8
(2.6)
51.7
51.7
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
Net profit/(loss) for the year
Total comprehensive income/(loss) for the year
1 The Group also has interests in a number of individually immaterial joint ventures that are accounted for using the equity method.
d. Summarised financial information for individually material joint ventures and associates (continued)
Summarised Statement of Financial Position
Dexus Australian
Logistics Trust No. 2
Dexus Kings
Square Trust
Dexus Industrial
Trust Australia
Dexus Creek
Street Trust
Dexus Healthcare
Property Fund
Other1
2021
$m
8.4
0.9
9.3
2020
$m
7.2
31.9
39.1
2021
$m
3.0
1.9
4.9
2020
$m
2.2
1.2
3.4
2021
$m
9.2
10.2
19.4
2020
$m
123.7
2.3
126.0
2021
$m
41.5
18.1
59.6
Total
2021
$m
179.7
1,042.8
1,222.5
2020
$m
300.1
161.3
461.4
2020
$m
13.1
3.6
16.7
719.9
211.8
507.5
477.0
474.9
403.6
418.0
400.0
Investments accounted for using the equity method
719.9
211.8
507.5
477.0
474.9
403.6
–
–
–
–
–
–
4.7
–
2.4
7.1
–
–
–
4.2
1.7
5.9
–
–
–
–
–
0.2
418.2
4.7
–
7.0
11.7
–
–
–
–
–
0.2
400.2
0.6
–
4.0
4.6
–
–
–
731.7
255.1
502.7
469.0
477.1
436.8
411.4
399.0
469.0
441.4
436.8
404.9
399.0
–
90.5
(50.2)
477.1
238.9
–
7.0
40.7
(15.8)
436.8
218.4
–
6.0
21.0
(14.6)
411.4
205.7
–
353.7
30.7
29.6
(15.0)
399.0
199.5
–
888.0
26.0
–
30.6
944.6
7.5
–
7.2
14.7
246.3
19.8
266.1
683.3
453.6
170.0
84.8
(25.1)
683.3
158.0
–
522.4
1,262.5
991.4
15,319.7
14,717.1
–
–
–
0.1
0.4
9.5
0.1
0.3
5.0
611.8
0.4
165.6
591.7
0.3
55.1
522.4
1,272.5
996.8
16,097.5
15,364.2
4.6
–
17.6
22.2
152.8
19.8
172.6
453.6
183.7
245.1
40.1
(15.3)
453.6
126.2
–
5.7
0.5
37.2
43.4
16.9
65.7
82.6
1.9
0.6
9.4
11.9
–
4.8
4.8
103.9
0.6
269.0
373.5
285.8
85.5
371.3
87.2
234.7
206.1
528.0
175.3
24.6
199.9
1,206.1
996.8
16,575.2
15,097.7
996.8
189.5
36.8
(17.0)
1,206.1
351.7
3.1
256.6
736.7
12.9
(9.4)
996.8
225.3
3.2
15,097.7
13,061.9
1,279.2
1,178.1
(979.8)
1,625.3
999.2
(588.7)
16,575.2
15,097.7
8,067.3
7,284.2
3.1
3.2
372.8
130.1
251.4
234.5
238.9
218.4
372.8
199.5
158.0
126.2
354.8
228.5
8,070.4
7,287.4
24.0
72.6
–
–
–
–
(4.7)
–
(1.4)
90.5
90.5
23.6
22.7
(0.1)
–
–
0.1
(4.3)
–
(1.3)
40.7
40.7
22.4
9.1
–
–
–
–
(8.3)
–
(2.3)
21.0
21.0
21.9
17.2
–
–
–
–
(7.3)
–
(2.2)
29.6
29.6
30.7
67.0
–
1.3
(0.3)
–
(3.1)
(6.0)
(4.8)
84.8
84.8
20.6
26.7
–
0.5
–
2.1
(1.6)
(5.2)
(3.0)
40.1
40.1
58.2
6.2
–
–
–
2.5
(23.3)
(0.2)
(6.6)
36.8
36.8
22.2
4.5
–
–
–
0.1
(11.7)
(0.2)
(2.0)
12.9
12.9
801.8
662.8
11.4
1.5
16.1
3.2
(248.4)
(7.7)
(62.6)
1,178.1
1,178.1
761.2
466.3
0.9
1.7
46.2
2.9
(216.8)
(10.6)
(52.6)
999.2
999.2
Dexus 2021 Annual Report
141
OverviewApproachGovernanceFinancial reportInvestor informationPerformanceDirectors’ report
Property portfolio assets (continued)
Note 10 Inventories
Development properties held for repositioning, construction and sale are recorded at the lower of cost or net realisable value.
Cost is assigned by specific identification and includes the cost of acquisition, and development and holding costs such as
borrowing costs, rates and taxes. Holding costs incurred after completion of development are expensed.
Development revenue includes proceeds on the sale of inventory and revenue earned through the provision of development
services on assets sold as inventory. Revenue earned on the provision of development services is recognised using the
percentage complete method. The stage of completion is measured by reference to costs incurred to date as a percentage of
estimated total costs for each contract. Where the project result can be reliably estimated, development services revenue and
associated expenses are recognised in profit or loss. Where the project result cannot be reliably estimated, profits are deferred
and the difference between consideration received and expenses incurred is carried forward as either a receivable or payable.
Development services revenue and expenses are recognised immediately when the project result can be reliably estimated.
Transfers from investment properties to inventories occur when there is a change in intention regarding the use of the property
from an intention to hold for rental income or capital appreciation purposes to an intention to develop and sell. The transfer
price is recorded as the fair value of the property as at the date of transfer. Development activities will commence immediately
after they transfer.
Key estimate: Net Realisable Value (NRV) of inventories
NRV is determined using the estimated selling price in the ordinary course of business less estimated costs to bring inventories
to their finished condition, including marketing and selling expenses. NRV is based on the most reliable evidence available
at the time and the amount the inventories are expected to be realised. These key assumptions are reviewed annually or
more frequently if indicators of impairment exist. Key estimates have been reviewed and updated in light of COVID-19. No
impairment provisions have been recognised.
a. Development properties held for sale
Current assets
Development properties held for sale
Total current assets - inventories
Non-current assets
Development properties held for sale
Total non-current assets - inventories
Total assets - inventories
b. Reconciliation
Opening balance at the beginning of the year
Transfer to investment properties
Acquisitions
Disposals
Reversal of impairment
Additions
Closing balance at the end of the year
2021
$m
137.2
137.2
41.0
41.0
178.2
2021
$m
335.8
(6.9)
9.6
(176.2)
4.7
11.2
178.2
2020
$m
179.5
179.5
156.3
156.3
335.8
2020
$m
457.7
–
–
(173.6)
–
51.7
335.8
Note
8
142 Financial report
Note 10 Inventories (continued)
Acquisitions
On 17 June 2021, settlement occurred for the acquisition of 22 Business Park Drive, Ravenhall VIC for $9.0 million excluding
acquisition costs.
Disposals
On 20 August 2020, settlement occurred for the disposal of a 25% interest in 201 Elizabeth Street, Sydney NSW for gross
proceeds of $157.5 million excluding transaction costs.
On 1 October 2020, settlement occurred for the disposal of 47-53 Foundation Drive, Truganina VIC and 380 Doherty’s Road,
Truganina VIC for gross proceeds of $29.2 million excluding transaction costs.
On 21 December 2020, settlement occurred for the disposal of a 50% interest in 11 Lord Street, Botany NSW (Lakes Business Park
South) for gross proceeds of $48.0 million excluding transaction costs.
Impact of COVID-19 on Inventories
An assessment of whether the project result is impacted as a result of COVID-19 has been performed. There has been minimal
impact on development services revenue and expenses as a result of project delays, changes in assessments related to future
sales prices or changes in costs expected to be incurred to complete projects.
Key estimates used to determine the Net Realisable Value (NRV) of inventories have been reviewed and updated in light of
COVID-19. No impairment provisions have been recognised.
Note 11 Non-current assets classified as held for sale
Non-current assets are classified as held for sale if their carrying amount will be recovered principally through a sale transaction
rather than through continuing use, and a sale is considered highly probable.
Non-current assets classified as held for sale are presented separately from the other assets in the Consolidated Statement of
Financial Position. Non-current assets classified as held for sale relate to investment properties measured at fair value.
At 30 June 2021, the balance relates to 60 Miller Street, North Sydney NSW.
At 30 June 2020, the balance related to 45 Clarence Street, Sydney NSW.
Note 12 Financial assets at fair value through profit or loss
The Group’s investments in financial assets consists of minority equity interests in Australian unlisted entities and managed
property funds. Financial assets are initially recognised at cost, excluding transaction costs. Transaction costs are expensed as
incurred in the Consolidated Statement of Comprehensive Income. Financial assets are subsequently measured at fair value
with any realised or unrealised gains being recognised in the Consolidated Statement of Comprehensive Income in the period
in which they arise.
a. Classification of financial assets at fair value through profit or loss (FVPL)
Non-current assets
Equity investments in Australian unlisted entities
Equity investments in Australian managed funds1
Total current financial assets at fair value through profit or loss
2021
$m
–
180.5
180.5
2020
$m
0.4
–
0.4
1 On 9 June 2021 Dexus announced it had participated in Australian Unity Healthcare Property Trust’s (“AUHPT”) placement and entitlement offer
and had subscribed to $180 million worth of wholesale units in AUHPT, representing approximately 7% of the pro forma issued equity in AUHPT.
b. Amounts recognised in profit or loss
During the year, the following gains/(losses) were recognised in profit or loss:
Fair value gains/(losses) on equity investments in Australian unlisted entities
Fair value gains/(losses) on equity investments in Australian managed funds
Total gains/(losses) at fair value through profit or loss
c. Fair value measurement
2021
$m
–
–
–
2020
$m
(2.7)
–
(2.7)
Refer to Note 13 for the methods used in the determination and disclosure of the fair value of financial instruments.
Equity investments in unlisted entities and managed funds are measured at Level 3 using unit prices which are based on the net
assets of the relevant fund, which is largely comprised of investment property held at fair value. During the year, there were no
transfers between Level 1, 2 and 3 fair value measurement.
Dexus 2021 Annual Report 143
OverviewApproachGovernanceFinancial reportInvestor informationPerformanceDirectors’ report
Capital and financial risk
management and working capital
In this section
The Group’s overall risk management program focuses on reducing volatility from impacts of movements in financial markets
and seeks to minimise potential adverse effects on the financial performance of the Group.
Note 13 Capital and financial risk management outlines how the Group manages its exposure to a variety of financial risks
(interest rate risk, foreign currency risk, liquidity risk and credit risk) and details the various derivative financial instruments
entered into by the Group.
The Board determines the appropriate capital structure of the Group, how much is borrowed from financial institutions and
capital markets (debt), and how much is raised from security holders (equity) in order to finance the Group’s activities both
now and in the future. This capital structure is detailed in the following notes:
Debt: Lease liabilities in note 14, Interest bearing liabilities in note 15, and Commitments and contingencies in note 16;
Equity: Contributed equity in note 17 and Reserves in note 18.
Note 19 provides a breakdown of the working capital balances held in the Consolidated Statement of Financial Position.
Note 13 Capital and financial risk management
Capital and financial risk management is carried out through a centralised treasury function which is governed by a Board
approved Treasury Policy. The Group has an established governance structure which consists of the Group Management
Committee and Capital Markets Committee.
The Board has appointed a Group Management Committee responsible for achieving Dexus’ goals and objectives, including
the prudent financial and risk management of the Group. A Capital Markets Committee has been established to advise the
Group Management Committee.
The Capital Markets Committee is a management committee that is accountable to the Board. 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 financial risk management policies and funding strategies for recommendation to the Board,
and the approval of treasury transactions within delegated limits and powers.
a. Capital risk management
The Group manages its capital to ensure that entities within the Group will be able to continue as a going concern while
maximising the return to owners through the optimisation of the debt and equity balance.
The capital structure of the Group consists of debt, cash and cash equivalents and equity attributable to security holders. The
Group continuously monitors its capital structure and it is managed in consideration of the following factors:
– the cost of capital and the financial risks associated with each class of capital;
– gearing levels and other debt covenants;
– potential impacts on net tangible assets and security holders’ equity;
– potential impacts on the Group’s credit rating; and
– other market factors.
144 Financial report
Note 13 Capital and financial risk management (continued)
a. Capital risk management (continued)
The Group has a stated target gearing level of 30% to 40%. The table below details the calculation of the gearing ratio in
accordance with its primary financial covenant requirements.
Total interest bearing liabilities1
Total tangible assets2
Gearing ratio
Gearing ratio (look-through)3
2021
$m
4,629.1
17,447.1
26.5%
26.7%
2020
$m
4,210.8
16,593.1
25.4%
26.3%
1 Total interest bearing liabilities excludes deferred borrowing costs and includes the impact of foreign currency fluctuations of cross-
currency swaps.
2 Total tangible assets comprise total assets less intangible assets, derivatives and deferred tax balances.
3 The look-through gearing ratio is adjusted for cash and debt in equity accounted investments and is not a financial covenant.
The Group is rated A- by Standard & Poor’s (S&P) and A3 by Moody’s. The Group is required to comply with certain financial
covenants in respect of its interest bearing liabilities. During the 2021 and 2020 reporting periods, the Group was in compliance
with all of its financial covenants.
DXFM is the Responsible Entity for the managed investment schemes (DDF, DIT, DOT and DXO) that are stapled to form the
Group. DXFM has been issued with an Australian Financial Services Licence (AFSL). The licence is subject to certain capital
requirements including the requirement to maintain liquidity above specified limits. DXFM must also prepare rolling cash
projections over at least the next 12 months and demonstrate it will have access to sufficient financial resources to meet its
liabilities that are expected to be payable over that period. Cash projections and assumptions are approved, at least quarterly,
by the Board of the Responsible Entity.
Dexus Wholesale Property Limited (DWPL), a wholly owned entity, has been issued with an AFSL as it is the Responsible Entity
for Dexus Wholesale Property Fund (DWPF) and Dexus ADPF (DADPF). Dexus Wholesale Management Limited (DWML), a wholly
owned entity, has been issued with an AFSL as it is the trustee of third party managed funds. Dexus Wholesale Funds Limited
(DWFL), a wholly owned entity, has been issued with an AFSL as it is the Responsible Entity for Dexus Healthcare Property
Fund (DHPF). Dexus Investment Management Limited (DIML), a wholly owned entity, has been issued with an AFSL as the
Responsible Entity for Dexus Industrial Fund (DIF), a wholly owned entity. These entities are subject to the capital requirements
described above.
b. Financial risk management
The Group’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 Group. The Group’s principal financial instruments, other than
derivatives, comprise cash, bank loans and capital markets issuance. The main purpose of financial instruments is to manage
liquidity and hedge the Group’s exposure to financial risks namely:
– interest rate risk;
– foreign currency risk;
– liquidity risk; and
– credit risk.
The Group uses derivatives to reduce the Group’s exposure to fluctuations in interest rates and foreign exchange rates. These
derivatives create an obligation or a right that effectively transfers one or more of the risks associated with an underlying
financial instrument, asset or obligation. Derivative financial instruments that the Group may use to hedge its risks include:
– interest rate swaps and interest rate options (together interest rate derivatives);
– cross-currency interest rate swaps and foreign exchange contracts; and
– other derivative contracts.
The Group does not trade in interest rate or foreign exchange related derivative instruments for speculative purposes. The
Group uses different methods to measure the different types of risks to which it is exposed, including monitoring the current and
forecast levels of exposure and conducting sensitivity analysis.
Dexus 2021 Annual Report 145
OverviewApproachGovernanceFinancial reportInvestor informationPerformanceDirectors’ report
Capital and financial risk management and working capital (continued)
Note 13 Capital and financial risk management (continued)
b. Financial risk management (continued)
i. Market risk
Interest rate risk
Interest rate risk arises from interest bearing financial assets and liabilities that the Group utilises. Non-derivative interest
bearing financial instruments are predominantly short term liquid assets and long term debt issued at fixed rates which
expose the Group to fair value interest rate risk as the Group may pay higher interest costs than if it were at variable rates.
The Group’s borrowings which have a variable interest rate give rise to cash flow interest rate risk due to movements in
variable interest rates.
The Group’s risk management policy for interest rate risk seeks to minimise the effects of interest rate movements on its asset
and liability portfolio through active management of the exposures. The policy prescribes minimum and maximum hedging
amounts for the Group, which is managed on a portfolio basis.
The Group maintains a mix of offshore and local currency fixed rate and variable rate debt, as well as a mix of long term and
short term debt. The Group primarily enters into interest rate derivatives and cross-currency interest rate swap agreements
to manage the associated interest rate risk. The Group hedges the interest rate and currency risk on its foreign currency
borrowings by entering into cross-currency swaps, which have the economic effect of converting foreign currency borrowings
to local currency borrowings at contracted rates. The derivative contracts are recorded at fair value in the Consolidated
Statement of Financial Position, using standard valuation techniques with market inputs.
As at 30 June 2021, 68% (2020: 81%) of the interest bearing liabilities of the Group were hedged. The average hedged
percentage for the financial year was 81% (2020: 79%).
Interest rate derivatives require settlement of net interest receivable or payable generally each 90 or 180 days. The settlement
dates coincide with the dates on which the interest is payable on the underlying debt. The receivable and payable legs on
interest rate derivative contracts are settled on a net basis. The net notional amount of average fixed rate debt and interest
rate derivatives in place in each year and the weighted average effective hedge rate is set out below:
A$ fixed rate debt
A$ interest rate derivatives1
Combined fixed rate debt and
derivatives (A$ equivalent)
June 2022
$m
June 2023
$m
June 2024
$m
June 2025
$m
June 2026
$m
2,042.5
1,487.5
3,530.0
1,848.3
1,458.3
3,306.6
1,653.3
1,914.6
3,567.9
1,370.0
1,650.0
3,020.0
1,246.7
235.4
1,482.1
Hedge rate (%)
1.53%
1.51%
1.54%
1.57%
1.80%
1 Amounts do not include fixed rate debt that has been swapped to floating rate debt through cross-currency swaps.
Sensitivity analysis on interest expense
The table below shows the impact on the Group’s net interest expense of a 50 basis point movement in market interest rates.
The sensitivity on cash flow arises due to the impact that a change in interest rates will have on the Group’s floating rate debt
and derivative cash flows on average during the financial year. Net interest expense is only sensitive to movements in market
rates to the extent that floating rate debt is not hedged.
+/- 0.50% (50 basis points)
Total A$ equivalent
The movement in interest expense is proportional to the movement in interest rates.
2021
(+/-) $m
7.8
7.8
2020
(+/-) $m
8.0
8.0
146 Financial report
Note 13 Capital and financial risk management (continued)
b. Financial risk management (continued)
i. Market risk (continued)
Interest rate risk (continued)
Sensitivity analysis on fair value of interest rate derivatives
The sensitivity analysis on interest rate derivatives below shows the effect on net profit or loss of changes in the fair value of
interest rate derivatives for a 50 basis point movement in short-term and long-term market interest rates. The sensitivity on
fair value arises from the impact that changes in market rates will have on the valuation of the interest rate derivatives.
The fair value of interest rate derivatives is calculated as the present value of estimated future cash flows on the instruments.
Although interest rate derivatives are transacted for the purpose of providing the Group with an economic hedge, the Group
has elected not to apply hedge accounting to these instruments. Accordingly, gains or losses arising from changes in the fair
value are reflected in the profit or loss.
+/- 0.50% (50 basis points)
Total A$ equivalent
Sensitivity analysis on fair value of cross-currency swaps
2021
(+/-) $m
28.0
28.0
2020
(+/-) $m
22.8
22.8
The sensitivity analysis on cross-currency interest rate swaps below shows the effect on net profit or loss for changes in the
fair value for a 50 basis point increase and decrease in market rates. The sensitivity on fair value arises from the impact that
changes in short-term and long-term market rates will have on the valuation of the cross-currency swaps. The sensitivity
analysis excludes the impact of hedge accounted cross-currency swaps.
+/- 0.50% (50 basis points)
Total A$ equivalent
Foreign currency risk
US$ (A$ equivalent)
2021
(+/-) $m
0.9
0.9
2020
(+/-) $m
2.5
2.5
Foreign currency risk refers to the risk that the value or the cash flows arising from a financial commitment, or recognised
asset or liability will fluctuate due to changes in foreign currency rates. The Group’s foreign currency risk arises primarily from
borrowings denominated in foreign currency.
The objective of the Group’s foreign exchange risk management policy is to ensure that movements in exchange rates have
minimal adverse impact on the Group’s foreign currency assets and liabilities. Refer to note 15 for the US$ foreign currency
exposures and management thereof via cross-currency interest rate swaps.
Foreign currency assets and liabilities
Where foreign currency borrowings are used to fund Australian investments, the Group transacts cross-currency swaps to
reduce the risk that movements in foreign exchange rates will have an impact on security holder equity and net tangible
assets.
Dexus 2021 Annual Report 147
OverviewApproachGovernanceFinancial reportInvestor informationPerformanceDirectors’ report
Capital and financial risk management and working capital (continued)
Note 13 Capital and financial risk management (continued)
b. Financial risk management (continued)
ii. Liquidity risk
Liquidity risk is associated with ensuring that there are sufficient funds available to meet the Group’s financial commitments
as and when they fall due and planning for any unforeseen events which may curtail cash flows. The Group identifies and
manages liquidity risk across the following categories:
– short-term liquidity management covering the month ahead on a rolling basis with continuous monitoring of forecast and
actual cash flows;
– medium-term liquidity management of liquid assets, working capital and standby facilities to cover Group cash
requirements over the next 1-24 month period. The Group maintains a level of committed borrowing facilities above the
forecast committed debt requirements (liquidity headroom buffer). Committed debt includes future expenditure that has
been approved by the Board or Investment Committee (as required within delegated limits); and
– long-term liquidity management through ensuring an adequate spread of maturities of borrowing facilities so that
refinancing risk is not concentrated in certain time periods and ensuring an adequate diversification of funding sources
where possible, subject to market conditions.
Refinancing risk
Refinancing risk is the risk that the Group:
– will be unable to refinance its debt facilities as they mature; and/or
– will only be able to refinance its debt facilities at unfavourable interest rates and credit market conditions (margin price risk).
The Group’s key risk management strategy for margin price risk on refinancing 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 market conditions in any one
period. An analysis of the contractual maturities of the Group’s interest-bearing liabilities and derivative financial instruments
is shown in the table below. The amounts in the table represent undiscounted cash flows.
2021
2020
Within
one year
$m
Between
one and
two years
$m
Between
two and
five years
$m
Payables
Lease liabilities
Total payables and
lease liabilities
(173.8)
(3.5)
(177.3)
–
(3.7)
(3.7)
–
(9.0)
(9.0)
Interest bearing liabilities & interest
After five
years
$m
Within
one year
$m
–
(6.4)
(179.8)
(4.8)
(6.4)
(184.6)
Between
one and
two years
$m
Between
two and
five years
$m
After five
years
$m
–
(4.2)
(4.2)
–
(9.8)
(9.8)
–
(9.2)
(9.2)
Fixed interest rate
liabilities
Floating interest rate
liabilities
Total interest bearing
liabilities & interest1
(183.6)
(389.3)
(1,551.6)
(2,492.1)
(522.5)
(191.6)
(633.4)
(4,104.5)
(31.7)
(344.9)
(967.1)
(149.3)
(20.9)
(112.9)
(436.9)
(120.3)
(215.3)
(734.2)
(2,518.7)
(2,641.4)
(543.4)
(304.5)
(1,070.3)
(4,224.8)
Derivative financial liabilities
Cash receipts
Cash payments
Total net derivative
financial instruments2
74.1
(52.0)
74.8
(52.9)
640.2
(505.9)
1,218.8
(1,143.0)
470.8
(374.0)
86.3
(54.7)
930.0
(699.4)
1,188.3
(962.7)
22.1
21.9
134.3
75.8
96.8
31.6
230.6
225.6
Refer to note 15. Excludes deferred borrowing costs but includes estimated fees and interest.
1
2 The notional maturities on derivatives are shown for cross-currency interest rate swaps (refer to interest rate risk) as they are the
only instruments where a principal amount is exchanged. For interest rate derivatives, only the net interest cash flows (not the
notional principal) are included. Refer to note 13(c) for fair value of derivatives. Refer to note 16(b) for financial guarantees.
148 Financial report
Note 13 Capital and financial risk management (continued)
b. Financial risk management (continued)
iii. Credit risk
Credit risk is the risk that the counterparty will not fulfil its obligations under the terms of a financial instrument and will cause
financial loss to the Group. The Group has exposure to credit risk on all financial assets included in the Group’s Consolidated
Statement of Financial Position.
The Group manages this risk by:
– adopting a process for determining an approved counterparty, with consideration of qualitative factors as well as the
counterparty’s credit rating;
– regularly monitoring counterparty exposure within approved credit limits that are based on the lower of an S&P and
Moody’s credit rating. The exposure includes the current market value of in-the-money contracts and the potential
exposure, which is measured with reference to credit conversion factors as per APRA guidelines;
– entering into International Swaps and Derivatives Association (ISDA) Master Agreements once a financial institution
counterparty is approved;
– for some trade receivables, obtaining collateral where necessary in the form of bank guarantees and tenant bonds; and
– regularly monitoring loans and receivables on an ongoing basis.
A minimum S&P rating of A– (or Moody’s equivalent) is required to become or remain an approved counterparty unless
otherwise approved by the Dexus Board.
The Group is exposed to credit risk on cash balances and on derivative financial instruments with financial institutions. The
Group has a policy that sets limits as to the amount of credit exposure to each financial institution. New derivatives and cash
transactions are limited to financial institutions that meet minimum credit rating criteria in accordance with the Group’s policy
requirements.
Financial instrument transactions are spread among a number of approved financial institutions within specified credit
limits to minimise the Group’s exposure to any one counterparty. As a result, there is no significant concentration of credit
risk for financial instruments. The maximum exposure to credit risk at 30 June 2021 is the carrying amounts of financial assets
recognised on the Consolidated Statement of Financial Position.
The Group is exposed to credit risk on trade receivable balances. The Group has a policy to continuously assess and monitor
the credit quality of trade debtors on an ongoing basis. Given the historical profile and exposure of the trade receivables, it
has been determined that no significant concentrations of credit risk exists for receivables balances. The maximum exposure
to credit risk at 30 June 2021 is the carrying amounts of the trade receivables recognised on the Consolidated Statement of
Financial Position.
iv. Fair value
The Group uses the following methods in the determination and disclosure of the fair value of financial instruments:
Level 1: The fair value is calculated using quoted prices in active markets.
Level 2: The fair value is determined using inputs other than quoted prices included in Level 1 that are observable for the asset
or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices).
Level 3: The fair value is estimated using inputs for the asset or liability that are not based on observable data.
All derivative financial instruments were measured at Level 2 for the periods presented in this report. During the year, there
were no transfers between Level 1, 2 and 3 fair value measurements.
Dexus 2021 Annual Report 149
OverviewApproachGovernanceFinancial reportInvestor informationPerformanceDirectors’ report
Capital and financial risk management and working capital (continued)
Note 13 Capital and financial risk management (continued)
b. Financial risk management (continued)
iv. Fair value (continued)
Since cash, receivables and payables are short-term in nature, their fair values are not materially different from their carrying
amounts. For the majority of the borrowings, the fair values are not materially different to their carrying amounts, since the
interest payable on those borrowings is either close to current market rates or the borrowings are of a short-term nature.
Material differences are identified only for the following borrowings:
Type
Maturity
2021
2021
2020
Carrying Amount
($m)
Fair Value
($m)
Carrying Amount
($m)
2020
Fair Value
($m)
USD borrowing
USD borrowing
USD borrowing
USD borrowing
USD borrowing
USD borrowing
USD borrowing
USD borrowing
MTN
MTN
MTN
MTN
MTN
MTN
AUD USPP
AUD USPP
AUD USPP
AUD USPP
Fixed bank debt
Exchangeable note
2021
2024
2025
2026
2027
2029
2030
2033
2023
2026
2027
2030
2032
2039
2028
2030
2033
2039
2022
2026
–
59.9
146.3
212.8
412.3
166.3
279.3
232.8
161.3
186.8
129.0
198.2
500.0
30.0
100.0
50.0
100.0
75.0
150.0
403.1
–
65.0
162.6
232.7
466.5
184.9
306.4
254.0
167.6
209.8
147.1
202.7
512.9
36.0
113.4
56.6
117.4
89.7
155.2
425.0
364.3
65.6
160.3
233.1
451.7
182.1
306.0
255.0
162.2
187.1
128.9
198.0
500.0
30.0
100.0
50.0
100.0
75.0
150.0
399.1
373.7
70.9
178.6
253.9
520.5
208.8
354.9
304.4
169.2
207.1
144.4
192.8
496.4
35.0
113.4
56.6
117.4
89.7
155.2
425.0
Key assumptions: fair value of derivatives and interest bearing liabilities
The fair value of derivatives and interest bearing liabilities has been determined based on observable market inputs
(interest rates, exchange rates and currency basis) and applying a credit or debit value adjustment based on the current
credit worthiness of counterparties and the Group.
v. Offsetting financial assets and financial liabilities
Financial assets and liabilities are offset and the net amount reported in the Consolidated Statement of Financial Position
where there is a legally enforceable right to set-off the recognised amounts and there is an intention to settle on a net basis,
or realise the asset and settle the liability simultaneously. No financial assets and liabilities are currently held under netting
arrangements.
Master Netting arrangements – not currently enforceable
Agreements with derivative counterparties are based on an ISDA Master Agreement. Under the terms of these arrangements,
where certain credit events occur (such as default), the net position owing/receivable to a single counterparty in the same
currency will be taken as owing and all the relevant arrangements terminated. As the Group does not presently have a legally
enforceable right of set-off, these amounts have not been offset in the Consolidated Statement of Financial Position.
150 Financial report
Note 13 Capital and financial risk management (continued)
c. Derivative financial instruments
A derivative is a type of financial instrument typically used to manage risk. A derivative’s value changes over time in response to
an underlying benchmark, such as interest rates, exchange rates, or asset values, and is entered into for a fixed period. A hedge
is where a derivative is used to manage an underlying exposure.
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 regularly reviews the Group’s exposures and updates its treasury
policies and procedures. The Group does not trade in interest rate or foreign exchange related derivative instruments for
speculative purposes.
The Group uses derivative contracts as part of its financial and business strategy. Derivative contracts may cover interest rate,
foreign currency and equity market movements but also include option contracts embedded in the Group’s exchangeable note
borrowings (see note 15(e)).
1. Interest rate derivative contracts – the Group uses interest rate derivative contracts to manage the risk of movements in
variable interest rates on the Group’s Australian dollar denominated borrowings;
2. Cross-currency swap contracts – the Group uses cross-currency swap contracts to manage the risk of movements in interest
rates and fair values of foreign currencies associated with its foreign denominated borrowings; and
3. Other derivative contracts – other derivative contracts include embedded option contracts within the Group’s exchangeable
note borrowings (see note 15(e)) as well as equity linked derivatives that are used from time to time and expose the Group
to movements in the fair value of listed equities included within the Australian REIT index as part of its strategy of investing in
Australian property assets.
Derivatives are measured at fair value with any changes in fair value recognised either in the Statement of Comprehensive
Income, or directly in equity where hedge accounted.
At inception the Group can elect to formally designate and document the relationship between certain hedge derivative
instruments and the associated hedged items, along with its risk management objectives and its strategy for undertaking
various hedge transactions.
The only derivatives designated by the Group in hedge relationships are cross-currency interest rate swap contracts used to
hedge foreign denominated borrowings.
The Group also documents its assessment, both at hedge inception and on an ongoing basis, of whether the financial
instrument is effective in offsetting changes in fair values or cash flows of the hedged item attributable to the hedged risk. The
hedging relationship is deemed effective when all of the following requirements are met:
– there is an economic relationship between the hedged item and the hedging instrument;
– the effect of credit risk does not dominate the changes in value that result from that economic relationship; and
– the hedge ratio of the hedging relationship is the same as that resulting from the quantity of the hedged item that the Group
actually hedges and the quantity of the hedging instrument that the Group actually uses to hedge that quantity of hedged
item.
The Group uses cross-currency interest rate swap contracts to hedge interest rate risk and foreign exchange risk associated
with foreign denominated borrowings issued by the Group. The Group designates the cross-currency interest rate swap
contracts as:
– fair value hedges against changing interest rates on foreign denominated borrowings;
– cash flow hedges or fair value hedges against foreign currency exposure on foreign denominated borrowings.
The foreign currency basis spread of a cross-currency interest rate swap is excluded from the designation of that financial
instrument as the hedging instrument. Changes in the fair value of the foreign currency basis spread of a financial instrument
are accumulated in the foreign currency basis spread reserve and are amortised to profit or loss on a rational basis over the
term of the hedging relationship.
As the critical terms of the cross-currency interest rate swap contracts and their corresponding hedged items match, the Group
performs a qualitative assessment of effectiveness. The main source of hedge ineffectiveness in these hedge relationships is the
effect of the counterparty and the Group’s own credit risk on the fair value of the cross-currency interest rate swap contracts,
which is not reflected in the fair value of the hedged item attributable to the change in interest rates. No other sources of
ineffectiveness emerged from these hedging relationships.
The Group has applied the hedge ratio of 1:1 to all hedge relationships.
Dexus 2021 Annual Report
151
OverviewApproachGovernanceFinancial reportInvestor informationPerformanceDirectors’ report
Capital and financial risk management and working capital (continued)
Note 13 Capital and financial risk management (continued)
c. Derivative financial instruments (continued)
Fair value hedge – cross-currency swap contracts
A fair value hedge is a hedge of the exposure to changes in fair value of an asset or liability that is attributable to a particular
risk and could affect the Consolidated Statement of Comprehensive Income. Changes in the fair value of cross-currency swap
contracts that are designated as fair value hedges are recorded in profit or loss, together with any changes in the fair value of
the interest rates on foreign denominated borrowings, and fair value of the foreign denominated borrowings themselves.
If the hedge no longer meets the criteria for hedge accounting, the adjustment to the carrying amount of a hedged item
for which the effective interest method is used is amortised to profit or loss over the period to maturity using a recalculated
effective interest rate.
Cash flow hedge
A cash flow hedge is a hedge of the exposure to variability in cash flows attributable to a particular risk to a highly probable
forecast transaction pertaining to an asset or liability. The effective portion of changes in the fair value of cross-currency swap
contracts that are designated as cash flow hedges is recognised in other comprehensive income in equity via the cash flow
hedge reserve. Amounts accumulated in equity are reclassified to profit or loss in the periods when the payments associated
with the underlying foreign denominated borrowings affect profit or loss. Any gain or loss related to ineffectiveness is recognised
in profit or loss immediately.
Hedge accounting is discontinued when each cross-currency swap contract expires, is terminated, is no longer in an effective
hedge relationship, is de-designated, or the forecast underlying payments are no longer expected to occur. The fair value gain
or loss of derivatives recorded in equity is recognised in profit or loss over the period that the forecast payments are recorded
in profit or loss. If the forecast payments are no longer expected to occur, the cumulative gain or loss in equity is recognised in
profit or loss immediately.
Current assets
Cross-currency swap contracts
Total current assets - derivative financial instruments
Non-current assets
Cross-currency swap contracts
Total non-current assets - derivative financial instruments
Current liabilities
Interest rate derivative contracts
Cross-currency swap contracts
Total current liabilities - derivative financial instruments
Non-current liabilities
Interest rate derivative contracts
Cross-currency swap contracts
Other derivative contracts
Total non-current liabilities - derivative financial instruments
Net derivative financial instruments
2021
$m
13.8
13.8
333.3
333.3
4.4
2.8
7.2
17.2
0.3
25.4
42.9
297.0
The table below details a breakdown of the net fair value gain on derivatives in the Consolidated Statement of
Comprehensive Income.
Net fair value gain/(loss) of derivatives
Cross-currency swap contracts
Interest rate swap contracts
Exchangeable note contracts
Other derivative contracts
Total net fair value gain/(loss) of derivatives
152 Financial report
2021
$m
(120.1)
29.6
(11.9)
–
(102.4)
2020
$m
91.9
91.9
604.3
604.3
13.4
–
13.4
34.3
7.0
13.5
54.8
628.0
2020
$m
153.0
(24.6)
0.9
(126.3)
3.0
Note 13 Capital and financial risk management (continued)
c. Derivative financial instruments (continued)
Effects of hedge accounting on the financial position and performance – Quantitative information
The following table details the notional principal amounts and remaining terms of the hedging instrument (cross-currency
interest rate swap) at the end of the financial year:
Notional Amount of the Hedging Instrument ($m)
Under 1 year
1–2 years
2–5 years
Over 5 years
Foreign exchange risk and interest rate risk – Cross currency interest rate swap (hedging foreign currency debt)1
Average contracted FX rate (AUD/USD)
Average contracted fixed USD rate
Average notional amount
0.8699
2.4922
1,304.7
Interest rate risk – Cross currency interest rate swap (hedging foreign currency debt)1
Average contracted fixed USD rate
Average notional amount
1.3906
1,304.7
0.8699
2.4922
1,304.7
1.3906
1,304.7
0.8598
2.4905
1,153.3
1.3809
1,153.3
0.7960
2.3763
405.3
1.3902
405.3
1 Cross-currency interest rate swaps totalling $1,135.0 million (notional) have been split into cash flow hedge and fair value hedge relationships.
The following tables detail information regarding the cross-currency interest rate swaps designated in cash flow hedge or fair
value hedge relationships at the end of the reporting period and their related hedged items.
Current notional principal value of the hedging instrument
Carrying amount of the hedging instrument assets/(liabilities)1
Cumulative change in fair value of the hedging instrument
used for calculating hedge ineffectiveness
Current fair value notional amount of the hedged item
Cumulative change in value of the hedged item used for
calculating hedge ineffectiveness
Balance in cash flow hedge reserve
Hedge ineffectiveness recognised in the Consolidated
Statement of Comprehensive Income2
Cash flow hedges
Fair value hedges
Cross currency
interest rate swaps
$m
Cross currency
interest rate swaps
$m
1,304.7
7.7
7.7
(22.2)
(22.2)
(9.4)
1.8
1,304.7
315.6
326.0
(328.1)
(328.1)
n/a
(10.8)
1 The carrying amount is included in the “Derivative financial instruments” line items in the Consolidated Statement of Financial Position.
2 Included in the “Net fair value loss of derivatives” line item in the Consolidated Statement of Comprehensive Income.
Dexus 2021 Annual Report 153
OverviewApproachGovernanceFinancial reportInvestor informationPerformanceDirectors’ report
Capital and financial risk management and working capital (continued)
Note 13 Capital and financial risk management (continued)
c. Derivative financial instruments (continued)
The cash flow hedge reserve represents the cumulative amount of gains and losses on hedging instruments deemed effective
in cash flow hedges. The cumulative deferred gain or loss on the hedging instrument is recognised in profit or loss only when
the hedged transaction impacts the profit or loss.
Foreign exchange risk
$m
Cash flow hedge reserve and foreign currency basis spread
Balance at 1 July 2020 (before tax)
Movement
Gain/(loss) arising on changes in fair value of hedging instruments during the period
Changes in fair value of foreign currency basis spread during the period
Transfer out
(Gain)/loss reclassified to profit or loss – hedged item has affected profit or loss
(Gain)/loss arising on changes in fair value of foreign currency basis spread during the period
Balance at 30 June 2021 (before tax)
Note 14 Lease liabilities
The following table details information relating to leases where the Group is a lessee.
Current
Lease liabilities – ground leases
Lease liabilities – other property leases
Total current liabilities - lease liabilities
Non-current
Lease liabilities – ground leases
Lease liabilities – other property leases
Total non-current liabilities - lease liabilities
Total liabilities – lease liabilities
a. Lease liabilities – ground leases
Note
(a)
(b)
(a)
(b)
2021
$m
0.8
2.7
3.5
7.8
12.7
20.5
24.0
15.2
16.2
(6.5)
(30.7)
4.9
(0.9)
2020
$m
0.9
3.9
4.8
8.3
11.2
19.5
24.3
Lease liabilities include ground leases at Parkade, 34-60 Little Collins Street, Melbourne and Waterfront Place, 1 Eagle
Street, Brisbane. Refer to note 8 Investment properties where the corresponding leased asset is included in the total value of
investment properties.
b. Lease liabilities – other property leases
Lease liabilities relating to property leases predominantly relate to Dexus offices and Dexus Place property leases. Refer to the
Consolidated Statement of Financial Position for disclosure of the corresponding right-of-use asset.
154 Financial report
Note 15 Interest bearing liabilities
Borrowings are initially recognised at fair value net of transaction costs and subsequently measured at amortised cost using
the effective interest rate method. Under the effective interest rate method, any transaction fees, costs, discounts and premiums
directly related to the borrowings are capitalised to borrowings and amortised in profit or loss over the expected life of
the borrowings.
If there is an effective fair value hedge of borrowings, a fair value adjustment will be applied based on the mark to market
movement in the benchmark component of the borrowings. This movement is recognised in profit or loss. Refer note 13 Capital
and financial risk management for further detail.
All borrowings with contractual maturities greater than 12 months after reporting date are classified as non-current liabilities.
Current
Unsecured
US senior notes1
Bank loans
Total unsecured
Total current liabilities - interest bearing liabilities
Non-current
Unsecured
US senior notes1
Bank loans
Commercial paper
Medium term notes
Exchangeable notes
Total unsecured
Deferred borrowing costs
Debt modifications
Total non-current liabilities - interest bearing liabilities
Total interest bearing liabilities
Note
(a)
(b)
(a)
(b)
(c)
(d)
(e)
2021
$m
–
50.0
50.0
50.0
1,957.8
1,241.0
100.0
1,205.3
403.1
4,907.2
(20.7)
(11.8)
4,874.7
4,924.7
2020
$m
364.3
–
364.3
364.3
2,217.1
571.0
100.0
1,206.2
399.1
4,493.4
(21.5)
1.8
4,473.7
4,838.0
1
Includes cumulative fair value adjustments amounting to $123.1 million (2020: $238.3 million) in relation to effective fair value hedges.
Financing arrangements
The following table summarises the maturity profile of the Group’s financing arrangements:
Type of facility
US Senior notes (USPP)1
US Senior notes (USPP)
(a)
(a)
Multi-option revolving credit facilities
(b)
Commercial paper
Medium term notes
Exchangeable note
Total
Bank guarantee in place
Unused at balance date
(c)
(d)
(e)
Notes
Currency
Security
Unsecured
Unsecured
Unsecured
Unsecured
Unsecured
US$
A$
Multi
Currency
A$
A$
A$
Unsecured
Jun 26
Maturity
Date
Jul 23 to
Nov 32
Jun 28 to
Oct 38
Jun 22 to
May 28
Apr 24
Nov 22 to
Aug 38
Utilised
$m
1,509.7
Facility
Limit
$m
1,509.7
325.0
325.0
1,291.0
2,375.0
100.0
1,205.3
403.1
5,918.1
100.0
1,205.3
403.1
4,834.1
(58.1)
1,025.9
1
Includes drawn amounts and excludes fair value adjustments recorded in interest bearing liabilities in relation to effective fair value hedges.
Dexus 2021 Annual Report 155
OverviewApproachGovernanceFinancial reportInvestor informationPerformanceDirectors’ report
Capital and financial risk management and working capital (continued)
Note 15 Interest bearing liabilities (continued)
Financing arrangements (continued)
Each of the Group’s unsecured borrowing facilities are supported by guarantee arrangements and have negative pledge
provisions which limit the amount and type of encumbrances that the Group can have over their assets and ensures that all
senior unsecured debt ranks pari passu.
a) US senior notes (USPP)
This includes a total of US$1,135.0 million and A$325.0 million (A$1,834.7 million) of US senior notes with a weighted average
maturity of February 2029. US$1,135.0 million is designated as an accounting hedge using cross-currency interest rate swaps with
the same notional value.
b) Multi-option revolving credit facilities
This includes 21 facilities maturing between June 2022 and May 2028 with a weighted average maturity of June 2025. A$58.1
million is utilised as bank guarantees for AFSL requirements and other business requirements including developments.
c) Commercial paper
This includes a total of A$100.0 million of Commercial Paper which is supported by a standby facility of A$100.0 million with a
maturity of April 2024. The standby facility has same day availability.
d) Medium term notes
This includes a total of A$1,205.0 million of Medium Term Notes with a weighted average maturity of February 2029. The
remaining A$0.3 million is the net premium on the issue of these instruments.
e) Exchangeable notes
This includes Exchangeable Notes with a face value totalling $425.0 million. The notes are exchangeable based on the
exchange price (currently $15.00 representing approximately 28.3 million securities) on the exchange date, at the election of the
holder, until 19 March 2024. The holders have an option to put the notes to the issuer for face value 60 days prior but not later
than 30 days after 19 March 2024. On expiration of the put option, the notes continue to be exchangeable until 10 days prior
to maturity on 19 June 2026. Any securities issued on exchange will rank equally with existing securities. As at 30 June 2021, no
notes have been exchanged.
Exchange price1
Coupon (per annum)
Notes on issue at 30 June 2021
$15.00
2.30%
4,250,000
1 The exchange price has been adjusted for any subsequent equity raises completed at greater than 5% discount to the five day VWAP prior
to the raise. The price will also be adjusted in the event of any Dexus distributions which exceed quoted thresholds in the Exchangeable Note
terms and conditions.
156 Financial report
Note 16 Commitments and contingencies
a. Commitments
Capital commitments
The following amounts represent capital expenditure on investment properties and inventories as well as committed fitout or
cash incentives contracted at the end of each reporting period but not recognised as liabilities payable:
Investment properties
Inventories and development management services
Investments accounted for using the equity method
Total capital commitments
Lease receivable commitments
The future minimum lease payments receivable by the Group are:
Within one year
Later than one year but not later than five years
Later than five years
Total lease receivable commitments
b. Contingencies
2021
$m
87.1
0.7
311.5
399.3
2021
$m
467.0
1,398.5
592.9
2,458.4
2020
$m
94.7
62.9
200.2
357.8
2020
$m
515.9
1,487.5
745.0
2,748.4
DDF, together with DIT, DOT and DXO, is a guarantor of A$5,918.1 million of interest-bearing liabilities (refer to note 15). The
guarantees have been given in support of debt outstanding and drawn against these facilities and may be called upon in the
event that a borrowing entity has not complied with certain requirements such as failure to pay interest or repay a borrowing,
whichever is earlier. During the period no guarantees were called.
The Group has bank guarantees of $58.1 million, comprising $55.2 million held to comply with the terms of the Australian
Financial Services Licences (AFSL) and $2.9 million largely in respect of developments.
The above guarantees are issued in respect of the Group and represent an additional liability to those already existing in
interest bearing liabilities on the Consolidated Statement of Financial Position.
The Directors of the Responsible Entity are not aware of any other contingent liabilities in relation to the Group, other than those
disclosed in the Consolidated Financial Statements, which should be brought to the attention of security holders as at the date
of completion of this report.
Outgoings are excluded from contingencies as they are expensed when incurred.
Dexus 2021 Annual Report 157
OverviewApproachGovernanceFinancial reportInvestor informationPerformanceDirectors’ report
Capital and financial risk management and working capital (continued)
Note 17 Contributed equity
Number of securities on issue
Opening balance at the beginning of the year
Buy-back of contributed equity
Closing balance at the end of the year
2021
No. of securities
2020
No. of securities
1,091,202,163
1,096,857,665
(15,636,917)
(5,655,502)
1,075,565,246
1,091,202,163
Each stapled security ranks equally with all other stapled securities for the purposes of distributions and on termination of
the Group.
Each stapled security entitles the holder to vote in accordance with the provisions of the Constitutions and the
Corporations Act 2001.
Transaction costs arising on the buy-back 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 buy-back of those equity instruments and which would not have been incurred had those instruments
not been bought back.
On 23 October 2019, Dexus announced plans to initiate an on-market securities buy-back of up to 5% of Dexus securities
on issue over the next 12 months, as part of its active approach to capital management.
On 13 October 2020, Dexus announced an extension of the buy-back for a period of 12 months commencing on
23 October 2020.
During the 12 months to 30 June 2021, Dexus acquired and cancelled 15,636,917 securities representing 1.5% of Dexus
securities on issue.
158 Financial report
Note 18 Reserves
Asset revaluation reserve
Cash flow hedge reserve
Foreign currency basis spread reserve
Security-based payments reserve
Treasury securities reserve
Total reserves
Movements:
Asset revaluation reserve
Opening balance at the beginning of the year
Closing balance at the end of the year
Cash flow hedge reserve
Opening balance at the beginning of the year
Changes in the fair value of cash flow hedges
Closing balance at the end of the year
Foreign currency basis spread reserve
Opening balance at the beginning of the year
Changes in cost of hedge reserve
Closing balance at the end of the year
Security-based payments reserve
Opening balance at the beginning of the year
Issue of securities to employees
Security-based payments expense
Closing balance at the end of the year
Treasury securities reserve
Opening balance at the beginning of the year
Issue of securities to employees
Purchase of securities
Closing balance at the end of the year
Nature and purpose of reserves
Asset revaluation reserve
2021
$m
42.7
9.4
(10.3)
10.6
(15.8)
36.6
42.7
42.7
24.0
(14.5)
9.4
(8.8)
(1.6)
(10.3)
9.8
(8.5)
9.3
10.6
(17.1)
8.6
(7.3)
(15.8)
2020
$m
42.7
24.0
(8.8)
9.8
(17.1)
50.6
42.7
42.7
17.8
6.2
24.0
(4.6)
(4.2)
(8.8)
16.3
(12.3)
5.8
9.8
(18.5)
12.3
(10.9)
(17.1)
The asset revaluation reserve is used to record the fair value adjustment arising on a business combination.
Cash flow hedge reserve
The cash flow hedge reserve is used to record the effective portion of changes in the fair value of derivatives that are
designated as cash flow hedges.
Foreign currency basis spread reserve
The foreign currency basis spread reserve is used to record the changes in the fair value of cross-currency derivatives
attributable to movements in foreign currency basis spreads and represents a cost of hedging.
Security-based payments reserve
The security-based payments reserve is used to recognise the fair value of performance rights to be issued under the Deferred
Short Term Incentive Plans (DSTI), Long Term Incentive Plans (LTI) and Senior Management Retention Awards. Refer to note 23 for
further details.
Treasury securities reserve
The treasury securities reserve is used to record the acquisition of securities purchased to fulfil the obligations of the Deferred
Short Term Incentive Plans (DSTI), Long Term Incentive Plans (LTI) and Senior Management Retention Awards. As at 30 June 2021,
DXS held 1,574,324 stapled securities which includes acquisitions of 745,590 and unit vesting of 842,186 (2020: 1,670,920).
Dexus 2021 Annual Report 159
OverviewApproachGovernanceFinancial reportInvestor informationPerformanceDirectors’ report
Capital and financial risk management and working capital (continued)
Note 19 Working capital
a. 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.
b. Receivables
Rental income and management fees are brought to account on an accrual basis. Dividends and distributions are recognised
when declared and, if not received at the end of the reporting period, reflected in the Consolidated Statement of Financial
Position as a receivable.
Trade and other receivables are recognised initially at fair value and subsequently measured at amortised cost using the
effective interest rate method, less provision for expected credit losses. 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 uncollectable are written off by
reducing the carrying amount directly.
A provision for expected credit losses is recognised for expected credit losses on trade and other receivables. The provision for
expected credit losses is the difference between the asset’s carrying amount and the present value of estimated future cash
flows, discounted at the original effective interest rate. Cash flows relating to short-term receivables are not discounted as the
effect of discounting is immaterial.
The calculation of expected credit losses relating to rent and other receivables requires significant judgement to assess the
future uncertainty of tenants’ ability to pay their debts. Expected credit losses have been estimated using a provision matrix
that has been developed with reference to the Group’s historical credit loss experience, general economic conditions and
forecasts, assumptions around rent relief that may be provided to tenants and tenant risk factors such as size, industry exposure
and the Group’s understanding of the ability of tenants to pay their debts. Accordingly, expected credit losses include both
the part of the rent receivable that is likely to be waived and any additional amount relating to credit risk associated with the
financial condition of the tenant.
In relation to distributions and fees receivables, an assessment has been performed taking into consideration the ability of the
funds and mandates managed by the Group to cash settle their distributions and pay their fees outstanding.
For any provisions for expected credit losses, the corresponding expense has been recorded in the Consolidated Statement of
Comprehensive Income within Property expenses.
2021
$m
35.0
(17.7)
17.3
49.0
51.2
–
3.5
103.7
121.0
2020
$m
18.4
(7.5)
10.9
38.7
33.1
40.5
9.0
121.3
132.2
Rent receivable1
Less: provision for expected credit losses
Total rent receivables
Distributions receivable
Fees receivable
Receivables from related entities
Other receivables
Total other receivables
Total receivables
1 Rent receivable includes outgoings recoveries.
160 Financial report
Note 19 Working capital (continued)
b. Receivables (continued)
The provision for expected credit losses for rent receivables (which includes outgoings recoveries) as at 30 June 2021 was
determined as follows:
$m
30 June 2021
0–30 days1
31–60 days
61–90 days
91+ days
Total provision for expected credit losses
1. 0-30 days includes deferred rent receivable but not due.
Office
7.0
0.7
0.8
6.0
14.5
Sector
Industrial
1.7
–
0.1
1.4
3.2
The provision for expected credit losses for distributions receivable, fees receivable and other receivables that has been
recorded is minimal.
The provision for expected credit losses for rent receivables as at the reporting date reconciles to the opening loss
allowances as follows:
Trade receivables
Opening provision for expected credit losses
Increase in provision recognised in profit or loss during the year
Closing provision for expected credit losses
c. Other current assets
Prepayments
Other
Total other current assets
d. Payables
Trade creditors
Accruals
Accrued capital expenditure
Prepaid income
Accrued interest
Other payables
Total payables
2021
$m
(7.5)
(10.2)
(17.7)
2021
$m
19.6
8.7
28.3
2021
$m
35.3
21.6
59.4
19.6
27.9
10.0
173.8
Total
8.7
0.7
0.9
7.4
17.7
2020
$m
(0.1)
(7.4)
(7.5)
2020
$m
14.9
13.4
28.3
2020
$m
56.0
8.8
60.1
19.0
34.8
1.1
179.8
Dexus 2021 Annual Report
161
OverviewApproachGovernanceFinancial reportInvestor informationPerformanceDirectors’ report
Capital and financial risk management and working capital (continued)
Note 19 Working capital (continued)
e. Provisions
A provision is recognised when a current obligation exists as a result of a past event and it is probable that a future outflow of
cash or other benefit will be required to settle the obligation.
In accordance with the Trust’s Constitution, the Group distributes its distributable income to security holders by cash or
reinvestment. Distributions are provided for when they are approved by the Board of Directors and declared.
Provision for employee benefits relates to the liabilities for wages, salaries, annual leave and long service leave.
Liabilities for employee benefits for wages, salaries and annual leave expected to be settled within 12 months represent present
obligations resulting from employees’ services provided to the end of the reporting period. They are measured based on
remuneration wage and salary rates that the Group expects to pay at the end of the reporting period including related on-
costs, such as workers compensation, insurance and payroll tax.
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 the end of the reporting period.
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 Australian Corporate Bond Index rates at the end of the
reporting period that most closely matches the term of the maturity of the related liabilities. The provision for employee benefits
also includes the employee incentives schemes which are shown separately in note 23.
Current
Provision for distribution
Provision for employee benefits
Provision for land tax
Total current provisions
Non-current
Provision for employee benefits
Total non-current provisions
Movements in material provisions during the financial year, are set out below:
Provision for distribution
Opening balance at the beginning of the year
Additional provisions
Payment of distributions
Closing balance at the end of the year
2021
$m
247.4
37.7
6.1
291.2
2021
$m
2.7
2.7
2021
$m
254.3
561.0
(567.9)
247.4
2020
$m
254.3
25.5
–
279.8
2020
$m
2.5
2.5
2020
$m
252.3
550.3
(548.3)
254.3
A provision for distribution has been raised for the period ended 30 June 2021. This distribution is to be paid on 30 August 2021.
162 Financial report
Other
disclosures
In this section
This section includes information that must be disclosed to comply with the Accounting Standards, the Corporations Act
2001 or the Corporations Regulations, but which are not considered critical in understanding the financial performance or
position of the Group.
Notes 20 Intangible assets
Management rights represent the asset management rights owned by Dexus Holdings Pty Limited, a wholly owned subsidiary
of DXO, which entitles it to management fee revenue from both finite life trusts and indefinite life trusts. Those rights that are
deemed to have a finite useful life (held at a value of $0.4 million (2020: $0.5 million)) are measured at cost and amortised using
the straight-line method over their estimated remaining useful lives of 8 years. Management rights that are deemed to have an
indefinite life are held at a value of $300.5 million (2020: $286.0 million).
Costs that are directly attributable to the design and testing of identifiable and unique software products controlled by the
group are recognised as intangible assets. Costs associated with configuration and customisation in a cloud computing
arrangement are recognised as an expense when incurred, unless they are paid to the suppliers of the SaaS arrangement
to significantly customise the cloud-based software for the group, in which case the costs are recorded as a prepayment for
services and amortised over the expected renewable term of the arrangement. Refer to note 26 Change in accounting policy
for further details in relation to the accounting policy adopted. Software is measured at cost and amortised using the straight-
line method over its estimated useful life, expected to be three to five years.
Goodwill represents the excess of the cost of an acquisition over the fair value of the Group’s share of the net identifiable assets
of the acquired subsidiary at the date of acquisition.
Goodwill and management rights with an indefinite useful life are not subject to amortisation and are tested annually for
impairment, or more frequently if events or changes in circumstances indicate that they might be impaired. An impairment loss
is recognised in the Consolidated Statement of Comprehensive Income for the amount by which the asset’s carrying amount
exceeds its recoverable amount. The recoverable amount is the higher of an asset’s fair value less costs to sell and value in use.
For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable
cash inflows, which are largely independent of the cash inflows from other assets or groups of assets (cash-generating units).
During the year, management carried out a review of the recoverable amount of its management rights, including an
assessment of the impacts of COVID-19. The Directors and management have considered the key assumptions adopted and
have not identified impairments of those carrying amounts.
The value in use has been determined using Board approved long-term forecasts in a five year discounted cash flow model
and applying a terminal value in year five. Forecasts were based on projected returns of the business in light of current market
conditions.
Key assumptions: value in use of management rights
Judgement is required in determining the following key assumptions used to calculate the value in use:
– Terminal capitalisation rate range of between 8.3%–20.0% (2020: 10.0%–20.0%) was used incorporating an appropriate risk
premium for a management business. A terminal capitalisation rate of 8.3% (2020: 10.0%) has been applied to the majority
of the management rights.
– Cash flows have been discounted at a pre-tax rate of 10.5% (2020: 12.0%) based on externally published weighted average
cost of capital for an appropriate peer group plus an appropriate premium for risk. A 1.0% (2020 1.0%) decrease in the
discount rate would increase the valuation by $30.8 million (2020: $29.6 million).
– An average growth rate of 3.0% (2020: 3.0%) has been applied to forecast cashflows.
Dexus 2021 Annual Report 163
OverviewApproachGovernanceFinancial reportInvestor informationPerformanceDirectors’ report
Other disclosures (continued)
Note 20 Intangible assets (continued)
2021
$m
2020
Restated1
$m
289.4
–
(2.6)
(0.3)
286.5
294.4
(5.3)
(2.6)
286.5
286.5
14.5
–
(0.1)
300.9
308.9
(5.4)
(2.6)
300.9
Management rights
Opening balance at the beginning of the year
Additions2
Impairment of management rights
Amortisation charge
Closing balance at the end of the year
Cost
Accumulated amortisation
Accumulated impairment
Total management rights
Goodwill
Opening balance at the beginning of the year
Additions
Impairment
Closing balance at the end of the year
Cost
Accumulated impairment
Total goodwill
Software1
4.8
Opening balance at the beginning of the year
1.1
Additions
(1.5)
Amortisation charge
4.4
Closing balance at the end of the year
16.5
Cost
(12.1)
Accumulated amortisation
(7.5)
Cost - Fully amortised assets written off
7.5
Accumulated amortisation - Fully amortised assets written off
4.4
Total software
291.8
Total non-current intangible assets
Restatement to 2020 required to comply with recently issued guidance from the International Financial Reporting Interpretations Committee
(IFRIC) regarding the treatment of “Configuration or Customisation Costs in a Cloud Computing Arrangement”. Refer to note 26 for further
details.
4.4
1.2
(2.0)
3.6
17.6
(14.0)
(10.0)
10.0
3.6
305.4
1.0
2.9
(3.0)
0.9
5.9
(5.0)
0.9
0.9
–
–
0.9
5.9
(5.0)
0.9
1
2 During the year, Dexus incurred costs in connection with Dexus Wholesale Property Limited, a Dexus entity, being appointed as
Responsible Entity of Dexus ADPF.
Note 21 Audit, taxation and transaction service fees
During the year, the Auditor and its related practices earned the following remuneration:
Audit and review services
Auditors of the group - PwC
Financial statement audit and review services
Audit and review fees paid to PwC
Assurance services
Auditors of the group - PwC
Outgoings audits
Regulatory audit and compliance assurance services
Sustainability assurance services
Other assurance services
Assurance fees paid to PwC
Total audit, review and assurance fees paid to PwC
Other services
Auditors of the group - PwC
Transaction services fees
Other services fees paid to PwC
Total audit, review, assurance and other services fees paid to PwC
164 Financial report
2021
$’000
1,612
1,612
124
118
140
518
900
2,512
712
712
3,224
2020
$’000
1,535
1,535
127
261
104
35
527
2,062
97
97
2,159
Note 22 Cash flow information
a) Reconciliation of cash flows from operating activities
Reconciliation of net profit after income tax to net cash inflows from operating activities:
Net profit/(loss) for the year
Capitalised interest
Depreciation and amortisation
Amortisation of incentives and straight line income
Impairment of intangibles
Impairment of investments accounted for using the equity method
Loss on other assets at fair value
Net fair value (gain)/loss of investment properties
Share of net (profit)/loss of investments accounted for using the equity method
Net fair value (gain)/loss of derivatives
Net fair value (gain)/loss of interest rate swaps
Amortisation of deferred borrowing costs
Net (gain)/loss on sale of investment properties
Net fair value (gain)/loss of interest bearing liabilities
Net foreign exchange (gain)/loss
Distributions from investments accounted for using the equity method
Change in operating assets and liabilities
(Increase)/decrease in receivables
(Increase)/decrease in prepaid expenses
(Increase)/decrease in inventories
(Increase)/decrease in other current assets
(Increase)/decrease in other non-current assets
Increase/(decrease) in payables
Increase/(decrease) in current tax receivables
Increase/(decrease) in current liabilities
Increase/(decrease) in other non-current liabilities
Increase/(decrease) in deferred tax liabilities
Net cash inflow/(outflow) from operating activities
2021
$m
1,138.4
(1.8)
9.1
85.0
–
–
–
(273.7)
(565.6)
120.1
(17.7)
3.8
(0.3)
(115.2)
0.1
478.1
11.2
(4.7)
157.6
72.3
(61.4)
(6.0)
(18.6)
25.1
(36.9)
0.4
999.3
2020
Restated1
$m
972.7
(9.5)
9.9
69.9
5.6
12.2
2.7
(386.5)
(494.7)
(3.0)
5.7
3.7
0.4
168.3
(0.1)
312.2
15.7
0.5
121.9
(59.3)
(8.7)
(20.7)
(24.1)
(10.7)
18.7
11.3
714.1
1
Restatement to 2020 required to comply with recently issued guidance from the International Financial Reporting Interpretations Committee
(IFRIC) regarding the treatment of “Configuration or Customisation Costs in a Cloud Computing Arrangement”. Refer to note 26 for further details.
b) Net debt reconciliation
Reconciliation of net debt movements:
Opening balance
Changes from financing cash flows
Proceeds from borrowings
Repayment of borrowings
Non cash changes
Movement in deferred borrowing costs and other
The effect of changes in foreign exchange rates
Fair value hedge adjustment
Closing balance
2021
Interest bearing
liabilities
$m
2020
Interest bearing
liabilities
$m
4,838.0
4,066.6
8,405.0
(7,983.3)
(13.0)
(144.1)
(177.9)
4,924.7
5,244.8
(4,686.1)
0.8
43.6
168.3
4,838.0
Dexus 2021 Annual Report 165
OverviewApproachGovernanceFinancial reportInvestor informationPerformanceDirectors’ report
Other disclosures (continued)
Note 23 Security-based payments
The DXFM Board has approved a grant of performance rights to DXS stapled securities to eligible participants. Awards, via the
Deferred Short Term Incentive Plans (DSTI), Long Term Incentive Plans (LTI) and Senior Management Retention Awards will be
in the form of performance rights awarded to eligible participants which convert to DXS stapled securities for nil consideration
subject to satisfying specific service and performance conditions.
For each Plan, the eligible participants will be granted performance rights, based on performance against agreed key
performance indicators, as a percentage of their remuneration mix. Participants must remain in employment for the vesting
period in order for the performance rights to vest. Non-market vesting conditions, including Adjusted Funds from Operations
(AFFO), Return on Contributed Equity (ROCE), successful delivery of key strategic initiatives identified by the Board and
employment status at vesting, are included in assumptions about the number of performance rights that are expected to vest.
When performance rights vest, the Group will arrange for the allocation and delivery of the appropriate number of securities to
the participant.
The fair value of performance rights granted is recognised as an employee benefit expense with a corresponding increase in
the security-based payments reserve in equity. The total amount to be expensed is determined by reference to the fair value of
the performance rights granted.
Key assumptions: fair value of performance rights granted
Judgement is required in determining the fair value of performance rights granted. In accordance with AASB 2 Share-based
Payment, fair value is determined independently using Binomial and Monte Carlo pricing models with reference to:
– the expected life of the rights
– the security price at grant date
– the expected price volatility of the underlying security
– the expected distribution yield
– the risk free interest rate for the term of the rights and expected total security-holder returns (where applicable)
The total expense is recognised over the vesting period, which is the period over which all of the specified vesting conditions
are to be satisfied. At the end of each period, the Group revises its estimates of the number of performance rights that are
expected to vest based on the non-market vesting conditions. The impact of the revised estimates, if any, is recognised in profit
or loss with a corresponding adjustment to equity.
a. Deferred Short Term Incentive Plan
25% of any award under the Short Term Incentive Plan (STI) for certain participants will be deferred and awarded in the form of
performance rights to DXS securities.
50% of the performance rights awards will vest one year after grant and 50% of the awards will vest two years after grant,
subject to participants satisfying employment service conditions. In accordance with AASB 2 Share-based Payment, the year of
employment in which participants become eligible for the DSTI, the year preceding the grant, is included in the vesting period
over which the fair value of the performance rights is amortised. Consequently, 50% of the fair value of the performance rights is
amortised over two years and 50% of the award is amortised over three years.
The number of performance rights granted in respect of the year ended 30 June 2021 was 423,514 (2020: 239,769) and the fair
value of these performance rights is $10.65 (2020: $13.10) per performance right. The total security-based payments expense
recognised during the year ended 30 June 2021 was $1,794,299 (2020: $2,523,561).
b. Long Term Incentive Plan
50% of the awards will vest three years after grant and 50% of the awards will vest four years after grant, subject to participants
satisfying employment service conditions and performance hurdles. In accordance with AASB 2 Share-based Payment, the year
of employment in which participants become eligible for the LTI, the year preceding the grant, is included in the vesting period
over which the fair value of the performance rights is amortised. Consequently, 50% of the fair value of the performance rights is
amortised over four years and 50% of the award is amortised over five years.
The number of performance rights granted in respect of the year ended 30 June 2021 was 580,350 (2020: 443,657) and the fair
value of these performance rights is $6.53 (2020: $11.39) per performance right. The total security-based payments expense
recognised during the year ended 30 June 2021 was $5,651,985 (2020: $2,229,150).
166 Financial report
Note 23 Security-based payments (continued)
c. Senior Management Retention Awards
CEO Incentive Award
A once-off CEO incentive award was granted to the CEO on 1 June 2020. The award will vest three years after the grant date,
subject to the participant satisfying employment service conditions, governance and behavioural standards and performance
hurdles. Consequently, the fair value of the performance rights is amortised over three years from the grant date.
The number of performance rights granted in respect of the year ended 30 June 2021 was 356,335 (2020: nil). The grant date fair
value of these performance rights is $8.93 (2020: $nil) per performance right. The total security-based payments expense related
to this award recognised during the year ended 30 June 2021 was $89,989 (2020: $nil).
Retention Equity Award
The retention equity award is a once-off award to certain Key Management Personnel which was granted in December 2020.
50% of the once-off retention equity rights will vest three years after the grant date and 50% of the rights will vest four years
after the grant date, subject to participants satisfying employment service conditions and governance and behavioural
standards. Consequently, 50% of the fair value of the equity rights is amortised over three years and 50% of the rights is
amortised over four years from the grant date.
The number of equity rights granted in respect of the year ended 30 June 2021 was 306,960 (2020: nil). The fair value of these
equity rights is $8.20 (2020: $nil) per equity right. The total security-based payments expense related to this award recognised
during the year ended 30 June 2021 was $444,931 (2020: $nil).
Note 24 Related parties
Responsible Entity and Investment Manager
DXH is the parent entity of DXFM, the Responsible Entity of DDF, DIT, DOT and DXO and the Trustee of Dexus Office Trust
Australia (DOTA) and the investment manager of DOTA and Dexus Industrial Trust Australia (DITA).
DXH is also the parent entity of DWPL, the Responsible Entities of DWPF and Dexus ADPF, DWFL, the Responsible Entity of DHPF
and DWML, the Trustee of Dexus Australian Commercial Trust (DACT).
Management Fees
Under the terms of the Constitutions of the entities within the Group, the Responsible Entity and Investment Manager are
entitled to receive fees in relation to the management of the Group. DXFM’s parent entity, DXH, is entitled to be reimbursed for
administration expenses incurred on behalf of the Group. Dexus Property Services Pty Limited (DXPS), a wholly owned subsidiary
of DXH, is entitled to property management fees from the Group.
The Group received Responsible Entity and other management fees from the unlisted property funds managed by
DXS during the financial year.
Related party transactions
Transactions between the consolidated entity and related parties were made on commercial terms and conditions. All
agreements with third party funds and joint ventures are conducted on normal commercial terms and conditions.
Transactions with related parties
Responsible entity (investment management fees)
Property management fee income
Development services revenue (DS), Development management (DM), Project
Delivery Group (PDG), capital expenditure and leasing fee income
Rent paid
Responsible entity fees receivable at the end of each reporting year (included
above)
Property management fees receivable at the end of each reporting year
(included above)
DS, DM, PDG, capital expenditure and leasing fees receivable at the end of each
reporting year (included above)
Loans to related parties1
2021
$’000
71,357.3
41,228.2
108,848.9
5,052.2
19,782.5
2020
$’000
64,415.5
38,929.6
145,896.9
5,298.0
17,042.0
3,854.8
3,287.0
12,123.4
44,629.5
30,650.4
–
1 Represents the Dexus share of a subordinated convertible loan which has been provided to the SAHMRI 2 Trust, a wholly owned subsidiary of
SAHMRI 2 Holding Trust. This loan accrues interest at 5.5% per annum and matures on the date the development reaches practical completion.
Under the subordination terms, repayment of this loan may only occur once the external construction loan has been repaid. The loan may be
settled in cash or converted into equity at the election of the holders.
Dexus 2021 Annual Report 167
OverviewApproachGovernanceFinancial reportInvestor informationPerformanceDirectors’ report
Other disclosures (continued)
Note 24 Related parties (continued)
Key management personnel compensation
Compensation
Short-term employee benefits
Post employment benefits
Security-based payments
Total key management personnel compensation
2021
$’000
10,604.8
275.7
4,582.6
15,463.1
2020
$’000
8,278.8
384.5
3,675.5
12,338.8
Information regarding individual Directors’ and Senior Executives’ remuneration is provided in the Remuneration Report on
pages 78 to 105 of the Annual Report.
There have been no other transactions with key management personnel during the year.
Note 25 Parent entity disclosures
The financial information for the parent entity of Dexus Diversified Trust has been prepared on the same basis as the
Consolidated Financial Statements except as set out below.
Distributions received from associates are recognised in the parent entity’s Statement of Comprehensive Income, rather than
being deducted from the carrying amount of these investments.
Interests held by the parent entity in controlled entities are measured at fair value through profit and loss to reduce a
measurement or recognition inconsistency.
a. Summary financial information
The individual Financial Statements for the parent entity show the following aggregate amounts:
Total current assets
Total assets
Total current liabilities
Total liabilities
Equity
Contributed equity
Reserves
Retained profits
Total equity
Net profit/(loss) for the year
Total comprehensive income/(loss) for the year
b. Guarantees entered into by the parent entity
Refer to note 16 for details of guarantees entered into by the parent entity.
c. Contingent liabilities
Refer to note 16 for details of the parent entity’s contingent liabilities.
d. Capital commitments
2021
$m
60.6
5,926.6
163.8
2,122.1
2,341.4
(0.8)
1,463.9
3,804.5
525.0
509.0
2020
$m
112.3
6,141.6
469.0
2,693.2
2,381.4
15.2
1,051.8
3,448.4
284.6
286.6
The following amounts represent capital expenditure of the parent entity on investment properties contracted at the end of the
reporting period but not recognised as liabilities payable:
Investment properties
Total capital commitments
168 Financial report
2021
$m
14.7
14.7
2020
$m
7.4
7.4
Note 25 Parent entity disclosures (continued)
e. Going concern
The parent entity is a going concern. The Group has unutilised facilities of $1,025.9 million (2020: $1,573.4 million) (refer to note
15) and sufficient working capital and cash flows in order to fund all requirements arising from the net current asset deficiency
of the parent entity as at 30 June 2021 of $51.7 million (2020: $356.7 million). The deficiency is largely driven by the provision for
distribution due to be paid on 30 August 2021.
Note 26 Change in accounting policy
Configuration or Customisation Costs in a Cloud Computing Arrangement (AASB 138 Intangible Assets)
On 27 April 2021, the International Financial Reporting Interpretations Committee (IFRIC) issued an addendum regarding the
treatment of “Configuration or Customisation Costs in a Cloud Computing Arrangement”. The addendum clarified how a
customer should account for the cost of configuring or customising a supplier’s software when it is a “Software as a Service”
(SaaS) product.
The IFRIC concluded that configuration or customisation costs incurred by a customer in relation to application software
which the customer has access to but does not own, should be expensed through profit or loss as these costs do not create
a resource controlled by the customer which is separate from the software unless they are paid to the suppliers of the SaaS
arrangement to significantly customise the cloud-based software for the group, in which case the costs are recorded as a
prepayment for services and amortised over the expected renewable term of the arrangement.
As a consequence, the Group has retrospectively changed its accounting policy in respect of SaaS arrangements previously
recorded as intangible assets, on the basis that these do not meet the recognition criteria in AASB 138 Intangible Assets.
The following table summarises the impact of this change in accounting policy on the Consolidated Financial Statements.
Increase/(decrease) of previously recorded balances
Consolidated Statement of Financial Position
Intangible assets
Deferred tax liabilities
Net profit/Retained earnings
Increase/(decrease) of previously recorded balances
Consolidated Statement of Comprehensive Income
Management operations, corporate and administration expenses
Profit before tax
Tax expense
Net profit
Earnings per share - basic
Earnings per share - diluted
Increase/(decrease) of previously recorded balances
Consolidated Statement of Cash Flows
Cash flows from operating activities
Payments in the course of operations (inclusive of GST)
Cash flows from investing activities
Payments for intangibles
2021
Cumulative
$m
2020
Cumulative
$m
1 July 2019
$m
(26.9)
(8.1)
(18.8)
(52.8)
(15.8)
(36.9)
2021
$m
11.2
(11.2)
(3.4)
(7.8)
(0.72)
(0.70)
2021
$m
11.2
(11.2)
(41.6)
(12.5)
(29.1)
2020
$m
14.7
(14.7)
(4.4)
(10.3)
(0.94)
(0.92)
2020
$m
18.0
(18.0)
Dexus 2021 Annual Report 169
OverviewApproachGovernanceFinancial reportInvestor informationPerformanceDirectors’ report
Other disclosures (continued)
Note 27 Subsequent events
On 6 July 2021, Dexus implemented the Simplification from a quadruple stapled trust structure (comprised of DDF, DIT, DOT and
DXO) to a dual stapled trust structure. This was achieved by “top-hatting” three of the existing trusts (DDF, DIT and DOT) with a
newly established trust, Dexus Property Trust (DPT). Effective from this date, the Simplified Group now comprises a unit in each of
DXO and DPT, with DXFM appointed as the Responsible Entity of DPT.
On 8 July 2021, Mercatus Dexus Australia Partnership (MDAP), a joint venture with Mercatus Co-operative Limited (Mercatus)
settled on the acquisition of a 33.33% interest in 1 Bligh Street, Sydney for $375.0 million excluding acquisition costs.
On 20 July 2021, Dexus entered into binding terms which provide a framework to fund, develop and invest in Atlassian’s new
headquarters at 8-10 Lee Street, Sydney. As part of the arrangements Dexus will act as development manager and take
responsibility for delivering the project, fund 100% of the project costs during construction, and retain a long-term equity interest
in the asset with Atlassian. The total project costs are expected to be $1.4 billion.
On 22 July 2021, Dexus acquired a 49% interest in a holding unit trust that owns Capital Square Tower 1 at 98 Mounts Bay Road
in Perth, for a total consideration of $339.0 million. A portion of Dexus’s contribution will be utilised by the holding trust as a new
receivable loan to the co-owner, to be repaid in four years. Dexus’s share in the loan receivable is approximately $77.0 million.
On 27 July 2021, APN Property Group (APN) security holders approved the Scheme of Arrangement for Dexus to acquire all
of the stapled securities in APN for an all cash-consideration of 90 cents per security. On 13 August 2021, the Scheme was
implemented. Effective from this date, APN is now a wholly owned subsidiary of Dexus.
On 3 August 2021, settlement occurred for the disposal of 60 Miller Street, North Sydney for $273.0 million excluding
transaction costs.
On 9 August 2021, settlement occurred for the disposal of 436-484 Victoria Road, Gladesville for $55.0 million excluding
transaction costs.
On 13 August 2021, Dexus entered into an agreement to sell 22 Business Park Drive, Ravenhall for $13.5 million excluding
transaction costs.
On 15 August 2021, Dexus entered into a put and call option arrangement to acquire 1-21 McPhee Drive, Berrinba and 116-130
Gilmore Road, Berrinba for $117.0 million excluding acquisition costs.
On 15 August 2021, Dexus exchanged contracts to acquire 2 Maker Place, Truganina for $69.0 million excluding acquisition costs.
On 16 August 2021, Dexus entered into a put and call option arrangement to acquire 113-153 Aldington Road, Kemps Creek for
$125.5 million excluding acquisition costs.
There remains significant uncertainty regarding how the COVID-19 pandemic will evolve, including the duration of the pandemic,
the severity of the downturn and the speed of economic recovery. In accordance with AASB 110 Events after the Reporting
Date, the Group considered whether events after the reporting period confirmed conditions that existed before the reporting
date, e.g. bankruptcy of customers. Consideration was given to the macro-economic impact of any lockdowns or border
closures since 30 June 2021, and the Group concluded that the amounts recognised in the Consolidated Financial Statements
and the disclosures therein are appropriate. The economic environment is subject to rapid change and updated facts and
circumstances continue to be closely monitored by the Group.
Since the end of the year other than the matters disclosed above, the Directors are not aware of any matter or circumstance
not otherwise dealt with in their Directors’ Report or the Consolidated Financial Statements that has significantly or may
significantly affect the operation of the Group, the results of those operations, or state of the Group’s affairs in future financial
periods.
170 Financial report
Directors’
Declaration
The Directors of Dexus Funds Management Limited as Responsible Entity of Dexus Diversified Trust declare that the
Consolidated Financial Statements and Notes set out on pages 114 to 170:
i. comply with Australian Accounting Standards, the Corporations Act 2001 and other mandatory professional reporting
requirements; and
ii. give a true and fair view of the Group’s financial position as at 30 June 2021 and of its performance, as represented by the
results of its operations and its cash flows, for the year ended on that date.
In the Directors’ opinion:
a. the Consolidated Financial Statements and Notes are in accordance with the Corporations Act 2001;
b. there are reasonable grounds to believe that the Group and its consolidated entities will be able to pay their debts as and
when they become due and payable; and
c. the Group has operated in accordance with the provisions of the Constitution dated 15 August 1984 (as amended) during the
year ended 30 June 2021.
The Consolidated Financial Statements also comply with International Financial Reporting Standards as issued by the
International Accounting Standards Board.
The Directors have been given the declarations by the Chief Executive Officer and the Chief Financial Officer required by
section 295A of the Corporations Act 2001.
This declaration is made in accordance with a resolution of the Directors.
W Richard Sheppard
Chair
16 August 2021
Dexus 2021 Annual Report
171
OverviewApproachGovernanceFinancial reportInvestor informationPerformanceDirectors’ report
Independent Auditor’s Report
Independent auditor’s report
To the stapled security holders of Dexus Diversified Trust
Report on the audit of the Group financial report
Our opinion
In our opinion:
The accompanying Group financial report of Dexus Diversified Trust (the Trust) and its controlled
entities, Dexus Industrial Trust (DIT) and its controlled entities, Dexus Office Trust (DOT) and its
controlled entities, and Dexus Operations Trust (DXO) and its controlled entities (together the Group)
is in accordance with the Corporations Act 2001, including:
(a) giving a true and fair view of the Group's financial position as at 30 June 2021 and of its
financial performance for the year then ended
(b) complying with Australian Accounting Standards and the Corporations Regulations 2001.
What we have audited
For the purposes of consolidation accounting, the Trust is the deemed parent entity and acquirer of
DIT, DOT and DXO.
The Group financial report comprises:
•
•
•
•
•
•
the Consolidated Statement of Financial Position as at 30 June 2021
the Consolidated Statement of Comprehensive Income for the year then ended
the Consolidated Statement of Changes in Equity for the year then ended
the Consolidated Statement of Cash Flows for the year then ended
the Notes to the Consolidated Financial Statements, which include significant accounting
policies and other explanatory information
the Directors’ Declaration.
The Group financial report excludes the Directors’ Report included on pages 107 to 112 of the annual
report.
Basis for opinion
We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under
those standards are further described in the Auditor’s responsibilities for the audit of the Group
financial report section of our report.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for
our opinion.
PricewaterhouseCoopers, ABN 52 780 433 757
One International Towers Sydney, Watermans Quay, Barangaroo, GPO BOX 2650, SYDNEY NSW 2001
T: +61 2 8266 0000, F: +61 2 8266 9999, www.pwc.com.au
Level 11, 1PSQ, 169 Macquarie Street, Parramatta NSW 2150, PO Box 1155 Parramatta NSW 2124
T: +61 2 9659 2476, F: +61 2 8266 9999, www.pwc.com.au
Liability limited by a scheme approved under Professional Standards Legislation.
172 Financial report
Independence
We are independent of the Group in accordance with the auditor independence requirements of the
Corporations Act 2001 and the ethical requirements of the Accounting Professional & Ethical
Standards Board’s APES 110 Code of Ethics for Professional Accountants (including Independence
Standards) (the Code) that are relevant to our audit of the Group financial report in Australia. We
have also fulfilled our other ethical responsibilities in accordance with the Code.
Our audit approach
An audit is designed to provide reasonable assurance about whether the Group financial report is free
from material misstatement. Misstatements may arise due to fraud or error. They are considered
material if individually or in aggregate, they could reasonably be expected to influence the economic
decisions of users taken on the basis of the Group financial report.
We tailored the scope of our audit to ensure that we performed enough work to be able to give an
opinion on the Group financial report as a whole, taking into account the geographic and management
structure of the Group, its accounting processes and controls and the industry in which it operates.
Materiality
Audit scope
Key audit matters
•
•
For the purpose of our audit we
used overall materiality of
$35.9 million, which represents
approximately 5% of the
Group's adjusted profit before
tax (Funds from Operations or
FFO).
• We applied this threshold,
together with qualitative
considerations, to determine
the scope of our audit and the
nature, timing and extent of our
audit procedures and to
evaluate the effect of
misstatements on the Group
financial report as a whole.
• We chose FFO because, in our
view, it is the key performance
measure of the Group. An
explanation of what is included
in FFO is outlined in Note 1,
Operating segments.
The Group is a stapled group
with operations in Australia. In
a stapled group the securities of
two or more entities are
'stapled' together and cannot be
traded separately. In the case of
the Group, the stapled group
includes the Trust, DIT, DOT
and DXO and their respective
controlled entities.
• Our audit focused on where the
Group made subjective
judgements; for example,
significant accounting
estimates involving
assumptions and inherently
uncertain future events.
• We audited each of the
individual stapled trusts that
form the Group as well as the
consolidation of the Group.
• Amongst other relevant
topics, we communicated
the following key audit
matters to the Board Audit
Committee:
−− Valuation of investment
properties, including
those investment
properties in investments
accounted for using the
equity method
−− Carrying amount of
inventory
−− Expected Credit Losses
(ECL) associated with
rental receivables related
to property revenue
•
These are further described
in the Key audit matters
section of our report.
Dexus 2021 Annual Report 173
OverviewApproachGovernanceFinancial reportInvestor informationPerformanceDirectors’ report
Independent Auditor’s Report (continued)
• We utilised a 5% threshold
based on our professional
judgement, noting it is within
the range of commonly
acceptable thresholds.
Key audit matters
Key audit matters are those matters that, in our professional judgement, were of most significance in
our audit of the Group financial report for the current period. The key audit matters were addressed in
the context of our audit of the Group financial report as a whole, and in forming our opinion thereon,
and we do not provide a separate opinion on these matters. Further, any commentary on the outcomes
of a particular audit procedure is made in that context.
Key audit matter
How our audit addressed the key audit
matter
Valuation of investment properties, including those investment properties in investments
accounted for using the equity method
(Refer to Notes 8 and 9)
The Group’s investment property portfolio
comprises:
To assess the valuation of investment properties we
performed the following procedures amongst others:
•
•
Directly held properties included in the
Consolidated Statement of Financial Position
as Investment Properties valued at $8,476.8
million as at 30 June 2021 (2020: $8,215.9
million).
The Group’s share of investment properties
held through associates and joint ventures
included in the Consolidated Statement of
Financial Position as Investments accounted
for using the equity method valued at $7,474.6
million as at 30 June 2021 (2020: $7,433.4
million).
Investment properties are carried at fair value at
reporting date using the Group’s policy as described
in Note 8. The valuation of investment properties is
dependent on assumptions and inputs including the
capitalisation rate, discount rate, terminal yield, and
net market rental.
In light of the continued impact and uncertainty
surrounding the Coronavirus (COVID-19)
pandemic, significant judgement was exercised by
the Group in determining the significant
assumptions used to determine fair value.
The Group engaged external valuers to assist in the
determination of the fair value of investment
properties. For certain investment properties, the
valuers have included a significant valuation
uncertainty clause in their reports. This clause
highlights that less certainty, and consequently a
higher degree of caution, should be attached to the
valuation as a result of the COVID-19 pandemic.
• We compared the valuation methodology
adopted by the Group with commonly
accepted valuation approaches used for
investment properties in the industry, and
with the Group’s stated valuation policy.
• We obtained a selection of independent
property market reports to develop an
understanding of prevailing market
conditions to assist us with assessing the
expected impact on the Group’s investment
properties.
• We assessed the design and tested the
operating effectiveness of certain controls
supporting the Group’s investment property
valuation process, including controls relating
to the review and approval of valuations
adopted.
• We agreed the fair values of all properties to
the external or internal valuation models.
•
For a sample of key data inputs to the
valuations, we agreed details to supporting
documentation. For example, we compared
the rental income used in the investment
property valuations to relevant lease
agreements.
• We performed a risk-based assessment over
the investment property portfolio to
determine those properties at greater risk of
being carried at amounts other than fair
value. Our risk-based selection criteria
included qualitative and quantitative
174 Financial report
This represents a higher level of estimation
uncertainty in relation to the valuation of
investment properties.
At each reporting period the Group determines the
fair value of its investment property portfolio having
regard to the Group’s valuation policy which
requires all properties to be externally valued by an
independent valuation expert at least once every
three years. It has been the Group’s practice to have
such valuations performed every six months.
This was considered a key audit matter given:
•
•
•
•
The inherently subjective nature of
investment property valuations arising
from the use of assumptions in the
valuation methodology.
The extent of judgement involved in
determining the fair value of investment
properties in light of the continued impact
and uncertainty surrounding the COVID-19
pandemic.
The financial significance of the balance.
The importance of the valuers’ clause
referring to valuation uncertainty to users’
understanding of the Group financial
report, where relevant.
measures and were informed by our
knowledge of each property, asset class and
our understanding of the current market
conditions.
For those properties which met our selection
criteria, we performed procedures to assess
the appropriateness of significant
assumptions used in the valuations. These
procedures included, amongst others:
- Meeting with the Group’s Head of
Valuations and discussing the specifics of
the selected individual properties
including, amongst other things, any new
leases signed during the year, lease
expiries, incentives, capital expenditure
and vacancy rates.
Comparing significant assumptions such
as the capitalisation rate, discount rate
and net market rental used in the
valuations to market analysis published
by industry experts and recent market
transactions.
Considering the impact of significant
valuation uncertainty clauses, specific
other uncertainties and adjustments
related to COVID-19 included in
independent valuers’ reports, where
applicable.
-
-
-
Testing the mathematical accuracy of the
valuation calculations.
• As the Group engaged external experts to assist in
the determination of the fair value of certain
investment properties, we considered the
independence, experience and competency of the
Group’s external experts as well as the results of
their procedures.
• We met with a selection of independent valuation
firms to develop an understanding of their
processes, judgements and observations, as well
as any material valuation uncertainty clauses
included in their valuation reports and how they
dealt with the uncertainties arising from COVID-
19 in their valuations.
• We assessed the reasonableness of the Group’s
disclosures in the Group financial report against
the requirements of Australian Accounting
Standards. In particular, we considered the
adequacy of the disclosures made in Note 8 to the
consolidated financial statements which explain
that there is significant estimation uncertainty in
relation to the valuation of investment properties.
Dexus 2021 Annual Report 175
OverviewApproachGovernanceFinancial reportInvestor informationPerformanceDirectors’ report
Independent Auditor’s Report (continued)
Key audit matter
Carrying amount of Inventory
(Refer to Note 10)
The Group develops a portfolio of office and
industrial sites for future sale, which are classified
as inventory.
At 30 June 2021 the carrying amount of the Group’s
inventory was $178.2 million (2020: $335.8
million). The Group’s inventories are held at the
lower of the cost or net realisable value for each
inventory asset.
The cost of inventory is calculated using actual
acquisition costs, subsequent construction and
development related costs, and interest capitalised
for eligible projects.
Net realisable value is determined by using the
valuation techniques referred to in the key audit
matter: Valuation of investment properties,
including those investment properties in
investments accounted for using the equity method
to determine the estimated future selling price, or
using an agreed sales price where an agreement has
been signed, and adjusting for the estimated cost to
complete and transaction costs.
We considered the carrying amount of inventory to
be a key audit matter given the:
•
•
•
Judgements required by the Group in
determining the future fair value of properties
being developed for sale.
Financial significance of the inventory balance
in the Consolidated Statement of Financial
Position.
The subsequent impact to FFO from the
disposal of inventory.
How our audit addressed the key audit
matter
To assess the carrying amount of inventory we
performed the following procedures amongst others:
• We tested that a sample of acquisition costs and
costs capitalised to inventory were in
accordance with the Group’s
policy/methodology and the requirements of
Australian Accounting Standards.
• Where the Group had exchanged a contract to
sell the underlying inventory asset, we checked
that the agreed sales price, net of selling costs,
exceeded the carrying amount.
•
For all other inventory assets we performed net
realisable value testing as follows:
̵ Discussed with the Group, amongst other
things, the life cycle of the project, key
project risks, changes to project strategy,
current and future estimated sales prices,
construction progress and costs and any new
or previous impairments, including the
impact of COVID-19 and how it has been
reflected in the net realisable value.
̵ We compared estimated sales prices to
market sales data for comparable properties
in similar locations. This included
comparing the market capitalisation rates
and net market income used by the Group to
calculate net realisable value to market
capitalisation rates and rental rates
published by external independent valuation
experts.
̵ We compared the carrying amount of
inventory against the Group’s estimate of net
realisable value as at 30 June 2021 to
identify assets with potential impairments.
• We assessed the reasonableness of the Group’s
disclosures in the Group financial report against
the requirements of Australian Accounting
Standards.
176 Financial report
Key audit matter
How our audit addressed the key audit
matter
Expected Credit Losses (ECL) associated with rental receivables related to property revenue
(Refer to Notes 2 and 19)
The Group’s main revenue stream is property
revenue which is derived from holding investment
properties and earning rental yields over time.
Property revenue is recognised on a straight-line
basis over the terms of the underlying leases, with
receivables being recorded for property rental
revenue recognised but not yet received.
In response to the COVID-19 pandemic, the
Australian Government introduced The Code of
Conduct for Commercial Tenancies (the Code) for
tenants that suffered financial stress or hardship as
defined by their eligibility for the Commonwealth
Governments JobKeeper program. All State
Governments subsequently legislated a version of
the Code with all rent relief measures being
concluded during the year ended 30 June 2021.
The Group continues to work with impacted tenants
to finalise rent relief measures in accordance with
the Code.
•
In order to assess the appropriateness of ECL
provisions associated with property rental receivables,
we performed the following procedures amongst
others:
• We performed inquiries of management to
develop an understanding of the key
processes established by the Group in
response to the continued administration of
rent relief to tenants during the COVID-19
period.
• We obtained the Group’s accounting papers
outlining the impact of COVID-19 on the ECL
provisions associated with property rental
receivables and assessed whether the Group’s
treatment was in accordance with Australian
Accounting Standards.
For a sample of tenants where the outcome of
rental relief negotiations was known, we
agreed the amount of relief provided to
relevant source documentation such as
signed tenant agreements.
Australian Accounting Standards require that the
Group recognise provisions for ECL for all financial
assets held at amortised cost, including property
rental receivables, and to reduce the gross carrying
amount of a financial asset when the Group does not
have a reasonable expectation of recovering a
property rental receivable, or portion thereof.
Where the Group has recorded property rental
receivables but is expecting to provide rent relief to
the tenants to whom the receivables relate, a
provision for ECL is recognised against the
receivable.
We considered this a key audit matter due to the
continued uncertainty in the economic environment
and the uncertain outcome of continued rent relief
negotiations with tenants which have resulted in
significant estimation uncertainty when
determining the provision for ECL at 30 June 2021.
• Where the outcome of rental relief
negotiations for tenants have not yet
concluded we obtained the model developed
by the Group that estimated the amount that
the Group did not have a reasonable
expectation of recovering from tenants and
thus was provided as an ECL against the
property rental receivable balance. The model
was also used to estimate the ECL provision
of the remaining property rental receivables
balance.
For the population of tenants for which the
rent relief has not been agreed, we:
− Assessed whether the Group’s significant
assumptions used to calculate the
expected rent relief were appropriate in
light of current and forecast economic
conditions.
− Recalculated the rent abatement for a
sample of tenants.
− Checked the mathematical accuracy of
the calculations within the model.
− Agreed the total relief expected to be
provided per the model to the Group
financial report.
In testing the Group’s ECL provision model
we performed the following audit procedures,
amongst others, on a sample basis:
Dexus 2021 Annual Report 177
OverviewApproachGovernanceFinancial reportInvestor informationPerformanceDirectors’ report
Independent Auditor’s Report (continued)
− Agreed a sample of data such as tenant
property rental amounts used as inputs
to the ECL model to relevant source
documentation.
− Checked the mathematical accuracy of
the calculations within the model.
− Assessed the methodology applied
against generally accepted market
practice.
− Considered the Group’s judgements
including the appropriateness of
forward-looking information
incorporated into the ECL model by
assessing the forecasts, assumptions and
probability weighting applied in multiple
economic scenarios.
• We assessed the reasonableness of the Group’s
disclosures in the Group financial report against
the requirements of Australian Accounting
Standards.
Other information
The Directors of Dexus Funds Management Limited as Responsible Entity of the Trust, DIT, DOT and
DXO (the Directors) are responsible for the other information. The other information comprises the
information included in the annual report for the year ended 30 June 2021 but does not include the
Group financial report and our auditor’s report thereon.
Our opinion on the Group financial report does not cover the other information and accordingly we do
not express any form of assurance conclusion thereon.
In connection with our audit of the Group financial report, our responsibility is to read the other
information and, in doing so, consider whether the other information is materially inconsistent with
the Group financial report or our knowledge obtained in the audit, or otherwise appears to be
materially misstated.
If, based on the work we have performed on the other information that we obtained prior to the date of
this auditor’s report, we conclude that there is a material misstatement of this other information, we
are required to report that fact. We have nothing to report in this regard.
Responsibilities of the Directors for the Group financial report
The Directors are responsible for the preparation of the Group financial report that gives a true and
fair view in accordance with Australian Accounting Standards and the Corporations Act 2001 and for
such internal control as the Directors determine is necessary to enable the preparation of the Group
financial report that gives a true and fair view and is free from material misstatement, whether due to
fraud or error.
In preparing the Group financial report, the Directors are responsible for assessing the ability of the
Group to continue as a going concern, disclosing, as applicable, matters related to going concern and
178 Financial report
using the going concern basis of accounting unless the Directors either intend to liquidate the Group
or to cease operations, or have no realistic alternative but to do so.
Auditor’s responsibilities for the audit of the Group financial report
Our objectives are to obtain reasonable assurance about whether the Group financial report as a whole
is free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that
includes our opinion. Reasonable assurance is a high level of assurance but is not a guarantee that an
audit conducted in accordance with the Australian Auditing Standards will always detect a material
misstatement when it exists. Misstatements can arise from fraud or error and are considered material
if, individually or in the aggregate, they could reasonably be expected to influence the economic
decisions of users taken on the basis of the Group financial report.
A further description of our responsibilities for the audit of the Group financial report is located at the
Auditing and Assurance Standards Board website at:
https://www.auasb.gov.au/admin/file/content102/c3/ar1_2020.pdf. This description forms part of
our auditor's report.
Report on the Remuneration report
Our opinion on the Remuneration report
We have audited the Remuneration report included on pages 78 to 105 of the annual report for the
year ended 30 June 2021.
In our opinion, the Remuneration report for the year ended 30 June 2021 complies with section 300A
of the Corporations Act 2001.
Responsibilities
The Directors are responsible for the preparation and presentation of the Remuneration report in
accordance with section 300A of the Corporations Act 2001. Our responsibility is to express an
opinion on the Remuneration report, based on our audit conducted in accordance with Australian
Auditing Standards.
PricewaterhouseCoopers
Matthew Lunn
Partner
Sydney
16 August 2021
Dexus 2021 Annual Report 179
OverviewApproachGovernanceFinancial reportInvestor informationPerformanceDirectors’ report
Integrated Reporting Content Elements Index
An Integrated Report includes eight Content Elements, posed in the form of questions to be answered. The purpose of this Index is to allow
readers to understand how and where we have addressed these integrated reporting content elements throughout this Annual Report.
PwC has been engaged to provide limited assurance as to whether the Content Elements of the Integrated Reporting Framework have
been addressed in this report as described in this Index. This assurance is focused on whether these Content Elements have been included
in this report but does not extend to assessing the accuracy or validity of any statement made throughout this report.
Reference
Content Elements
A. Organisational overview and external environment
What does the
organisation do and what
are the circumstances
under which it operates?
About this report
About Dexus
Chair and CEO review
How we create value
Strategy
Key business activities
Financial
Environment, Climate resilience
Governance
Megatrends
Key risks
Materiality assessment
Customer and communities
Content Elements
F. Performance
An integrated report should
answer the question:
To what extent has the
organisation achieved its
strategic objectives for
the period and what are
its outcomes in terms of
effects on the capitals?
Page
1
4-5
6-11
12-13
16-17
20-21
28-41
62-69
72-77
14-15
22-27
26-27
54-61
Chair and CEO review
Key risks
People and capabilities
Environment, Climate resilience
Future commitments
Governance
Board focus areas
Board skills and experience
Board composition, Group
Management Committee
Remuneration report
Group scorecard performance
6-11
22-27
50-53
62-69
70-71
72-77
22, 28, 42,
62, 79
73
77
78-105
92
G. Outlook
An integrated report
should answer the
question: What challenges
and uncertainties is the
organisation likely to
encounter in pursuing its
strategy, and what are the
potential implications for its
business model and future
performance?
Reference
Page
Chair and CEO review
How we create value
Materiality assessment
Board focus areas
Performance:
– Financial
– Properties
– People and capabilities
– Customers and communities
– Environment
Collaborating with our suppliers
Advancing resource efficiency,
increasing renewable energy
Climate resilience
Future commitments
Governance
Chair and CEO review
How we create value
Megatrends
Key resources
Key risks
Performance:
– Financial
– Properties
– People and capabilities
– Customers and communities
– Environment
Group scorecard performance
Historical performance
outcomes
External environment
B. Governance
How does the
organisation’s governance
structure support its ability
to create value in the short,
medium and long term?
C. Business model
An integrated report should
answer the question:
What is the organisation’s
business model including
key; inputs, business
activities, outputs and
outcomes?
D. Risks and opportunities
An integrated report should
answer the question: What
are the specific risks and
opportunities that affect
the organisation’s ability to
create value over the short,
medium and long term,
and how is the organisation
dealing with them?
E. Strategy and resource allocation
An integrated report
should answer the
question: Where does the
organisation want to go
and how does it intend to
get there?
FY21 highlights
Chair and CEO review
How we create value
Megatrends
Strategy
Key resources
Key business activities
Key risks
Materiality assessment
Climate resilience
Performance:
– Financial
– Properties
– People and capabilities
– Customer and communities
– Environment
Future commitments
How we create value
Key risks
Materiality assessment
Climate resilience
Chair and CEO review
– Achievement against FY21
priorities, Strategy, Summary
and outlook
How we create value
Megatrends
Strategy
Key resources
Key risks
Materiality assessment
Performance:
– Financial
– Properties
– People and capabilities
– Customers and communities
– Environment
Future commitments
2-3
6-11
12-13
14-15
16-17
18-19
20-21
22-27
26-27
66-69
28-41
42-49
50-53
54-61
62-69
70-71
12-13
22-27
26-27
66-69
6-11
7, 8, 11
12-13
14-15
16-17
18-19
22-27
26-27
28-41
42-49
50-53
54-61
62-69
70-71
180
Investor information – Integrated Reporting Content Elements Index
About this report
Megatrends
Key resources
Key risks
H. Basis of preparation and presentation
An integrated report should
answer the question: How
does the organisation
determine what matters to
include in the integrated
report and how are such
matters quantified or
evaluated?
Summary of materiality
determination process
Reporting boundary
Summary of significant
frameworks and methods
Materiality assessment
Board focus areas
About this report
About this report and
report scope
FY21 highlights
GRI standards
Key risks
Performance:
– Financial
– Properties
– People and capabilities
– Customers and communities
– Environment
6-11
12-13
26-27
22, 28, 42,
62, 79
28-41
42-49
50-53
54-61
62-69
58
64
66-69
70-71
72-77
6-11
12-13
14-15
18-19
22-27
28-41
42-49
50-53
54-61
62-69
92
96
1
14-15
18-19
22-27
26-27
62
1
1
2-3
1
22-27
28-41
42-49
50-53
54-61
62-69
Independent limited assurance report
What we found
Based on the work described below, nothing has come to our attention that causes us to believe that the Integrated Reporting Content Elements
Index, presented in the Dexus Annual Report for the year ended 30 June 2021, has not addressed the Content Elements as described within Section
4 of The International Integrated Reporting Framework.
To the Board of Directors of Dexus Funds Management Limited,
What we did
Dexus Funds Management Limited (Dexus) engaged
PricewaterhouseCoopers (PwC) to perform a limited assurance
engagement on the preparation of the Integrated Reporting Content
Elements Index (the Subject Matter), presented in the Dexus
Annual Report for the year ended 30 June 2021 (the Annual
Report), to address the Content Elements as described within Section
4 of The International Integrated Reporting Framework (the
Assurance Criteria).
This assurance is focused on whether these Content Elements have
been addressed in this Annual Report but does not extend to assessing
the accuracy or validity of any statement made throughout this Annual
Report.
The Assurance Criteria has been developed by the International
Integrated Reporting Council. This is a publicly available document
and can be found here:
https://integratedreporting.org/resource/international-ir-framework/
Scope Exclusions
Our assurance engagement focused on whether the Content Elements
have been addressed in the Annual Report per the Assurance Criteria
above. However, it does not extend to assessing the accuracy or
validity of any statement made throughout this Annual Report.
Independence and Quality Control
We have complied with relevant ethical requirements related to
assurance engagements, which are founded on fundamental principles
of integrity, objectivity, professional competence and due care,
confidentiality and professional behaviour.
PwC applies Auditing Standard ASQC 1 Quality Control for Firms that
Perform Audits and Reviews of Financial Reports and Other Financial
Information, Other Assurance Engagements and Related Services
Engagements and accordingly maintains a comprehensive system of
quality control including documented policies and procedures
regarding compliance with ethical requirements, professional
standards and applicable legal and regulatory requirements.
Responsibilities
PricewaterhouseCoopers
Our responsibility is to express a conclusion based on the work we
performed.
Dexus Management
Dexus Management is responsible for the preparation and presentation of
the Integrated Reporting Content Elements Index included in the Annual
Report to address the Content Elements as described within Section 4 of
The International Integrated Reporting Framework. Dexus Management
are also responsible for ensuring that the Integrated Reporting Content
Elements Index provides an accurate and fair representation of the Annual
Report’s alignment to The International Integrated Reporting Framework’s
Content Elements and that all statements made throughout the Annual
Report are accurate and valid.
What our work involved
We conducted our work in accordance with the Australian Standard on
Assurance Engagements 3000 Assurance Engagements Other than Audits
or Reviews of Historical Financial Information. This standard requires
that we comply with independence and ethical requirements and plan the
engagement so that it will be performed effectively.
Main procedures performed
Our procedures consisted primarily of:
•
•
•
•
•
•
Undertaking enquiries of Management regarding the processes and
controls for capturing, collating and reporting the Subject Matter;
Reviewing and assessing the appropriateness of the Assurance
Criteria;
Reviewing and assessing the completeness of the Subject Matter;
Assessing the preparation and presentation of the Subject Matter
against the Assurance Criteria;
Reviewing all references noted in the Subject Matter and confirming
the appropriateness of the references against the Assurance Criteria;
and
Reconciling the sections and page numbers included within the
Integrated Reporting Content Elements Index to the referenced
sections of the Annual Report.
We believe that the information we have obtained is sufficient and
appropriate to provide a basis for our conclusion.
Caroline Mara
Partner
16 August 2021
Liability limited by a scheme approved under Professional Standards Legislation
PricewaterhouseCoopers
Sydney
Inherent limitations
Inherent limitations exist in all assurance
engagements due to the selective testing of the
information being examined. Therefore fraud, error
or non-compliance may occur and not be detected.
Additionally, non-financial data may be subject to
more inherent limitations than financial data, given
both its nature and the methods used for determining,
calculating and sampling or estimating such data.
Restriction on use
This report has been prepared in accordance with our
engagement terms to assist Dexus in its integrated
reporting.
Our report is intended solely for the Directors of
Dexus. We do not accept or assume responsibility for
the consequences of any reliance on this report for
any other purpose or to any other person or
organisation.
Any reliance on this report by any third party is
entirely at its own risk. We consent to the inclusion of
this report within the Annual Report to assist Dexus’
members in assessing whether the directors have
discharged their responsibilities by commissioning an
independent assurance report in connection with the
Subject Matter.
We accept no responsibility for the integrity and
security of the Dexus website, which is the
responsibility of Dexus management. This report is
not intended to relate to, or to be read in conjunction
with, any information that may appear on the Dexus
website other than the Subject Matter and Assurance
Criteria. Readers of this report on the Dexus website
(who may read it for their information only) should
bear in mind the inherent risk of the website
changing after the date of our report.
Limited assurance
This engagement is aimed at obtaining limited
assurance for our conclusions. As a limited assurance
engagement is restricted primarily to enquiries and
analytical procedures and the work is substantially
less detailed than that undertaken for a reasonable
assurance engagement, the level of assurance is lower
than would be obtained in a reasonable assurance
engagement.
Professional standards require us to use negative
wording in the conclusion of a limited assurance
report.
Dexus 2021 Annual Report
181
OverviewApproachGovernanceFinancial reportInvestor informationPerformanceDirectors’ report
Investor contact method (by number)
Telephone calls 77
Property tours 3
Group meetings 8
One-on-one
meetings 90
Director
engagement
meetings 22
Conferences
& panels 8
Security holders by geography
We participated in a number of virtual
conferences which were attended by
domestic and international institutional
investors. These conferences enabled
access to potential new investors and
assisted with strengthening existing
relationships with long term investors.
We regularly commission independent
investor perception studies to gather
feedback from the institutional
investment community. These studies
involve independent surveys and
interviews with institutional investors
and sell-side brokers to measure
perceptions on a number of attributes
and report on the findings. The results
help the Board and Executive team
understand the investment community’s
views and concerns and assists in the
enhancement of the group’s investor
relations and communications activities.
Our Treasury team held presentations
with institutional debt investors in August
and September 2020 and February
2021. In addition, the team participated
in the Property Treasurers’ Round Table
events facilitated by the Property
Council of Australia and regularly met
with banks, rating agencies and other
credit investors.
Australia 39%
UK 9%
North America 22%
Europe (ex UK)
14%
Asia 7%
Rest of world 9%
Investor
information
Dexus recognises the
importance of effective
communication with
existing and potential
institutional investors,
sell-side analysts and
retail investors.
Our Executives and the Investor
Relations team maintain a strong
rapport with the investment community
through proactive and regular
engagement initiatives. We are
committed to delivering high levels of
transparency and disclosure by:
– Releasing accurate and relevant
information to investors to ensure
they can make informed investment
decisions
– Providing regular access to senior
management through one-on-one
meetings, presentations, property
tours, conferences, dedicated investor
roadshows, conference calls and
webcasts
We adopt strong governance practices
including a policy that ensures a
minimum of two Dexus representatives
participate in any institutional investor
or sell-side broker meetings and that
a record of the meeting is maintained
on an internal customer relationship
management database.
During FY21, senior management
together with the Investor Relations
team held 208 engagements with
investor/broker groups to discuss the
group’s business strategy, operational,
financial and ESG performance. These
engagements were undertaken across
a wide range of investor activities
including telephone calls, conferences,
site visits, roadshows, one-on-one
meetings, investor briefings and
roundtables.
182
Investor information
Annual General Meeting
Distribution payments
Dexus’s Annual General Meeting will
be held on Tuesday 19 October 2021
commencing at 2.00pm.
Despite the recent lockdowns
associated with the COVID-19
pandemic, we are still hopeful that we
will be able to host our Annual General
Meeting (AGM) as an in person meeting
in October this year.
As the health and safety of our Security
holders, our employees, all of their
families, and the broader community,
is paramount, this decision will be
reviewed as we get closer to the date of
the AGM.
We encourage all Security holders
and proxyholders to participate in
the Meeting, either by attending the
meeting in person, or via a virtual online
platform or webcast at www.dexus.com.
Details relating to the meeting and how
it will be conducted will be provided
in the 2021 Notice of Annual General
Meeting when its released in September
2021.
Dexus’s payout policy is to distribute in
line with free cash flow.
Distributions are paid for the six-month
periods to 31 December and 30 June
each year. Distribution statements are
available in print and electronic formats
and distributions are paid only by direct
credit into nominated bank accounts for
all Australian and New Zealand Security
holders and by cheque for other
international Security holders. To update
the method of receiving distributions,
please visit the investor login facility at
www.dexus.com/update
Unclaimed distribution income
Unpresented cheques or unclaimed
distribution income can be claimed by
contacting the Dexus Infoline on +61
1800 819 675. For monies outstanding
greater than seven years, please contact
the NSW Office of State Revenue on
+61 1300 366 016, 8.30am-5.00pm
Monday to Friday or use their search
facility at osr.nsw.gov.au/ucm or email
unclaimedmoney@osr.nsw.gov.au
AMMA Statement (previously
the Annual Taxation Statement)
An Attribution Managed Investment Trust
Member Annual Statement (AMMA) is
sent to investors at the end of August
each year. The statement summarises
distributions provided during the financial
year and includes information required
to complete your tax return. AMMA
statements are also available online at
www.dexus.com/update
Go electronic for convenience
and speed
Did you know that you can receive
all or part of your security holder
communications electronically? You can
change your communication preferences
at any time by logging in at
www.dexus.com/update or by
contacting Link Market Services on
+61 1800 819 675.
2022 Reporting calendar1
2021 Annual General Meeting
19 October 2021
2022 Half year results
2022 Annual results
9 February 2022
17 August 2022
2022 Annual General Meeting
26 October 2022
Distribution calendar1
Period end
Ex-distribution date
Record date
Payment date
31 December 2021
30 December 2021
31 December 2021
30 June 2022
29 June 2022
30 June 2022
28 February 2022
30 August 2022
1. Please note that these dates are indicative and are subject to change without
prior notice. Any changes in our key dates will be published on our website at
www.dexus.com/investor-centre.
Dexus 2021 Annual Report 183
OverviewApproachGovernanceFinancial reportInvestor informationPerformanceDirectors’ report
Investor information continued
2021 Annual Reporting Suite
Investor communications
Making contact
Dexus’s 2021 Annual Reporting
Suite for the year ended
30 June 2021, is available at
www.dexus.com/investor-centre.
The reporting suite includes:
2021 Annual Report
An integrated summary of the value
created across Dexus’s key resources
and the Consolidated Financial report.
2021 Financial Statements
The Financial Statements for Dexus
Industrial Trust, Dexus Office Trust and
Dexus Operations Trust, which should
be read in conjunction with the 2021
Annual Report.
2021 Sustainability Report
The Sustainability Report incorporates
the Sustainability Performance
Pack, Sustainability Data Appendix,
Sustainability Approach and
Procedures, GRI Content Index and
Assurance Statement, supporting the
results outlined in the 2021 Annual
Report.
We are committed to ensuring
all investors have equal access
to information. In line with our
commitment to long term integration
of sustainable business practices,
investor communications are provided
via various electronic methods
including:
Dexus’s website – www.dexus.com
Other investor tools available include:
Online enquiry –
www.dexus.com/get-in-touch
Scroll down to the investor section to
get in touch with us.
Investor login –
www.dexus.com/update
Enables investors to update their
details and download statements.
Subscribe to alerts –
www.dexus.com/subscribe
enables investors to receive Dexus
communications immediately after
release.
Key dates – notifies investors on key
events and reporting dates.
2021 Annual Results Presentation
A summary of Dexus’s operational and
financial performance.
LinkedIn – we engage with
our followers on LinkedIn at
www.dexus.com/LinkedIn and
click follow us.
2021 Corporate Governance
Statement
The Corporate Governance Statement
outlines Dexus’s corporate governance
framework.
2021 Modern Slavery Statement
The Modern Slavery Statement
outlines Dexus’s modern slavery
management framework.
The 2021 Annual Reporting Suite
is available in hard copy by email
request to ir@dexus.com or by calling
+61 1800 819 675.
184
Investor information
If you have any questions regarding your
Security holding or wish to update your
personal or distribution payment details,
please contact the Registry by calling
the Dexus Infoline on +61 1800 819 675.
This service is available from 8.30am
to 5.30pm (Sydney time) on all business
days. All correspondence should be
addressed to:
Dexus
C/- Link Market Services Limited
Locked Bag A14
Sydney South NSW 1235
Phone: +61 1800 819 675
Email: dexus@linkmarketservices.com.au
We are committed to delivering a high
level of service to all investors. If you
feel we could improve our service or
you would like to make a suggestion
or a complaint, your feedback is
appreciated. Our contact details are:
Investor Relations
Dexus
PO Box R1822
Royal Exchange NSW 1225
Email: ir@dexus.com
Complaints handling process
Dexus has a complaints handling policy
to ensure that all Security holders
are dealt with fairly, promptly and
consistently.
Any Security holder wishing to lodge a
complaint, can do so verbally by calling
the Dexus Infoline on +612 1800 819 675
or in writing to:
Dispute Resolutions Officer
Dexus Funds Management Limited
PO Box R1822
Royal Exchange NSW 1225
or
email to ir@dexus.com
Dexus Funds Management Limited is
a member of the Australian Financial
Complaints Authority (AFCA), an
independent dispute resolution scheme
which may be contacted at:
Australian Financial Complaints
Authority Limited
GPO Box 3
Melbourne VIC 3001
Phone: +61 1800 931 678
(free call within Australia)
Fax: +61 3 9613 6399
Email: info@afca.org.au
Website: www.afca.org.au
Additional information
Top 20 Security holders at 30 July 2021
Rank
Name
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
J P Morgan Nominees Australia Pty Limited
Citicorp Nominees Pty Limited
National Nominees Limited
BNP Paribas Nominees Pty Ltd
BNP Paribas Nominees Pty Ltd
Citicorp Nominees Pty Limited
BNP Paribas Nominees Pty Ltd Six Sis Ltd
HSBC Custody Nominees (Australia) Limited
Artmax Investments Limited
Buttonwood Nominees Pty Ltd
Australian Executor Trustees Limited
Netwealth Investments Limited
Charter Hall Wholesale Mngt Ltd
BNP Paribas Nominees (NZ) Ltd
AMP Life Limited
HSBC Custody Nominees (Australia) Limited - A/C 2
BNP Paribas Nominees Pty Ltd ACF Clearstream
Neweconomy com au Nominees Pty Limited <900 Account>
Medich Capital Pty Ltd
Sub total
Balance of register
Total of issued capital
Substantial holders at 30 July 2021
Number
of stapled
securities
475,909,935
236,099,221
128,971,084
35,299,114
30,251,412
21,809,092
11,474,910
9,667,244
6,117,342
3,273,924
3,212,975
2,250,038
2,166,839
2,019,501
1,994,743
1,763,947
1,760,560
1,745,163
1,652,928
1,600,000
961,039,972
114,525,274
1,075,565,246
% of issued
capital
42.57
21.95
11.99
3.28
2.81
2.03
1.07
0.90
0.57
0.30
0.30
0.21
0.20
0.19
0.19
0.16
0.16
0.16
0.15
0.15
89.35
10.65
100.00
The names of substantial holders, at 30 July 2021 that have notified the Responsible Entity in accordance with section 671B of
the Corporations Act 2001, are:
Date
Name
28 Jul 2021
Vanguard Group
12 May 2020
Blackrock Group
8 Apr 2019
State Street Corporation
Number of
stapled securities
109,255,969
107,340,102
70,998,322
% voting
10.16
9.83
6.98
Note: Dexus issued capital changed from 1,091,202,163 securities to 1,075,565,246 securities between October 2020 and March
2021 as a result of Dexus purchasing DXS Securities as part of its on-market securities buy back facility that was announced to
the ASX on 23 October 2019 and 10 October 2020.
Dexus Simplification
On 6 July 2021, Dexus completed the Simplification process which involved changing Dexus from a quadruple stapled trust
structure (comprising DXO, DDF, DIT and DOT) to a group comprising two stapled trusts, DXO and DPT, a new established trust.
Therefore Simplified Dexus Group comprises a unit in each of DXO and DPT. There was no change to Dexus’s underlying business
and operations or Security holder’s interests in Dexus (other than for Ineligible Foreign Security holders) after the completion of
the Simplification. Information relating to the Simplification is available at www.dexus.com/Simplification
Class of securities
Dexus has one class of stapled security trading on the ASX with Security holders holding stapled securities at 30 July 2021.
Dexus 2021 Annual Report 185
OverviewApproachGovernanceFinancial reportInvestor informationPerformanceDirectors’ report
Investor information continued
Spread of Securities at 30 July 2021
Range
100,001 and over
50,001 to 100,000
10,001 to 50,000
5,001 to 10,000
1,001 to 5,000
1 to 1,000
Total
Securities
987,220,050
4,330,867
22,961,892
20,661,610
34,815,442
5,575,385
%
91.79
0.40
2.13
1.92
3.24
0.52
No. of
Holders
83
66
1,324
2,988
14,319
12,018
1,075,565,246
100.00
30,798
At 30 July 2021, the number of security holders holding less than a marketable parcel of 49 Securities ($500) was 526 and they
held a total of 3,950 securities.
Voting rights
At meetings of the security holders of Dexus Property Trust and Dexus Operations Trust, being the Trusts that comprise Dexus,
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.
There are no stapled securities that are restricted or subject to voluntary escrow.
On-market buy-back
Dexus announced that it was continuing its on-market securities buy-back program on 13 October 2020 for up to 5% of DXS
securities. Throughout the year, Dexus acquired 15,636,917 securities for $136 million at an average price of $8.69 under the buy-
back program.
As at the date of this report the buy-back program is open.
Cost base apportionment
For capital gains tax purposes, the cost base apportionment details for Dexus securities for the 12 months ended 30 June 2021
are:
Date
1 Jul 2020 to 31 Dec 2020
1 Jan 2021 to 30 Jun 2021
Dexus
Diversified
Trust
28.48%
29.69%
Dexus
Industrial
Trust
7.71%
7.94%
Dexus
Office
Trust
61.01%
59.09%
Dexus
Operations
Trust
2.80%
3.28%
Historical cost base details are available at www.dexus.com
186
Investor information
Key ASX announcements
13 August 2021
12 August 2021
4 August 2021
4 August 2021
27 July 2021
22 July 2021
20 July 2021
8 July 2021
8 July 2021
7 July 2021
7 July 2021
7 July 2021
7 July 2021
7 July 2021
7 July 2021
7 July 2021
6 July 2021
1 July 2021
1 July 2021
1 July 2021
1 July 2021
30 June 2021
30 June 2021
23 June 2021
23 June 2021
23 June 2021
22 June 2021
15 June 2021
9 June 2021
31 May 2021
31 May 2021
25 May 2021
11 May 2021
4 May 2021
4 May 2021
27 April 2021
22 April 2021
22 April 2021
6 April 2021
23 March 2021
22 March 2021
16 March 2021
15 March 2021
10 March 2021
10 March 2021
2 March 2021
2 March 2021
1 March 2021
26 February 2021
23 February 2021
22 February 2021
19 February 2021
APN Property Group schemes implemented
Appendix 3Y - Nicola Roxon
APN Property Group schemes become
effective
Settlement of 60 Miller Street, North Sydney
Results of meetings relating to APN Property
Group
Acquisition of 49% interest in Premium-grade
Perth office tower
Agreement to fund, develop and invest in
flagship Atlassian development
Settlement of MDAP acquisition of interest in
1 Bligh Street Sydney
DDF, DOT and DIT removed from Official List
Appendix 3Y - Patrick Allaway
Appendix 3Y - Penny Bingham-Hall
Appendix 3Y - Tonianne Dwyer
Appendix 3Y - Darren Steinberg
Appendix 3Y - Richard Sheppard
Appendix 3Y - Mark Ford
Appendix 3Y - Nicola Roxon
Confirmation of completion of Simplification
Additional information concerning Dexus
on-market buy-back program
Appendix 3C - Notification of buy-back
Pre-Quotation Disclosure
Dexus Property Trust - Admission to Official
List
Retirement of Non-Executive Director
Appendix 3Z - Final Director’s Interest Notice
Notice of Distribution - Appendix 3A
Estimated distribution for the six months to
30 June 2021
Values increase across Dexus property
portfolio
Simplification implementation and timetable
Appendix 3Y - Darren Steinberg
Healthcare real estate - establishment of
relationship with Australian Unity
Upgrade to FY21 guidance
Settlement of 10 Eagle Street Brisbane
Senior management retention awards
Acquisition of APN to further strengthen
Funds business
March 2021 quarter update
Macquarie Australia Conference
Update in relation to the merger of DWPF
with AMP Capital Diversified Fund
2021 Extraordinary General Meeting
2021 Extraordinary General Meeting Results
Sale of 10 Eagle Street Brisbane
Explanatory Memorandum and Notice of
Extraordinary General Meeting
Dexus establishes new JV to acquire interest
in 1 Bligh Street Sydney
Dexus and DWPF enter into implementation
agreement with ADPF
Appendix 3Y - Nicola Roxon
Appendix 3Y - Nicola Roxon
Appendix 3Y - Tonianne Dwyer
ASX CEO Connect
Appendix 3X Initial Director’s Interest Notice
On-market buy-back and cancellation of
securities
31 December 2020 distribution payment
Appendix 3E Daily buy back notice
Appendix 3E Daily buy back notice
Appendix 3E Daily buy back notice
18 February 2021
18 February 2021
17 February 2021
16 February 2021
15 February 2021
12 February 2021
11 February 2021
10 February 2021
9 February 2021
9 February 2021
9 February 2021
9 February 2021
9 February 2021
2 February 2021
18 January 2021
18 January 2021
15 January 2021
14 January 2021
13 January 2021
12 January 2021
18 December 2020
18 December 2020
16 December 2020
11 December 2020
11 December 2020
18 November 2020
16 November 2020
4 November 2020
2 November 2020
2 November 2020
30 October 2020
30 October 2020
29 October 2020
23 October 2020
23 October 2020
21 October 2020
20 October 2020
Appendix 3E Daily buy back notice
Appendix 3Y - Nicola Roxon
Appendix 3E Daily buy back notice
Appendix 3E Daily buy back notice
Appendix 3E Daily buy back notice
Appendix 3E Daily buy back notice
Appendix 3E Daily buy back notice
Appendix 3E Daily buy back notice
HY21 Property synopsis
HY21 Distribution details
HY21 Appendix 4D and Financial Statements
HY21 Results release
HY21 Results presentation
On market buy back and cancellation of
securities
Appendix 3E Daily buy back notice
Appointment of non-executive director
Appendix 3E Daily buy back notice
Appendix 3E Daily buy back notice
Appendix 3E Daily buy back notice
Appendix 3E Daily buy back notice
Appendix 3Y - Darren Steinberg
Settlement of 45 Clarence Street Sydney
Recent sales support resilience in asset
values
Notice of Distribution Appendix 3A
Distribution details for the six months to 31
December 2020
Sale of Grosvenor Place, Sydney
UBS Australasia Virtual Conference
On-market buy-back and cancellation of
securities
Sale of 60 Miller Street, North Sydney
Appendix 3E Daily buy back notice
Appendix 3E Daily buy back notice
Appendix 3Y - Nicola Roxon
Appendix 3E Daily buy back notice
2020 AGM Chair and CEO address
2020 Annual General Meeting results
September 2020 quarter portfolio update
- Encouraging activity despite economic
conditions
Dexus and HWPF to acquire state-of-the-
art healthcare development
Appendix 3D Changes relating to buy-back
13 October 2020
18 September 2020 2020 Notice of Annual General Meeting
9 September 2020
9 September 2020
2 September 2020
2 September 2020
26 August 2020
26 August 2020
26 August 2020
25 August 2020
19 August 2020
19 August 2020
19 August 2020
19 August 2020
19 August 2020
Appendix 3Y - Nicola Roxon
Appendix 3Y - Tonianne Dwyer
Appendix 3Z Final Director’s Interest Notice
Retirement of Non-Executive Director
Appendix 3Y - Richard Sheppard
Appendix 3Y - Peter St George
Appendix 3Y - Nicola Roxon
Appendix 3Y - Darren Steinberg
2020 Annual Report
2020 Financial Statements
2020 Annual Results Presentation
2020 Final Distribution Details
2020 Appendix 4G and Corporate
Governance Statement
2020 Appendix 4E Daily buy back notice
2020 Annual Results Release
2020 Sustainability Report
2020 Property Synopsis
19 August 2020
19 August 2020
19 August 2020
19 August 2020
Dexus 2021 Annual Report 187
OverviewApproachGovernanceFinancial reportInvestor informationPerformanceDirectors’ report
Investor information continued
Our memberships and affiliations
Dexus holds memberships and affiliations with key industry bodies that are relevant to its investments and operations.
Dexus’s industry memberships ensure that its views are represented on advocacy, on policy and legislation. The benefits
of collaborating with industry peers include strategic partnerships, research, professional development and networking
opportunities.
Dexus regularly reviews these memberships for relevance to its business and alignment with its corporate values.
Current Dexus corporate memberships and commitments include:
member
member
member
member
member
member
member
member
member
member
member
member
member
member
member
signatory
signatory
signatory
signatory
signatory
signatory
constituent
constituent
constituent
member
member
188
Investor information
Directory
Dexus Property Trust
ARSN 648 526 470
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
AFSL 238163
Directors of the Responsible Entity
Investor Enquiries
Registry Infoline: +61 1800 819 675
Investor Relations: +61 2 9017 1330
Email: dexus@linkmarketservices.com.au
Security Registry
Link Market Services Limited
Level 12, 680 George Street
Sydney NSW 2000
Locked Bag A14
Sydney South NSW 1235
Website: linkmarketservices.com.au
Open Monday to Friday between
8.30am and 5.30pm (Sydney time). For
enquiries regarding security holdings,
contact the security registry, or access
security holding details at
www.dexus.com/investor-centre
W Richard Sheppard, Chair
Australian Securities Exchange
ASX Code: DXS
Social media
Dexus engages with its followers via
LinkedIn and Facebook
Patrick Allaway
Penny Bingham-Hall
Tonianne Dwyer
Mark H Ford
Warwick Negus
The Hon. Nicola Roxon
Darren J Steinberg, CEO
Secretaries of the Responsible Entity
Brett Cameron
Scott Mahony
Registered office of the Responsible Entity
Level 25, Australia Square
264 George Street
Sydney NSW 2000
PO Box R1822
Royal Exchange Sydney NSW 1225
Phone: +61 2 9017 1100
Fax: +61 2 9017 1101
Email: ir@dexus.com
Website: www.dexus.com
Auditors
PricewaterhouseCoopers
Chartered Accountants
One International Towers Sydney
Watermans Quay
Barangaroo NSW 2000
Dexus 2021 Annual Report 189
dexus.com
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