Dexus (ASX: DXS) ASX release 15 October 2019 Board investor - PDF document

Dexus (ASX: DXS) ASX release 15 October 2019 Board investor presentation Dexus provides the attached presentation which will be used as a basis of discussion in investor lunch sessions with members of the Dexus Board in Sydney and Melbourne. For further information please contact: Investor Relations Media Relations Rowena Causley David Yates +61 2 9017 1390 +61 2 9017 1424 +61 416 122 383 +61 418 861 047 rowena.causley@dexus.com david.yates@dexus.com About Dexus Dexus is one of Australia’s leading real estate groups, proudly managing a high quality Australian property portfolio valued at $31.8 billion. We believe that the strength and quality of our relationships is central to our success, and are deeply committed to working with our customers to provide spaces that engage and inspire. We invest only in Australia, and directly own $15.6 billion of office and industrial properties. We manage a further $16.2 billion of office, retail, industrial and healthcare properties for third party clients. The group’s circa $9.3 billion development and concept pipeline provides the opportunity to grow both portfolios and enhance future returns. With 1.7 million square metres of office workspace across 53 properties, we are Australia’s preferred office partner. Dexus is a Top 50 entity by market capitalisation listed on the Australian Securities Exchange (trading code: DXS) and is supported by 26,000 investors from 19 countries. With 35 years of expertise in property investment, development and asset management, we have a proven track record in capital and risk management, providing service excellence to tenants and delivering superior risk- adjusted returns for investors. www.dexus.com Download the Dexus IR app Download the Dexus IR app to your preferred mobile device to gain instant access to the latest stock price, ASX Announcements, presentations, reports, webcasts and more. Dexus Funds Management Ltd ABN 24 060 920 783, AFSL 238163, as Responsible Entity for Dexus (ASX: DXS)

Board investor presentation Melbourne and Sydney October 2019 Dex exus us Fund unds M Mana nagem ement ent L Limited ed AB ABN 24 24 06 060 9 0 920 20 783 AF AFSL 238163 as r res espons nsible ent e entity for D Dex exus us

Dexus Research 7 key themes to take us forward… 2 Board investor presentation – Melbourne and Sydney

Theme 1 Uncertainty is the one thing we can be certain about The good… The bad… Outcomes for FY20… Volatility in share markets Softer occupier demand outlook Lower for longer interest rates Downward pressure on cap rates on quality assets 3 3 3 Board investor presentation – Melbourne and Sydney

Theme 2 Occupier demand likely to be influenced by confidence Office net absorption (qtly) 2009 – 2019, ‘000sqm Syd CBD Melb CBD Bris CBD Perth CBD 4CBDs 150 100 50 0 -50 -100 -150 Sep-09 Sep-10 Sep-11 Sep-12 Sep-13 Sep-14 Sep-15 Sep-16 Sep-17 Sep-18 Sep-19 Source: JLL Research, Dexus Research 4 4 Board investor presentation – Melbourne and Sydney

Sydney CBD office net absorption Employment growth still solid, Government decentralising Large occupiers net take-up by industry Employment growth NSW 000sqm Finance & Insurance Property & Business Services Total employment White collar industries Information Technology Government Per annum Education & Health Other 10.0% 120 100 80 5.0% 60 40 3.5% pa 20 0 0.0% -20 -40 Jun-14 Jun-15 Jun-16 Jun-17 Jun-18 Jun-19 -5.0% Sep-14 Sep-15 Sep-16 Sep-17 Sep-18 Sep-19 Source: JLL Research (includes deals >1,000sqm), Dexus Research, ABS, Colliers International Reflects a reorganisation by a major bank. Finance sector has been the largest source of enquiry and fourth largest for transactions in 2019 5 Board investor presentation – Melbourne and Sydney

Melbourne CBD office net absorption Demand being boosted by super-strong population and jobs growth Large occupiers net take-up by industry Population growth Employment growth Per Finance & Insurance Property & Business Services Per 000sqm 5.0% annum annum 5.0% AUS VIC AUS VIC Information Technology Government 4.0% 4.0% Education & Health Other 120 3.0% 3.0% 80 2.0% 2.0% 40 1.0% 1.0% 0.0% 0 0.0% -1.0% -40 -1.0% -2.0% -80 -2.0% Jun-14 Jun-15 Jun-16 Jun-17 Jun-18 Jun-19 Sep-09 Sep-12 Sep-15 Sep-18 Source: JLL Research (includes deals >1,000sqm), DEXUS Research 6 Board investor presentation – Melbourne and Sydney

Theme 3 Low vacancy rates give office markets a high degree of resilience Vacancy and net supply forecasts – selected markets FY19 – FY23, % of stock Net supply (RHS, % of stock) Vacancy 20yr average 15% 15% 10% 10% 7.8% 7.4% 5% 5% 4.1% 3.8% 0% 0% -5% -5% FY19 FY20 FY21 FY22 FY23 FY24 FY19 FY20 FY21 FY22 FY23 FY24 Sydney CBD Melbourne CBD Source: JLL Research (FY19 Actual), Dexus Research Forecasts 7 Board investor presentation – Melbourne and Sydney

Theme 4 Office markets are at different points in their cycles Prime net effective rental growth FY19 % pa, FY19 vs previous three years average growth FY15-18 CAGR 20.6% FY19 11.6% 11.2% 10.0% 9.9% 8.6% 4.6% 3.4% 2.7% 1.3% -1.9% -8.3% Syd CBD Melb CBD Parramatta North Syd Bris CBD Perth CBD Growth Growth tapering firming Source: JLL Research, Dexus Research 8 Board investor presentation – Melbourne and Sydney

Theme 5 People will keep flocking to CBDs and inner city areas NSW employment growth by region Focus o s on at attrac acting g tal alent State Greater City - Millennials & Gen Z Index Inner City - Live/work/play 160 - Vibrant precincts - Public transport 150 - Best technology 140 3.3%pa Pro rovision o of infra rastru tructu ture re 78% of office work 130 - Connecting hubs areas are now - Metro rail open plan rather 2.1%pa - Light rail 120 than - Motorways walled/partitioned 110 Nat ational al empl mployme ment gr growth – past past 1 10 100 year ars: s: - White collar industries 2.6%pa - All other industries 1.9%pa 90 Aug-09 Aug-10 Aug-11 Aug-12 Aug-13 Aug-14 Aug-15 Aug-16 Aug-17 Aug-18 Aug-19 Source: ABS 9 Board investor presentation – Melbourne and Sydney

Theme 6 Lower-for-longer interest rates will underpin investment demand Cash rate, ten year bond yield and discount rate % Cash rate 10 yr bond Office discount rate 15% Impl mplied I d IRR expe pectat ations f s for differ eren ent lev evel els o of ‘ ‘normal malise sed’ ’ 10% bo bond y d yields: ds: Current Bond y yie ield ld Impl mplied I d IRR valuers’ 3.0% 6.6% IRR = 6.6% 2.0% 5.6% 5% 1.0% 4.6% 0% Sep-89 Sep-92 Sep-95 Sep-98 Sep-01 Sep-04 Sep-07 Sep-10 Sep-13 Sep-16 Sep-19 Source: Bloomberg, MSCI, Assumes a 3.6% risk premium for A-Grade Sydney office 10 Board investor presentation – Melbourne and Sydney

Yield spreads Real estate just became more affordable Property yield spread to Government bonds Property yields by sector (average prime) Sept 1999 – Sept 2019, 10 Yr Australian Government Bonds Sept 1999 – Sept 2019, % Syd CBD Office Regional retail 6% 11% Syd CBD Office OWSyd Industrial OWSyd Industrial Regional Retail Mel CBD Office 5% 10% 4% 9% 3% 8% 2% 7% 1% 6% 0% 5.00% 00% 5% 4.88% 88% -1% 4.75% 4. 4.69% 69% -2% 4% Sep-99 Sep-03 Sep-07 Sep-11 Sep-15 Sep-19 Sep-99 Sep-03 Sep-07 Sep-11 Sep-15 Sep-19 Source: JLL Research, Bloomberg and Dexus Research. 11 Board investor presentation – Melbourne and Sydney

Relative value Australian office property doesn’t appear expensive on a global scale Office effective yield* spread to government bonds % 3.0% 2.0% 1.0% 0.0% Source: Savills, JLL, Trading Economics, Knight Frank, Dexus Research. *Effective yields are based on A-grade office space – Australian, EU & Asia Pacific yields and bond rates as at June-19 12 Board investor presentation – Melbourne and Sydney

Theme 7 Australia has the best demographics in the developed world Growth in working age population to 2040 Proportion of working age population in 2040 %pa %pa Japan 54% Japan -0.9% Republic of Korea 56% Republic of Korea -0.9% Germany 57% Germany -0.6% France 57% China -0.6% Netherlands 57% Netherlands -0.4% Singapore 59% Singapore -0.2% United Kingdom 60% France -0.1% New Zealand 60% United Kingdom 0.1% Canada 60% Canada 0.2% United States Brazil 61% 0.3% Australia United States of America 62% 0.3% New Zealand 0.3% China 62% Australia 0.7% Brazil 66% Indonesia 0.8% Mexico 67% Argentina 0.8% Indonesia 68% Mexico 0.9% India 68% India 1.0% Argentina 69% More developed regions -0.3% More developed regions 59% Less developed regions, excl… 1.4% Less developed regions, excl China 65% -2.0% -1.0% 0.0% 1.0% 2.0% 40% 50% 60% 70% 80% Source: United Nations, Department of Economic and Social Affairs, Population Division (2017). World Population Prospects: The 2017 Revision, custom data acquired via website. 13 Board investor presentation – Melbourne and Sydney

Environmental, Social and Governance (ESG) factors 14 Board investor presentation – Melbourne and Sydney