DEXUS Property Group (ASX: DXS) ASX release 15 February 2017 2017 - - PDF document

DEXUS Property Group (ASX: DXS)

ASX release

15 February 2017 2017 Half year results presentation DEXUS Propert y Group provides it s 2017 Half year result s present ation. The property synopsis spreadsheet is also available on our website at www.dexus.com/ financialresult s For furt her informat ion please cont act : Investor relations Media relations Rowena Causley T: +61 2 9017 1390 M: +61 416 122 383 E: rowena.causley@ dexus.com Louise Murray T: +61 2 9017 1446 M:+61 403 260 754 E: louise.murray@ dexus.com

About DEXUS DEXUS Property Group is one of Australia’ s leading real estate groups, investing directly in high quality Australian

• ffice and industrial properties. With $22.7 billion of assets under management, the Group also actively manages
• ffice, industrial and retail properties located in key Australian markets on behalf of third party capital partners.

The Group manages an office portfolio of 1.7 million square metres located predominantly across S ydney, Melbourne, Brisbane and Perth and is the largest owner of office buildings in the S ydney CBD, Australia’ s largest office market. DEXUS is a Top 50 entity by market capitalisation listed on the Australian S ecurities Exchange under the stock market trading code ‘ DXS ’ and is supported by more than 30,000 investors from 20 countries. With more than 30 years of expertise in property investment, development and asset management, the Group has a proven track record in capital and risk management, providing service excellence to tenants and delivering superior risk-adj usted returns for its

• investors. www.dexus.com

Download t he DEXUS IR app t o your preferred mobile device t o gain inst ant access t o t he lat est st ock price, ASX announcement s, present at ions, report s, webcast s and more. DEXUS Funds Management Lt d ABN 24 060 920 783, AFSL 238163, as Responsible Ent it y for DEXUS Propert y Group (ASX: DXS)

DEXUS Property Group – [presentation title] Slide 1 DEXUS Property Group – [presentation title] Slide 1

DEXUS PROPERTY GROUP

2017 HALF YEAR RES ULTS PRES ENTATION – 15 FEBRUAR Y 2017

DEXUS Funds Management Limited ABN 24 060 920 783 AFS L 238163 as responsible entity for DEXUS Property Group DEXUS Property Group – 2017 Half Year Results Presentation and Appendices Slide 2

HY17 results highlights Financial results

— Capit al management

Property portfolio

— Market out look

Development, transactions & trading Funds management S

ummary

Appendices

AGENDA

Alison Harrop, Chief Financial Officer Ross Du Vernet, Chief Investment Officer Kevin George, EGM Office and Industrial Darren Steinberg, Chief Executive Officer Darren Steinberg, Chief Executive Officer

DEXUS Property Group – 2017 Half Year Results Presentation and Appendices Slide 3 1. DEXUS portfolio leasing, including Heads of Agreement.

HY17 RESULTS HIGHLIGHTS 94.9% Industrial portfolio occupancy by income, up 4.5 ppt Development and leasing upside offset t ing impact of asset sales

POSITIVE MOMENTUM DURING HY17 HOW RESULTS WERE ACHIEVED

$467.4m Uplift from revaluat ions & gains on sale of invest ment propert ies 13.9% Strong one-year DEXUS Office portfolio total return 10.6% Growth in Underlying FFO per security 327,938sqm St rong six months of Office and Indust rial leasing1

DEXUS Property Group – [presentation title] Slide 4

FINANCIAL RESULTS

DEXUS Property Group – [presentation title] Slide 4 DEXUS Property Group – 2017 Half Year Results Presentation and Appendices Slide 4

DEXUS Property Group – 2017 Half Year Results Presentation and Appendices Slide 5

FINANCIAL RESULTS – HY17 progress across key earnings drivers

1. Like-for-like income growth on an effective basis. For office this includes the impact of the Woodside rent review and the surrender payment from Lendlease which has been fully booked in HY17. 2. Trading profits net of tax. 3. FFO contribution is calculated before Finance costs, Group corporate costs and tax.

PROPERTY PORTFOLIO TRADING FUNDS MANAGEMENT & PROPERTY SERVICES

circa +2-3%

• ffice l-f-l income growth1

circa +3-4% industrial l-f-l income growth1 Management Operations FFO of circa $45-50m Approximately $45-50m trading profits2

6% FFO3 3% FFO3 UNDERLYING BUSINESS TRADING 91% FFO3

FY17 TARGET HY17 PROGRESS

FFO of $346.3 million +9.6%

• ffice l-f-l income growth will

normalise to 2.5-3% for FY171 +1.0% industrial l-f-l income growth1 will grow to 3-4% for FY17

FFO of $21.0 million

Funds are outperforming respective benchmarks

FFO of $8.3 million2

Settlement of Auburn in Jan-17 secures a further circa $17m post- tax and progressed priority projects

DEXUS Property Group – 2017 Half Year Results Presentation and Appendices Slide 6

Business contributions to HY17 FFO HY17 HY16 Change Underlying FFO1 $m 287.7 260.6 10.4% Trading profit s (net of t ax) $m 8.3 63.3 (86.9)% Funds from Operations (FFO) $m 296.0 323.9 (8.6)% Underlying FFO per security cents 29.7 26.9 10.6% FFO per security cents 30.6 33.4 (8.4)%

FINANCIAL RESULTS – Key financial metrics

1. ‘ Underlying’ FFO contribution excludes Trading profits (net of tax). 2. AFFO is calculated in line with the Property Council of Australia definition and comprises PCA FFO adj usted for: maintenance capex, incentives (including rent free incentives) given to tenants during the period and other items which have not been adj usted in determining FFO. Refer to slide 35 for a detailed breakdown.

Key financial metrics HY17 HY16 Change Adj ust ed Funds from Operat ions (AFFO)2 $m 214.3 230.7 (7.1)% Dist ribut ion per securit y cent s 21.71 23.05 (5.8)% S t at ut ory Net profit $m 716.0 797.5 (10.2)% HY17 FY16 Change NTA per securit y $8.05 $7.53 6.9%

FFO and distribution per security were impacted by the lower trading profits secured versus HY16, with the majority of FY17 trading profits skewed to the second half of the year. Despite asset sales, DEXUS is well positioned to deliver stronger underlying growth in FY17 than previously forecast

DEXUS Property Group – 2017 Half Year Results Presentation and Appendices Slide 7

HY17 $m HY16 $m Change $m Change % Office propert y FFO 292.6 272.3 20.3 7.5% Indust rial propert y FFO 53.7 52.5 1.2 2.3% Total property FFO 346.3 324.8 21.5 6.6% Management operat ions1 21.0 18.9 2.1 11.1% Group corporat e (10.7) (16.0) 5.3 (33.1)% Net Finance cost s (64.5) (66.9) 2.4 (3.6)% Ot her2 (4.4) (0.2) (3.6) Underlying FFO3 287.7 260.6 27.1 10.4% Trading profit s (net of t ax) 8.3 63.3 (55.0) (86.9)% FFO 296.0 323.9 (27.9) (8.6)% Adjusted Funds from Operations (AFFO) 214.3 230.7 (16.4) (7.1)% Dist ribut ion payout (%AFFO) 98.0% 96.7% Distribution 210.1 223.1 (13.0) (5.8)%

FINANCIAL RESULTS – Funds From Operat ions in det ail

1. ‘ Management Operations’ income includes Development management fees. 2. ‘ Other’ FFO includes non-trading related FFO tax expense. 3. ‘ Underlying’ FFO excludes Trading profits net of tax.

FUNDS MANAGEMENT

Management operations up $2.1m, driven by increased third party FUM

TRADING

Trading profits reduced, as all FY16 trading profits were realised in HY16, and only $8.3m in HY17

PROPERTY PORTFOLIO

Total property FFO of $346.3m increased $21.5m, driven by leasing success and surrender income

Office propert y FFO 292.6 272.3 20.3 7.5% Indust rial propert y FFO 53.7 52.5 1.2 2.3% Total property FFO 346.3 324.8 21.5 6.6% Management operat ions1 21.0 18.9 2.1 11.1% Trading profit s (net of tax) 8.3 63.3 (55.0) (86.9)%

GROUP CORPORATE

Group corporate costs reduced by $5.3m MER reduced to 36bps

DEXUS Property Group – 2017 Half Year Results Presentation and Appendices Slide 8

CAPITAL MANAGEMENT – HY17 activities and progress

Issued $125.5 million1 of Medium Term Notes via

reverse enquiry at an average duration of 7.8 years

Cancelled $300 million of debt facilities post the

settlement of $688 million of asset sales

–

57-65 Templar Road, Erskine Park, $50.0 million

–

The Zenit h, Chat swood, $139.5 million

–

108 Nort h Terrace Adelaide, $43.2 million

–

S

• ut hgat e, Melbourne (Tranche 1), $289.0 million

–

39 Mart in Place, S ydney, $166.0 million

Divestments resulted in a substantial increase

in percentage of hedged debt

Terminated expensive interest rates swaps,

reducing hedging back towards target levels and reducing the average cost of debt, with no impact on NTA

HY17 activities Progress on focus areas at HY17

Debt duration remains strong at 5.6 years1. Increased diversification of debt facility mix Achieved 4.3% average cost of debt in HY17. FY17 expect ed cost of debt circa 4.2% Gearing2 of 26.5% at 31 December 2016

1. Includes $75.5 million of Medium Term Notes issued in January 2017. 2. Adj usted for cash and for debt in equity accounted investments. Pro forma gearing adj usted for the acquisition of The Mill, Alexandria and the sale of 79-99 St Hilliers Road, Auburn is 26.8% .

DEXUS Property Group – 2017 Half Year Results Presentation and Appendices Slide 9

CAPITAL MANAGEMENT – Reduction in gearing and cost of debt

1. Adj usted for cash and for debt in equity accounted investments. 2. Pro forma gearing adj usted for the acquisition of The Mill, Alexandria and the sale of 79-99 St Hilliers Road, Auburn is 26.8% . 3. Weighted average across the period, inclusive of fees and margins on a drawn basis. 4. Includes $75.5 million of Medium Term Notes issued in January 2017. 5. Average for the period. Hedged debt (excluding caps) was 61% for 6 months to 31 December 2016 and 64% for 12 months to 30 June 2016. DEXUS was 64% hedged (including caps) as at 31 December 2016.

Key metrics 31 Dec 16 30 Jun 16 Change Gearing (look-t hrough)1 26.5%

2

30.7% (4.2) ppt Cost of debt 3 4.3% 4.8% (50) bps Durat ion of debt 5.6 years4 5.5 years 0.1 years Hedged debt (incl caps)5 64% 71% (7) ppt S&P/ Moody’s credit rat ing A-/ A3 A-/ A3 No change DEBT MATURITY PROFILE4 DIVERSIFIED MIX OF FACILITIES

4 Bank Facilities 42% Commercial Paper 3% MTN 22% USPP 25% 144A 8%

• 100

200 300 400 500 600 700 800 30-Jun-17 30-Jun-18 30-Jun-19 30-Jun-20 30-Jun-21 30-Jun-22 30-Jun-23 30-Jun-24 30-Jun-25 30-Jun-26 30-Jun-27 30-Jun-28 30-Jun-29 $m

DCM CPA MTN Bank DEXUS Property Group – [presentation title] Slide 10

PROPERTY PORTFOLIO

DEXUS Property Group – [presentation title] Slide 10 DEXUS Property Group – 2017 Half Year Results Presentation and Appendices Slide 10

DEXUS Property Group – 2017 Half Year Results Presentation and Appendices Slide 11

PROPERTY PORTFOLIO – Future valuat ion uplifts expected

Key drivers of capital contribution to Return on Equity

• f 9.8%

10.4%

Industrial portfolio

• ne-year

total return1

13.9%

Office portfolio

• ne-year

total return1 Office portfolio values up

$381.4m or 4.3%

Cap rate 5.95% (FY16 6.16%)

Industrial portfolio values up

$14.6m or 0.8%

Cap rate 7.28% (FY16 7.38%)

Total portfolio valuation uplift of

$396.0m or 3.7%

HY17 RETURNS HY17 VALUES

1. Returns exclude acquisition costs.

S

trong contribution from key office markets of Sydney and Melbourne (74%

• f the office portfolio)

Developments boosted total returns,

• ffsetting weakness in Perth market

OUTLOOK

Investment demand expected to continue for quality assets Underlying valuation assumptions expected to continue to improve Over the next 12 months, DEXUS expects a further 12.5 bps of cap rate compression for Prime office & industrial properties

HY17 OBSERVATIONS

Current cap rate to bond spread is 2.6% versus 10-year average of 2.1%

DEXUS Property Group – 2017 Half Year Results Presentation and Appendices Slide 12 DEXUS Property Group – 2017 Half Year Results Presentation and Appendices Slide 12

PROPERTY PORTFOLIO – HY17 progress

Maintained office portfolio occupancy of 96.3% , above the target of > 96.0% for FY17 Reduced FY19 office lease expiries from 14.2% to 12.4% Achieved 9.6% like-for-like income growth1 across office and 1.0% for industrial portfolios. Confident of achieving FY17 target of 2.5-3% for office 3-4% for industrial Improved industrial occupancy from 90.4% at 30 June 2016 to 94.9% at 31 December 2016

1. Like-for-like income growth is on an effective basis. DEXUS Property Group – 2017 Half Year Results Presentation and Appendices Slide 12

DEXUS Property Group – 2017 Half Year Results Presentation and Appendices Slide 13

RETENTION remained st eady WALE remained st eady OCCUPANCY maint ained LIKE-FOR-LIKE INCOME elevat ed2

and t o normalise for FY17

9.6% Face 9.6% Effective 63%

(FY16: 62% )

INCENTIVES reducing in key market s 96.3%

(FY16: 96.3% )

14.3% average incentives (FY16: 17.7%

)

40% of transactions were effective deals 4.7 years

(FY16: 4.7 years)

PROPERTY PORTFOLIO – OFFICE: Port folio performing consist ent ly well

O F F I C E

98,839sqm Total office space leased1 across 157 transactions

1. Including Heads of Agreement. 2. Includes the impact of the Woodside rent review and the surrender payment from Lendlease which has been fully booked in HY17. DEXUS Property Group – 2017 Half Year Results Presentation and Appendices Slide 14

3.7% 4.0% 8.0% 12.4% 11.9% 13.1% 0% 2% 4% 6% 8% 10% 12% 14% Vacant FY17 FY18 FY19 FY20 FY21

8.5%

1

14.2%

1

PROPERTY PORTFOLIO – OFFICE: Leasing activity improves expiry profile

Continued implementation of strategies to reduce vacancy and maximise cash flow 64%

• f office vacancies and expiries up t o and including FY20 are locat ed in Sydney

Note: Key leasing risks boxes represent tenant; property; and percentage of DEXUS office portfolio income. 1. As at 30 June 2016. 9.3%

1

End FY17 t arget

FY20 Key expiries Wilson, 34-60 Little Collins (0.6% ) CBA, 4 Dawn Fraser (0.6% ) Norton Rose, Grosvenor Pl (0.6% ) FY18 Key expiries CBA, 2 Dawn Fraser, (0.8% ) Carnival, Vic Cross (0.6% ) S tate of QLD, 123 Albert (0.5% ) FY17 Key expiries Intern’ l S OS , 45 Clarence (0.5% ) Origin Energy, 1 Eagle S t (0.3% ) The Neilsen Co, 11 Talavera (0.3% ) FY19 Key expiries Woodside, 240 S t Georges (4.2% ) CBA, 150 George (0.9% ) CBA, 101 George, (0.7% )

DEXUS Property Group – 2017 Half Year Results Presentation and Appendices Slide 15

LIKE-FOR-LIKE INCOME

growth turned positive

RETENTION significant ly improved WALE improving INCENTIVES Melbourne leasing impact OCCUPANCY improving 14.6% average incentives (FY16: 9.5%

)

Secured 26 effective deals 2.4% Face 1.0% Effective 65%

(FY16: 32% )

94.9%

(FY16: 90.4% )

4.6 years

(FY16: 4.1 years)

PROPERTY PORTFOLIO – INDUS

TRIAL: Record period of leasing

I N D U S T R I A L

1. Including Heads of Agreement.

229,099sqm Total industrial space leased1 across 68 transactions

DEXUS Property Group – 2017 Half Year Results Presentation and Appendices Slide 16

5.1% 5.3% 10.8% 12.2% 13.8% 8.4% 0% 2% 4% 6% 8% 10% 12% 14% 16% Vacant FY17 FY18 FY19 FY20 FY21

10.9%

1

PROPERTY PORTFOLIO – INDUS

TRIAL: Leasing act ivit y improves expiry profile

Improved Melbourne portfolio occupancy from 84.8%

at FY16 to 92.3% at HY17

52%

• f industrial vacancies and expiries up to and including FY20 are located in Sydney

Note: Key leasing risks boxes represent tenant; property; and percentage of DEXUS office portfolio income. 1. As at 30 June 2016. 14.1%

1

14.2%

1

FY19 Key expiries IBM, Baulkham Hills (3.7% ) Fonterra, Axxess CP (1.8% ) Bev Chain, Gillman (1.7% ) FY18 Key expiries Downer Eng., Gladesville (0.9% ) Orica Aust, Dandenong S th (0.7% ) Rail Infrastructure, Flemington (0.7% ) FY17 Key expiries Wesfarmers, Alt ona Nth (1.4% ) Tyres 4 U, Huntingwood (0.7% ) S ET, Gillman (0.7% ) FY20 Key expiries Visy, Kings Park (2.8% ) Agility Logistics, Matraville (1.9% ) Annex Holdings, Clayton (1.3% )

DEXUS Property Group – [presentation title] Slide 17

MARKET OUTLOOK

DEXUS Property Group – [presentation title] Slide 17 DEXUS Property Group – 2017 Half Year Results Presentation and Appendices Slide 17 DEXUS Property Group – 2017 Half Year Results Presentation and Appendices Slide 18

MARKET OUTLOOK – Posit ive out look for key office market s FY17 t o FY19

Expected ‘ supply gap’ in Sydney, Melbourne and Brisbane will lead to higher occupancy levels Withdrawals of older stock a significant factor with timing of new supply FY20+

Average demand and net supply outlook to FY19

• 0.5%

0.0% 0.5% 1.0% 1.5% 2.0% 2.5% S ydney Melbourne Brisbane Pert h %

• f Tot al S

t ock Demand forecast t o FY19 Net supply forecast t o FY19

Supply gaps

Source: DEXUS Research.

DEXUS Property Group – 2017 Half Year Results Presentation and Appendices Slide 19

MARKET OUTLOOK – Flight t o qualit y is a regular phenomenon

Sydney CBD net absorption by grade and total completions

Source: JLL Research, DEXUS Research *YTD.

Tenants are migrating to premium and A Grade buildings in preference to older stock Modern buildings are better able to support changing workplace and culture requirements of office users

• 150
• 100
• 50

50 100 150 200 250 300

1995 1997 1999 2001 2003 2005 2007 2009 2011 2013 2015

‘ 000sqm Prime net abs S econdary net abs Total new completions 384,000sqm 386,000sqm 206,000sqm Prime net absorpt ion over period 379,000sqm

DEXUS Property Group – 2017 Half Year Results Presentation and Appendices Slide 20

MARKET OUTLOOK – Indust rial market s st rong in S

ydney and Melbourne

Source: JLL Research, DEXUS Research.

Conditions favourable for development (due to economic activity and supply chain re-configuration) Sydney and Melbourne expected to record above average levels of take-up Brisbane is showing signs of improvement with some large pre-lease deals Strong supply pipelines keeping downward pressure on rental growth in the short term

Annual take-up (key markets)

100 200 300 400 2014 2015 2016 2017F 2018F 2014 2015 2016 2017F 2018F 2014 2015 2016 2017F 2018F ‘000sqm Outer West S ydney West Melbourne S

• ut hern Brisbane

10 Yr Historical

DEXUS Property Group – [presentation title] Slide 21

DEVELOPMENT, TRANSACTIONS AND TRADING

p y p [p ] DEXUS Property Group – 2017 Half Year Results Presentation and Appendices Slide 21 DEXUS Property Group – 2017 Half Year Results Presentation and Appendices Slide 22

DEVELOPMENT – A period of increased indust rial activity

Developed more than 500,000sqm of prime industrial facilities since 2010 Delivered 48 high quality facilities with average 10,600sqm size and 8.5 year WALE since 2010 INDUSTRIAL

Quarrywest , Greyst anes1

Complet ed Precinct E Secured HelloFresh across 9,526sqm Precinct E now 100%

leased

90,580sqm remaining to develop Completed Wrightson Seeds facility across

10,194sqm

S

ecured two pre-commitments across 39,112sqm post HY173

BUILDING ON ESTABLISHED TRACK RECORD DEXUS Indust rial Estate, Lavert on Nort h2

• 1. Owned 50/ 50 by DXS and DEXUS Industrial Partner.
• 2. Owned 50/ 50 by DXS and Australian Industrial Partner. Wrightson Seeds facility is 100%
• wned by DXS.
• 3. Including Heads of Agreement.

DEXUS Property Group – 2017 Half Year Results Presentation and Appendices Slide 23

DEVELOPMENT – HY17 progress across office and cit y ret ail proj ect s

100 Mount S t reet , Nort h S ydney1 Excavat ion near complet e, crane erect ed and const ruct ion of building core underway 201 Elizabet h S t reet , S ydney 175 Pit t S t reet , S ydney2

OFFICE CITY RETAIL

Tiffany & Co. int end t o expand t heir foot print across 2,275 square met res

• f office and ret ail space

Mixed-use S t at e S ignificant Development Applicat ion lodged

DEXUS Property Group – 2017 Half Year Results Presentation and Appendices Slide 23

core underway

• f office and ret ail space

DEXUS Property Group – 2017 Half Year Results Presentation and Appendices Slide 23

• 1. Owned 50/ 50 by DXS and DWPF.
• 2. Owned 50/ 50 by DXS and DEXUS Office Partner.

DEXUS Property Group – 2017 Half Year Results Presentation and Appendices Slide 24

DEVELOPMENT – Pipeline of development opportunities $4.5bn1

Group development pipeline

$2.0bn1 DEXUS portfolio

including $432m across 7 committed proj ects ($317m remaining spend)

$2.5bn1

Third Party Funds

Refer to slide 62 for breakdown of third party development pipeline

Refer t o slide 58-59 for full breakdown of DEXUS development pipeline

Circa 3.3%

• f balance sheet FUM allocated to

development, trading and value-add at 31 December 2016

Completion over 2-5 years Beyond 5 years

OFFICE

100 Mount S t reet , Nort h S ydney 12 Creek S t reet , Brisbane Wat erfront Place Precinct , Brisbane (mix-use) 180 Flinders S t reet , Melbourne 11 Talavera Road, Macquarie Park S ydney CBD office opport unit y

Total of 6 projects over 223,609sqm / cost of c. $1.1bn1 INDUSTRIAL

Lavert on Nort h (committed & uncommitted) 141 Ant on Road, Hemmant Quarrywest , Greyst anes (Precinct B and

remainder of estate)

Axxess Corporat e Park, Mt Waverley

Total of 6 projects over 258,942sqm / cost of c. $294m1 CITY RETAIL

175 Pit t S t reet , S ydney 44 Market S t reet , S ydney 201 Elizabet h S t reet , S ydney (mix-use) 321 Kent S t reet , S ydney 1 Farrer Place, S ydney

Total of 5 projects over 17,751sqm / cost of c. $91m1

• 1. Includes uncommitted development costs associated with non-commercial uses (Refer to slide 57 for further details).

DEXUS Property Group – 2017 Half Year Results Presentation and Appendices Slide 25

TRANSACTIONS – Lower levels of transact ion activity

Proceeds from recent divestments initially used to repay debt and to be progressively drawn upon to

fund future development pipeline opportunities

Acquisition opportunities pursued where DEXUS’s and third party partners’ investment criteria are met

Acquisit ion of The Mill, Alexandria DEXUS port folio Acquisit ion of Carillon Cit y, Pert h Divest ment of 39 Mart in Place, S ydney1 Divest ment of 324 Queen S t reet , Brisbane

S ignificant landholding in a prime S

• ut h S

ydney locat ion - expect ed t o benefit from t enant demand and act ive management of underut ilised space t o achieve rent al growt h Value add opport unit y t hat provides exposure t o t he t ight ly held Pert h cit y ret ail market and is DWPF’ s first ret ail invest ment in WA S

• ld following complet ion of

compulsory acquisit ion negot iat ions wit h Transport for NS W for const ruct ion of t he S ydney Met ro S ale represent ed an opport unit y for DWPF t o divest a B grade Brisbane office building and reinvest sale proceeds in it s act ive development pipeline 27% unlevered IRR since acquisit ion

Third part y funds port folio

• 1. Owned 50/ 50 by DXS and DWPF.

DEXUS Property Group – 2017 Half Year Results Presentation and Appendices Slide 26

TRADING – Leveraging capabilities to deliver profit s

Erskine Park and Auburn priorit y proj ect s set t led in July 2016 and January 2017 cont ribut ing circa $26m t o FY17 t rading profit s post t ax Remaining 4 priorit y proj ect s c. $90-100m profit s pre t ax from FY17-FY19

SECURED Pot ent ial addit ion t o fut ure pipeline PROGRESSING 105 Phillip S t reet , Parramat t a Lakes S

• ut h,

Bot any 32 Flinders S t reet , Melbourne 12 Frederick S t reet , S t Leonards 140 George S t reet , Parramat t a

Under construction & on track for March-18 completion Undergoing rezoning Planning Application for hospital use has been supported Local Council endorsed concept scheme for office tower Reviewing planning permit

DEXUS Property Group – [presentation title] Slide 27

FUNDS MANAGEMENT

DEXUS Property Group [presentation title] Slide 27 DEXUS Property Group – 2017 Half Year Results Presentation and Appendices Slide 27 DEXUS Property Group – 2017 Half Year Results Presentation and Appendices Slide 28

FUNDS MANAGEMENT – HY17 progress

Continued outperformance against benchmark returns Undertook $372 million of transactions on behalf of third party clients DWPF acquired Carillon City retail centre in Perth CBD, satisfying the Fund’s investment plan

DEXUS Property Group – 2017 Half Year Results Presentation and Appendices Slide 28 DEXUS Property Group – 2017 Half Year Results Presentation and Appendices Slide 28

DEXUS Property Group – 2017 Half Year Results Presentation and Appendices Slide 29

Opened new Gateway and Grosvenor Place restaurant precincts enhancing investor returns and improving office tenant amenity

FUNDS MANAGEMENT – Delivering on clients’ obj ectives $2.5 billion

Development pipeline2 ($2.0 billion remaining spend) DEXUS Office Partnership achieved a

12.9%p.a.

• ne-year unlevered property return

DEXUS Wholesale Property Fund (DWPF)

• utperformance1

1 year +239bps 3 years +142bps 5 years +90bps 7 years +103bps 70 investors from 7 countries

1. DWPF outperformance per annum against its benchmark which is the Mercer IPD Australian Pooled Property Fund Index (post fees). 2. Includes $1.65 billion uncommitted third party development pipeline. DEXUS Property Group – [presentation title] Slide 30

SUMMARY

DEXUS Property Group – [presentation title] Slide 30 DEXUS Property Group – 2017 Half Year Results Presentation and Appendices Slide 30

DEXUS Property Group – 2017 Half Year Results Presentation and Appendices Slide 31 1. Barring unforeseen circumstances guidance is supported by the following assumptions: Impacts of announced divestments and acquisition; 2.5-3% like-for-like income growth across the DEXUS Office portfolio and 3-4% like-for like income growth across the DEXUS Industrial portfolio, weighted average cost

• f debt of circa 4.2%

, trading profits of circa $45-50m net of tax, and Management Operations FFO of circa $45-50m (including third party development management fees).

Well positioned to deliver strong results Focused on two strategic obj ectives:

— Office sect or leadership by being t he preferred workplace part ner — Wholesale part ner of choice in Aust ralian propert y

Portfolio is well placed to deliver income growth with strong

fundamentals in key markets and an enhanced pipeline of development opportunities

Improved performance in underlying business and

confidence in achieving trading sales has resulted in an upgrade to market guidance1 for the 12 months ending 30 June 2017 — Underlying FFO per security growth of circa 4% — FFO per security growth of circa 1% — Distribution per security growth of 3.5-4.5%

SUMMARY

DEXUS Property Group – [presentation title] Slide 32 DEXUS Property Group – [presentation title] Slide 32

APPENDICES

DEXUS Property Group – 2017 Half Year Results Presentation and Appendices Slide 32

DEXUS Property Group – 2017 Half Year Results Presentation and Appendices Slide 33

Overview

— Tot al Group port folio composit ion

Financial results

— Reconciliat ion t o st at ut ory net profit — Management operat ions profit — Cash flow reconciliat ion — Int erest reconciliat ion — Change in net t angible asset s & revaluat ions — Direct propert y port folio movement s

Capital management

— HY17 posit on — Int erest rat e hedging profile

CONTENTS

Property portfolio

— Tot al ret urn composit ion and valuat ion met rics — DEXUS Office port folio — DEXUS Indust rial port folio — Office & Indust rial port folio sust ainabilit y met rics — DEXUS complet ed development s — DEXUS commit t ed development s & port folio capex — DEXUS uncommit t ed development s

Transactions Trading Funds Management

— Development pipeline

Market outlook Exchange rates & securities used in statutory accounts Glossary Important information

DEXUS Property Group – 2017 Half Year Results Presentation and Appendices Slide 34

OVERVIEW – Tot al Group port folio composit ion

DEVELOPMENT PIPELINE (future growth )

DEXUS PORTFOLIO

$11.0bn

DEXUS owned and managed portfolio of Australian office and industrial properties OFFICE: $9.2bn INDUSTRIAL: $1.8bn DEVELOPMENT: $2.0bn

FUNDS MANAGEMENT PORTFOLIO

$11.7bn

Management of a diverse portfolio of office, industrial and retail properties on behalf of third party partners and funds OFFICE: $5.8bn INDUSTRIAL: $1.3bn DEVELOPMENT: $2.5bn

TOTAL GROUP PORTFOLIO

$22.7bn

OFFICE: $15.0bn INDUSTRIAL: $3.1bn DEVELOPMENT: $4.5bn RETAIL: $4.6bn RETAIL: $4.6bn

DEXUS Property Group – 2017 Half Year Results Presentation and Appendices Slide 35

Reference Item 31 Dec 2016 $m 31 Dec 2015 $m Statutory AIFRS net profit after tax 716.0 797.5 A Investment property and inventory A2 (Gains)/ losses from sales of investment property (71.4) (15.0) A3 Fair value gain on investment property (396.0) (533.7) C Financial instruments C2 Fair value (gain)/ loss on the mark-to-market of derivatives 80.9 (21.2) D Incentives and rent straight-lining D1 Amortisation of cash and fit out incentives 24.4 22.8 D2 Amortisation of lease fees 4.8 3.9 D4 Amortisation of rent-free periods 25.5 23.5 D5 Rent straight-lining (4.4) (4.0) E Tax E1 Non-FFO deferred tax benefits (1.2) 7.9 F Other unrealised or one-off Items F1 Other unrealised or one-off items (82.6) 42.2 FFO 296.0 323.9 G Maintenance and leasing capex G1 Maintenance capital expenditure (21.5) (34.8) G2 Cash incentives and leasing costs paid (28.6) (30.7) G3 Rent free incentives (31.6) (27.7) AFFO1 214.3 230.7 Distribution 210.1 223.1 AFFO Payout ratio (Distribution/AFFO) 98.0% 96.7%

FINANCIAL RESULTS – Reconciliation to st at utory net profit

The table below shows the breakdown of DEXUS

’s FFO and AFFO which is in accordance with the PCA definition

• utlined in the PCA white paper “ Voluntary best practice guidelines for disclosing FFO and AFFO”

1. Excludes the termination and restructuring of derivatives, funded from asset sales. DEXUS Property Group – 2017 Half Year Results Presentation and Appendices Slide 36

FINANCIAL RESULTS – Management operat ions profit

HY17 ($m) Property Management Funds Management Development Management Management Operations Revenue 31.2 25.6 3.5 60.3 Operat ing expenses (24.8) (10.0) (4.5) (39.3) HY17 net profit 6.4 15.6 (1.0) 21.0 HY17 margin 21% 61% 35% HY16 margin 20% 62%

DEXUS Property Group – 2017 Half Year Results Presentation and Appendices Slide 37

FINANCIAL RESULTS – Cash flow reconciliat ion

31 Dec 2016 $m 31 Dec 2015 $m Cash flow from operating activities 301.6 438.5 add back: payment for inventory acquisition and capex 27.2 22.4 less: cost of sale of inventory (38.1) (114.3) add: proceeds from sale of Rosebery received in advance

• 1.7

add/ (less): receivable from sale of Mascot (5.0) 5.0 add: tax on sale of 88 S hortland S treet

• 4.5

less: tax on trading profits not yet paid (3.6) (27.1) add back: capitalised interest 4.8 3.7 adj ustments for equity accounted distributions (19.9) (38.2)

• ther working capital movements

0.8 4.5 Adjusted cash flow from operating activities 267.8 300.7 Rent free income 31.6 27.7 Depreciation and amortisation (incl. deferred borrowing costs) (3.4) (4.5) FFO 296.0 323.9 Less: maintenance capex and incentives (81.7) (93.2) AFFO 214.3 230.7 Less: gross distribution (210.1) (223.1) Cash surplus 4.2 7.6

DEXUS Property Group – 2017 Half Year Results Presentation and Appendices Slide 38

31 Dec 2016 $m 31 Dec 2015 $m Total statutory finance costs 49.9 73.3 Add: unrealised interest rate swap MTM gain/ (loss)1 12.7 (10.3) Add: finance costs attributable to investments accounted for using the equity method 2.5 4.4 Net finance costs for FFO2 65.1 67.4 Add: interest capitalised 4.8 3.9 Gross finance costs for cost of debt purpose 69.9 71.3

1. Net fair value gain of interest rate swap of $7.8m (per note 2 of the Financial Statements) includes realised interest rate swap expense of $4.9m and unrealised interest rate swap MTM gain of $12.7m. 2. Excludes interest income of $0.6m.

FINANCIAL RESULTS – Int erest reconciliat ion

DEXUS Property Group – 2017 Half Year Results Presentation and Appendices Slide 39

$m $ps Investment portfolio Valuation change $m Cap rate % % of portfolio Opening net tangible assets (30 Jun 16) 7,289 7.53 DEXUS

• ffice portfolio

381.4 5.95% 84% Revaluation of real estate 396 0.41 DEXUSIndustrial portfolio 14.6 7.28% 16% Retained earnings1 86 0.09 Total DEXUS portfolio 396.0 6.13% Amortisation of tenant incentives2 (50) (0.05) Fair value movements3 75 0.08 NTA changes in comprehensive income 507 0.52 Closing net tangible assets (31 Dec 16) 7,796 8.05

1. Represents HY17 FFO less distributions. 2. Includes rent straight-lining. 3. Primarily includes fair value movements of derivatives and interest bearing liabilities, deferred tax, gain from sale of investment properties, movement in reserves and other.

FINANCIAL RESULTS – Change in net t angible asset s and revaluat ions

DEXUS Property Group – 2017 Half Year Results Presentation and Appendices Slide 40

Office1 $m Industrial1 $m DEXUS total1 $m Trading assets2 (inventory) Opening direct property 9,238 1,749 10,987 276 Lease incentives

3

52 8 60 1 Maintenance capex 18 4 22 1 Acquisitions 64

• 64
• Transfer to inventories

4

• Developments

5

64 26 90 28 Disposals

6

(549) (38) (587) (38) Revaluations 381 15 396

• Amortisation

(49) (6) (55) (1) Rent straightlining 3 1 4

• Closing balance at the end of the period

9,222 1,759 10,981 267

1. Includes DEXUS’ s share of equity accounted investments. 2. Trading assets are included in Office, Industrial and DEXUS total amounts. 3. Includes rent free incentives. 4. Transfers to inventories are eliminated within the Office, Industrial and DEXUS total amounts. 5. Includes capitalised interest. 6. At book value.

FINANCIAL RESULTS – Direct property portfolio movements

DEXUS Property Group – 2017 Half Year Results Presentation and Appendices Slide 41

Key metrics 31 Dec 2016 30 June 2016 Total debt 1 $3,170m $3,687m Cost of debt 2 4.3% 4.8% Gearing (look-through) 26.5%

3

30.7% Headroom (approximately)4 $0.6bn $0.4bn Debt duration 5.6 years5 5.5 years S &P/ Moody’ s rating A-/ A3 A-/ A3 Covenant gearing (covenant 6 <55% ) 25.7% 30.3% Interest cover (covenant 6,7 >2.0x) 5.1x 4.4x Priority debt (covenant 6 <30% ) 0% 0%

1. Total debt does not include $85m of debt in an equity accounted investment. 2. Weighted average for the period. 3. Adj usted for cash and for debt in equity accounted investments. Pro forma gearing adj usted for the acquisition of The Mill, Alexandria and the sale of 79-99 St Hilliers Road, Auburn is 26.8% . 4. Undrawn facilities plus cash. 5. Includes $75.5m Medium Term Notes issued in January 2017. 6. As per public bond covenants. 7. Look-through interest cover is 4.9x.

CAPITAL MANAGEMENT – HY17 posit ion

DEXUS Property Group – 2017 Half Year Results Presentation and Appendices Slide 42

Hedging profile 31 Dec 2016 30 June 2016 Average amount of debt hedged1 64% 71% Average amount of debt hedged excluding caps 61% 64% Weighted average interest rate on hedged debt 2 3.3% 3.4% Weighted average fixed & floating rate3 4.3% 4.8% Weighted average maturity of interest hedges 4.7 years4 4.0 years

CAPITAL MANAGEMENT – Interest rate hedging profile

1. Average amount hedged for the period (including caps). 2. Including fixed rate debt (without credit margin).

Hedge maturity profile4

0.0% 0.5% 1.0% 1.5% 2.0% 2.5% 3.0% 3.5% 4.0%

• 500

1,000 1,500 2,000 2,500

FY17 FY18 FY19 FY20 FY21 FY22 Net fixed debt Int erest Rate Caps Int erest Rate Swaps Weighted Average Hedge Rat e (excl margin)

3. Including fees and margins. 4. Includes $75.5 million Medium Term Notes issued in January 2017.

DEXUS Property Group – 2017 Half Year Results Presentation and Appendices Slide 43 6.6% 5.6% 6.2% 4.4% 7.6% 10.6% 6.5% 7.5% 8.0% 11.9% 11.2% 7.3% 6.7% 1.7%

• 1.3%

2.2% 0.4%

• 7.2%

19.2% 17.3% 13.9% 11.4% 9.4% 9.2% 8.8% 7.9% 0.3% Melbourne CBD Sydney CBD Office Portfolio Office Development Rest of Australia Canberra Region Brisbane CBD Adelaide CBD Perth CBD

Income Capital Total

PROPERTY PORTFOLIO – Total return composit ion and valuat ion metrics

HY14 FY14 HY15 FY15 HY16 FY16 HY17 DEXUS Office portfolio cap rate 7.07% 6.87%

1

6.79% 6.71% 6.30% 6.16% 5.95% DEXUS Industrial portfolio cap rate 8.40% 8.32% 8.07% 7.77% 7.56% 7.38% 7.28% NTA per security $6.492 $6.362 $6.47 $6.68 $7.25 $7.53 $8.05

DEXUS’S Portfolio valuation metrics

• 1. Excluding DEXUS Office Partnership properties.
• 2. Adj usted for the one-for-six security consolidation completed in November 2014.

Office portfolio total return composition

DEXUS Property Group – 2017 Half Year Results Presentation and Appendices Slide 44

PROPERTY PORTFOLIO – OFFICE: Port folio diversificat ion

DEXUS office by location DEXUS office by asset type

NS W 63% VIC 11% QLD 17% ACT 1% WA 7% S A 1% Premium Grade 40% A Grade 52% B Grade 3% Land 1% Office Park 2% Carpark 2%

DEXUS Property Group – 2017 Half Year Results Presentation and Appendices Slide 45

97,935sqm 98,839sqm 20000 40000 60000 80000 100000 120000 HY16 HY17 sqm

DEXUS office leasing by market

NSW VIC QLD SA WA

PROPERTY PORTFOLIO – OFFICE: Leasing volumes remain st rong

98,839sqm

Tot al office space leased1

157 leasing t ransact ions

98,839sqm

1. Including Heads of Agreement.

29% 14% 12% 11% 8% 5% 6% 5% 3%2%2% 2%1%

DEXUS office leasing by Industry (by area)

Finance & Insurance Government Business S ervices Other Healthcare Property S ervices Information media and telecommunications Retailing (non-food) Education and training Legal services Construction S ervices Transport Mining

DEXUS Property Group – 2017 Half Year Results Presentation and Appendices Slide 46

PROPERTY PORTFOLIO – OFFICE: Lease expiry profile at 31 December 2016

3.7% 4.0% 8.0% 12.4% 11.9% 13.1% 12.3% 3.5% 3.9% 8.9% 13.9% 12.7% 11.5% 11.0% 0% 2% 4% 6% 8% 10% 12% 14% 16% Vacant FY17 FY18 FY19 FY20 FY21 FY22 Income Area

DEXUS Property Group – 2017 Half Year Results Presentation and Appendices Slide 47

DEXUS Office1 Value ($m) Cap rate (%) Yield2 (%) S ydney CBD 5,100 5.6% 4.8% S ydney S uburban 554 7.0% 8.1% Melbourne CBD 718 6.1% 6.5% Brisbane CBD 1,555 6.2% 6.3% Pert h CBD 652 7.0% 7.8%

1. Includes stabilised properties only. Excludes Adelaide and Canberra office properties. 2. Passing FFO yield based on annualised Property Funds From Operations for the month of January 2017. 4.1% 4.1% 8.2% 8.5% 13.8% 12.8% 12.2% 3.4% 4.1% 8.9% 9.0% 15.5% 13.0% 11.2% 0% 5% 10% 15% 20% Vacant FY17 FY18 FY19 FY20 FY21 FY22

Sydney CBD

Income Area 2.6% 6.6% 16.8% 23.7% 20.2% 9.3% 5.5% 2.7% 6.2% 17.6% 24.2% 20.2% 9.8% 4.3% 0% 10% 20% 30% Vacant FY17 FY18 FY19 FY20 FY21 FY22

Sydney Suburban

Income Area 3.0% 2.8% 4.9% 2.9% 3.7% 10.5% 28.9% 3.0% 3.0% 5.0% 2.8% 4.0% 6.7% 29.8% 0% 5% 10% 15% 20% 25% 30% 35% Vacant FY17 FY18 FY19 FY20 FY21 FY22

Brisbane CBD

5.2% 2.9% 7.4% 9.4% 9.5% 22.3% 3.4% 6.6% 2.3% 8.7% 9.4% 5.5% 17.5% 3.5% 0% 5% 10% 15% 20% 25% Vacant FY17 FY18 FY19 FY20 FY21 FY22

Melbourne CBD

Income Area 2.5% 3.0% 6.0% 44.9% 4.5% 14.6% 6.2% 1.5% 2.8% 5.8% 48.2% 4.3% 13.6% 4.9% 0% 10% 20% 30% 40% 50% 60% Vacant FY17 FY18 FY19 FY20 FY21 FY22

Perth CBD

Income Area

PROPERTY PORTFOLIO – OFFICE: Lease expiry profiles at 31 December 2016

DEXUS Property Group – 2017 Half Year Results Presentation and Appendices Slide 48 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Other Tourism Food and beverage manufacturing Employment placement and recruitment services Electricity, gas, water and waste service Pharmaceutical wholesaling Engineering consultancy services Superannuation Healthcare and social assistance Retailing (non-food) Construction services Investment banks Food retailing Insurance Rental & real estate services Other finance Federal Government Business services other Metal ore mining Car park services State Government Accounting services Oil and Gas Information media and telecommunications Banks & building societes Legal services

Office customer S&P rating % of income1

Wilson Parking Not rated 3.8% Commonwealth of Australia AAA negative 3.4% Woodside Energy BBB+ negative 3.2% Rio Tinto A- negative 2.8% Commonwealth Bank of Australia AA- negative 2.6% Deloitte Not rated 1.7% S tate of Victoria AAA negative 1.5% S tate of NS W AAA negative 1.1% Budage Times Not rated 1.0% BDO Not rated 1.0%

1. 31 December 2016 fully leased total DEXUS portfolio passing income.

PROPERTY PORTFOLIO – OFFICE: Top 10 cust omers

Diversity of office customers by income

DEXUS Property Group – 2017 Half Year Results Presentation and Appendices Slide 49

PROPERTY PORTFOLIO – INDUSTRIAL: Portfolio diversification

DEXUS industrial by location DEXUS industrial by asset type

Business Park 27% Dist ribut ion Cent re 21% Indust rial Est at e 43% Dat a Cent re 4% Land 5% NS W 58% VIC 36% QLD 5% S A 1%

DEXUS Property Group – 2017 Half Year Results Presentation and Appendices Slide 50

PROPERTY PORTFOLIO – INDUS

TRIAL: Leasing re-set t ing port folio

1. Including Heads of Agreement.

229,099sqm

Tot al indust rial space leased1

68 leasing t ransact ions

144,661sqm 229,099sqm

• 50,000

100,000 150,000 200,000 250,000 300,000 HY16 HY17 sqm

DEXUS industrial leasing by market

NSW VIC QLD SA

38% 17% 9% 8% 7% 7% 4% 2% 2% 5% 1%

DEXUS industrial leasing by Industry (by area)

Warehouse and storage services Manufacturing Transport Construct ion S ervices General wholesaling Ret ail Accommodation and food services Education and t raining Banks & building societies Ot her Healt hcare

229,099sqm

DEXUS Property Group – 2017 Half Year Results Presentation and Appendices Slide 51

PROPERTY PORTFOLIO – INDUS

TRIAL: Lease expiry profile at 31 December 2016

5.1% 5.3% 10.8% 12.2% 13.8% 8.4% 13.0% 6.0% 7.0% 7.9% 8.8% 12.0% 7.7% 9.5% 0% 2% 4% 6% 8% 10% 12% 14% 16% Vacant FY17 FY18 FY19 FY20 FY21 FY22 Income Area

DEXUS Property Group – 2017 Half Year Results Presentation and Appendices Slide 52

PROPERTY PORTFOLIO – INDUS

TRIAL: Lease expiry profiles at 31 December 2016

DEXUS Industrial1 Value ($m) Cap rate (%) Yield2 (%) S ydney 889 7.0% 6.7% Melbourne 557 7.3% 6.7% Brisbane 84 7.3% 5.8% Adelaide 27 11.0% 11.1%

1. Includes stabilised properties only. 2. Passing FFO yield based on annualised Property Funds From Operations for the month of January 2017. 1.6% 2.4% 13.2% 13.1% 16.4% 12.2% 10.9% 1.5% 2.6% 11.6% 9.4% 18.4% 13.6% 11.9% 0% 5% 10% 15% 20% Vacant FY17 FY18 FY19 FY20 FY21 FY22

Sydney Industrial Portfolio

Income Area 7.7% 7.3% 9.2% 9.1% 11.3% 4.5% 17.5% 6.3% 8.2% 6.1% 3.9% 8.1% 4.0% 9.3% 0% 5% 10% 15% 20% Vacant FY17 FY18 FY19 FY20 FY21 FY22

Melbourne Industrial Portfolio

Income Area 9.8% 9.4% 0.0% 2.5% 14.1% 0.0% 7.6% 10.9% 9.8% 0.0% 1.4% 18.2% 0.0% 6.0% 0% 5% 10% 15% 20% Vacant FY17 FY18 FY19 FY20 FY21 FY22

Brisbane Industrial Portfolio

Income Area 22.1% 19.8% 5.3% 46.9% 0.0% 5.8% 0.0% 23.9% 20.0% 5.2% 44.7% 0.0% 6.2% 0.0% 0% 10% 20% 30% 40% 50% Vacant FY17 FY18 FY19 FY20 FY21 FY22

Adelaide Industrial Portfolio

Income Area

DEXUS Property Group – 2017 Half Year Results Presentation and Appendices Slide 53 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Other Printing Other public administration Electricity, gas, water and waste service Arts and recreation services Legal services Not-for-profit Food Retailing State Government Banks & building societes Engineering Consultancy Services Healthcare and social assistance Education and training Scientific and Technical Services Business Services Other Pharmaceutical wholesaling Postal and courier pick-up and delivery services Transport support services Food and beverage manufacturing Construction services Other manufacturing Road, rail, water, air and space transport Information media and telecommunications Retailing (non-food) General wholesaling Warehousing and storage services

Industrial customer % of income1

Wesfarmers Limited 1.1% AWH Pty Ltd 0.6% Reece 0.5% IBM Australia 0.5% Visy Industry Packaging Pty Ltd 0.5% Blackwoods 0.4% Fedex 0.4% Toll Transport Pty Ltd 0.3% Fonterra Co-Operative Group 0.3% Device Technologies 0.3%

1. 31 December 2016 fully leased total DEXUS portfolio passing income.

PROPERTY PORTFOLIO – INDUS

TRIAL: Top 10 cust omers

Diversity of industrial customers by income

DEXUS Property Group – 2017 Half Year Results Presentation and Appendices Slide 54

PROPERTY PORTFOLIO – Office and Indust rial portfolio sust ainability metrics

DEXUS

• ffice

portfolio NABERS Energy average rating NABERS Water average rating Dec 13 4.81 3.51 Dec 14 4.62 3.52 Dec 15 4.72 3.82 Dec 16 4.82 3.62

Note: Data in charts is unaudited. 1. NABERS ratings on a like-for-like basis. 2. NABERS ratings on an absolute basis. 3. Water consumption is primarily under the control of tenants, with the increase in 2014 and 2015 due to tenant demand for water at Kings Park Industrial Estate.

Office: NABERS Energy Ratings by Area

0 stars 0.5 stars 1 stars 1.5 stars 2 stars 2.5 stars 3 stars 3.5 stars 4 stars 4.5 stars 5 stars 5.5 stars 6 stars 609.0 360.7 133.7 73.3 FY08 2008 2009 2010 2011 2012 2013 2014 2015 2016 Scope 1 & 2 GHG Emissions kg CO2-e/sqm Energy Intensity (MJ/sqm) Office Energy and GHG Emissions Intensity 40.8% energy intensity reduction 45.2% emissions intensity reduction 312.8 397.3 FY08 2008 2009 2010 2011 2012 2013 2014 2015 2016 Water Intensity (L/sqm) Industrial Water Intensity 27.0% water intensity increase 855.4 646.5 FY08 2008 2009 2010 2011 2012 2013 2014 2015 2016 Water Intensity (L/sqm) Office Water Intensity 24.4% water intensity reduction 34.7 16.0 8.7 3.3 FY08 2008 2009 2010 2011 2012 2013 2014 2015 2016 Scope 1 & 2 GHG Emissions kg CO2-e/sqm Energy Intensity (MJ/sqm) Industrial Energy and GHG Emissions Intensity 53.9% energy intensity reduction 61.9% emissions intensity reduction

DEXUS Property Group – 2017 Half Year Results Presentation and Appendices Slide 55

Pipeline Building area1 sqm Project cost2 $m Yield on cost3 % Space leased % Final Completion Industrial Quarrywest, 2A Basalt Rd & 1 Charley Cl (Precinct E), Greystanes, NS W 36,045 38 8.0% 100% S ep 2016 13 Felstead Dr, Laverton North, VIC 10,194 13 7.2% 100% Dec 2016 Total industrial 46,239 51 Total developments completed 46,239 51

1. At 100% . 2. DEXUS interest in development cost.

PROPERTY PORTFOLIO – DEXUS completed developments

DEXUS Property Group – 2017 Half Year Results Presentation and Appendices Slide 55 2. DEXUS interest in development cost. DEXUS Property Group – 2017 Half Year Results Presentation and Appendices Slide 55 1. At 100% . 2. DEXUS interest in development cost (including cost of land where purchased for development). 3. Yield on cost calculation includes cost of land. DEXUS Property Group – 2017 Half Year Results Presentation and Appendices Slide 56

Pipeline Building area1 sqm Project cost

• est. 2

$m

• Est. cost to

completion2 $m Yield on cost3 % Leased % Completion due Office 100 Mount S treet, North S ydney, NS W 41,419 231 167 7.3% 15% Jan 2019 Total office 41,419 231 167 Industrial Quarrywest, 5 Dolerite Way (Precinct B), Greystanes, NS W 10,100 10 2 7.9% 100% Mar 2017 Quarrywest, Greystanes, NSW 80,480 65 40 8.0% nil Aug 2018 DEXUSIndustrial Estate, Laverton North, VIC 39,112 47 47 6.8% 100% Dec 2017 141 Anton Road, Hemmant, QLD 68,410 49 35 8.1% nil Apr 2020 Total industrial 198,102 171 123 City retail 175 Pitt S treet, S ydney, NS W 5,276 30 27 6.3% Apr 2019 Total city retail 5,276 30 27 Total developments committed 244,797 432 317

1. At 100% . 2. DEXUS interest in development cost (including cost of land where purchased for development). 3. Yield on cost calculation includes cost of land.

DEXUS total portfolio capital expenditure HY17 FY17E Maintenance capital expenditure $21.5m $55-60m Cash incentives and leasing costs $28.6m $55-60m Total capital expenditure $50.1m $110-120m

PROPERTY PORTFOLIO – DEXUS committed developments & portfolio capex

DEXUS Property Group – 2017 Half Year Results Presentation and Appendices Slide 57

Pipeline Building area1 sqm Project cost est. 2 $m

• Est. yield on est.

project cost3 % Office S ydney CBD office opportunity, NS W 51,195 276 11 Talavera Road, Macquarie Park, NS W 34,000 202 180 Flinders S t, Melbourne, VIC 22,765 155 Waterfront Place Precinct, Brisbane, QLD (Office) 67,500 236 12 Creek S t, Brisbane, QLD 6,730 27 Total office 182,190 896 6-8% Industrial DEXUSIndustrial Estate (S tage 3), Laverton North, VIC 44,840 53 Axxess Corporate Park, Mount Waverley, VIC 16,000 70 Total industrial 60,840 123 6-9% City retail 321 Kent S t Retail Podium, S ydney, NS W 4,228 12 44 Market S t, S ydney, NS W 2,767 22 1 Farrer Place, S ydney, NS W 580 5 201 Elizabeth S treet, S ydney, NS W (City Retail) 4,900 23 Total city retail 12,475 61 6-8% Other 201 Elizabeth S treet, S ydney, NS W (Resi & hotel) 54,646 278 Waterfront Place Precinct, Brisbane, QLD (Resi & hotel) 100,000 204 Total other 154,646 481 N/A Total uncommitted 410,151 1,562

PROPERTY PORTFOLIO – DEXUS uncommitted developments

1. At 100% . 2. DEXUS interest in development cost (including cost of land where purchased for development). 3. Yield on cost calculation includes cost of land. DEXUS Property Group – 2017 Half Year Results Presentation and Appendices Slide 58

DEXUS acquisitions Purchase price $m Interest Cap rate Settlement Date The Mill, Alexandria, NS W 110.2 100% 6.6% 19 Jan 2017 Total 110.2

TRANSACTIONS – Group act ivit y

DEXUS divestments Sale price $m Interest Settlement Date 39 Mart in Place, S ydney, NS W 166.0 50% 14 Nov 20161 Total 166.0 Third party acquisitions Purchase price $m Interest Cap rate Settlement Date Carillon Cit y, Pert h, WA 140.0 100% 7.05% 30 Nov 2016 Total 140.0 Third party divestments Sale price $m Interest Settlement Date 66.0 50% 1 Dec 2016 324 Queen S treet, Brisbane, QLD 39 Martin Place, S ydney, NSW 166.0 50% 14 Nov 2016 Total 232.0

1. Settlement date for office component. Retail component not settled as at 31 December 2016.

DEXUS Property Group – 2017 Half Year Results Presentation and Appendices Slide 59

TRADING – Track record since 2012

TRADING PROFITS DELIVERED - developed or repositioned and sold nine properties

Settlement date Property Sector Trading strategy Sale price ($m) Trading profit1 ($m) Unlevered project IRR 15 Jun 12 Lenore Dr, Erskine Park Industrial Develop 38.1 4.5 22.3% 12 Mar 14 57-101 Balham Rd, Archerfield Industrial Reposition 24.5 0.8 9.4% 12 Mar 14 163-183 Viking Dr, Wacol Industrial Reposition 38 3.2 14.6% 1 Jul 14 30 Distribution Dr, Laverton North Industrial Develop 9.5 1.0 16.3% 1 Dec 14 50 Carrington S t, S ydney Office Reposition 88 12.2 13.2% 22 May 15 40 Market S t, Melbourne Office Reposition 105.3 17.4 26.0% 21 Jul 15 5-13 Rosebery & 22-55 Rothschild Ave, Rosebery Industrial Reposition 190 91.8 49.9%

2

31 Jul 15 154 O’ Riordan S t, Mascot Industrial Reposition 32 15.9 36.7%

2

1 Jul 16 57-65 Templar Road, Erskine Park Industrial Development 50 11.9 22.0% Total $575.4m $158.7m 23.4%

3 1. Pre-tax. 2. Levered IRR and includes the weighted cost of debt at 5.0% for the duration of the proj ect. 3. Calculated as an arithmetic average. DEXUS Property Group – 2017 Half Year Results Presentation and Appendices Slide 60

$1.65bn

Total uncommitted proj ects

$833m

Total committed proj ects

$372m

Remaining spend on committed proj ects

$2.5bn

Funds Management Development 1 Pipeline

Committed projects FY17 FY18 FY19/ 20 Office / City Retail - 3 properties $216m Retail - 3 properties $80m Industrial - 3 properties $76m

Remaining spend on committed Third Party projects

$372m Remaining spend on committed projects in Third Party Funds

Uncommitted proj ects focused primarily

• n office & retail properties

1. Third party funds’ or partners’ share of development spend and including DEXUS third party funds’ or partners’ share of Westfield redevelopments.

FUNDS MANAGEMENT – Development pipeline

DEXUS Property Group – 2017 Half Year Results Presentation and Appendices Slide 61

MARKET OUTLOOK – S

ect or comparison of t ot al ret urns over t he past 25 years

Source: IPD/ MSCI, DEXUS Research

Returns rolling annual % per annum, 25 years to September 2016

6.7% 7.6% 8.5% 9.0% 6.2% 7.1% 7.9% 7.2% 9.0% 8.9% 8.7% 4.1% 3.0% 2.7% 3.3% 1.9% 0.6%

• 0.2%
• 0.3%

1.8% 1.5% 1.8% 11.0% 10.8% 11.4% 12.6% 8.2% 7.7% 7.7% 6.9% 11.0% 10.4% 10.7%

• 2%

0% 2% 4% 6% 8% 10% 12% 14% Income Capital Total %

RETAIL OFFICE INDUSTRIAL

DEXUS Property Group – 2017 Half Year Results Presentation and Appendices Slide 62

MARKET OUTLOOK – S

ect or comparison of t ot al returns over the past 10 years

Returns rolling annual % per annum, 10 years to September 2016

Source: IPD/ MSCI, DEXUS Research.

DEXUS Property Group – 2017 Half Year Results Presentation and Appendices Slide 63

MARKET OUTLOOK – East coast office demand remains posit ive

Source: JLL Research, DEXUS Research.

Net absorption by office market (qtly)

• 150
• 100
• 50

50 100 150 Dec-06 Dec-07 Dec-08 Dec-09 Dec-10 Dec-11 Dec-12 Dec-13 Dec-14 Dec-15 Dec-16 ‘ 000sqm S yd CBD Melb CBD Bris CBD Pert h CBD

DEXUS Property Group – 2017 Half Year Results Presentation and Appendices Slide 64

MARKET OUTLOOK – Sydney office enquiry from a diverse range of sources

Sydney CBD lease enquiry by industry in 2016

Source: Colliers Edge.

20 40 60 80 100 120 Finance & insurance Business serv. Government Educat ion Healt h & pharm. Const ruct ion & engineering IT/ Comms ‘ 000sqm

Traditional users Growth sectors

DEXUS Property Group – 2017 Half Year Results Presentation and Appendices Slide 65

MARKET OUTLOOK – SYDNEY OFFICE: Solid fundamentals to support growth

Sydney CBD waterfall chart – FY16 to FY19

Source: DEXUS Research, long term average based on 20 year average as %

• f stock.

220,600sqm

• f vacancy

240,000sqm

• f vacancy

361,600sqm

• f vacancy

274,000sqm

• f supply

283,000sqm

• f

withdrawals 131,600sqm

• f net absorp

100 200 300 400 500 600 700 Vacancy FY16 New supply Withdrawals Net absorpt ion Vacancy FY19 Vacancy FY20 ‘ 000 sqm

4.3% 7.1% + 5.4%

• 5.6%
• 2.6%

New supply 21% below average

• levels. Only 2

buildings >20,000sqm t o complet e aft er Barangaroo Wit hdrawals t o

• ffset new
• supply. S

ydney Met ro wit hdrawals add t o gross leasing act ivit y Demand posit ive. Is expect ed t o run near t he long t erm average Lowest level of vacancy in fift een years FY16 vacancy down from 7.8% last year wit h 119,000sqm absorbed in t he CBD S upply t o increase in FY20 (119,000sqm) and FY21 (172,000sqm)

4.7%

DEXUS Property Group – 2017 Half Year Results Presentation and Appendices Slide 66

MARKET OUTLOOK – MELBOURNE OFFICE: Why the market will tighten FY17-19

Melbourne CBD waterfall chart – FY16 to FY19

Source: DEXUS Research, long term average based on 15 year average as %

• f stock.

320,000sqm

• f vacancy

369,000sqm

• f vacancy

296,000sqm

• f supply

73,300sqm of withdrawals 271,500sqm

• f net absorp

100 200 300 400 500 600 700 Vacancy FY16 New supply Withdrawals Net absorpt ion Vacancy FY19 Vacancy FY20 ‘ 000 sqm

7.5%

376,000sqm of vacancy

8.0% + 6.4%

• 1.6%
• 5.9%

Below average levels of commit t ed supply (down 22%

• f long t erm

average) Modest levels of wit hdrawals of st ock Average levels

• f demand –

Vict orian economy growing solidly Vacancy below average Vacancy down from 10.1% last year

6.6%

Mild rise in vacancy in FY20

DEXUS Property Group – 2017 Half Year Results Presentation and Appendices Slide 67

MARKET OUTLOOK – S

ydney faces near t erm supply short age

Source: DEXUS Research.

• 80
• 60
• 40
• 20

20 40 60 80 100 120 Int'l Towers Syd - Tower 3 high rise Int'l Towers Syd - Tower 1 333 George Street 80-82A Pitt Street One Wharf Lane 275 George Street 280 George Street Beneficial House Coca-Cola Amatil Building Fairfax House Goldfields House IAG House Thakral House Metro Rail Withdrawals Darling Harbour Live - Darling Square International House Sydney 40 York Street 51-55 Pitt Street 2-10 & 20 Loftus St, 9-13 Young St 50 Bridge Street 388 George Street Clarence St Commercial Tower 275 George Street 210 George Street 220 George Street Department of Edu & Training Building Department of Planning Building 60 Martin Place Wynard Place, 10 Carrington Wynyard Place, Shell House 183-185 Clarence Street 241 Castlereagh 246-247 Castlereagh 332 Pitt Street 338 Pitt Street 233 Castlereagh St AMP Quay Quarter Tower 55 Pitt Street 220 George Street 33 Bligh St CQ Tower (Lend Lease) 310-322 Pitt Street Darling Park Tower 4 VIG mixed development FY17 FY18 FY19 FY20 FY21 FY22 FY23 Sum of New pre-com Sum of New un-com Sum of Refurb pre-com Sum of Refurb un-com Sum of Withdrawal

‘ 000sqm

Planned supply still a long way off – most proj ects scheduled for FY20 to FY23

DEXUS Property Group – 2017 Half Year Results Presentation and Appendices Slide 68 Source: JLL Research, DEXUS Research.

Net absorption by grade 2016: Four major CBDs

Pronounced net movement of tenants into prime space and out of secondary space – all CBD markets Sydney - withdrawals are leading to a shortage of B and C grade stock and migration to A and Premium Other markets –A Grade and Premium stock is both available and cost effective Customers aspire to high quality and functional space

MARKET OUTLOOK – Office cust omers migrat ing t o high qualit y space

• 150
• 100
• 50

50 100 150 200 250 S ydney CBD Melbourne CBD Brisbane CBD Pert h CBD ‘ 000sqm Thousands Premium A-Grade B-Grade C-Grade D-Grade 10 Year Average Current 2016

DEXUS Property Group – 2017 Half Year Results Presentation and Appendices Slide 69

MARKET OUTLOOK – Sydney CBD office

Sydney CBD office market

Source: JLL Research actual & DEXUS Research forecast.

Growth cycle in full swing with a lack of supply leading to rent growth Vacancy rate is forecast to fall to 4.3%

in FY19

Planned new supply is still a long way off – scheduled for FY20 to FY22 NS

W economy performing well – service sector growing

Sydney CBD office market At 31 Dec 2016 Tot al net let t able area 5.14 million sqm Prime vacancy average 8.7% DEXUS Sydney CBD exposure Net let t able area 592,643sqm Number of propert ies 18 %

• f port folio by value

56% Occupancy by area 96.9% Occupancy by income 95.9% Weight ed average lease expiry 4.8 years

• 9%
• 6%
• 3%

0% 3% 6% 9% 12%

• 200
• 150
• 100
• 50
• 50

100 150 200 250 FY07 FY09 FY11 FY13 FY15 FY17 FY19 FY21 ‘000sqm Net Absorption Net S upply Vacancy (RHS )

DEXUS Property Group – 2017 Half Year Results Presentation and Appendices Slide 70

MARKET OUTLOOK – Melbourne CBD office

Melbourne CBD office market

Melbourne is experiencing a mild growth cycle Solid demand supported by growing state economy and strong population growth Tenant migration from the fringe to the CBD anticipated to continue Vacancy to tighten over the short-medium term due to muted supply

Melbourne CBD office market At 31 Dec 2016 Tot al net let t able area 4.72 million sqm Prime vacancy average 7.9% DEXUS Melbourne CBD exposure Net let t able area 274,823sqm Number of propert ies 8 %

• f port folio by value

8% Occupancy by area 93.4% Occupancy by income 94.8% Weight ed average lease expiry 5.3 years

Source: JLL Research actual & DEXUS Research forecast.

• 2.5%

0.0% 2.5% 5.0% 7.5% 10.0% 12.5%

• 50
• 50

100 150 200 250 300 FY07 FY09 FY11 FY13 FY15 FY17 FY19 FY21 ‘000sqm Net Absorption Net S upply Vacancy (RHS )

DEXUS Property Group – 2017 Half Year Results Presentation and Appendices Slide 71

MARKET OUTLOOK – Brisbane CBD office

Brisbane CBD office market

Demand has turned the corner with 4 quarters of positive demand Demand to benefit from centralisation of tenants into the CBD and improving economy Supply cycle is behind us with little new supply expected in the next three years Market is benefiting from significant withdrawals for alternative use

Brisbane CBD office market At 31 Dec 2016 Tot al net let t able area 2.27 million sqm Prime vacancy average 14.7% DEXUS Brisbane CBD exposure Net let t able area 250,969sqm Number of propert ies 6 %

• f port folio by value

18% Occupancy by area 97.0% Occupancy by income 97.0% Weight ed average lease expiry 5.4 years

Source: JLL Research actual & DEXUS Research forecast.

• 12%
• 6%

0% 6% 12% 18% 24%

• 100
• 50
• 50

100 150 FY07 FY09 FY11 FY13 FY15 FY17 FY19 FY21 ‘000sqm Net Absorption Net S upply Vacancy (RHS )

DEXUS Property Group – 2017 Half Year Results Presentation and Appendices Slide 72

MARKET OUTLOOK – Pert h CBD office

Perth CBD office market

Soft demand conditions due to contraction in state economy Elevated levels of new supply have driven vacancy rates to 20 year highs of 24.6% Recent rises in commodity prices are a welcome sign Rents are expected to reach a base in the next 12 months Market likely to take some years to recover, depending on demand

Perth CBD office market At 31 Dec 2016 Tot al net let t able area 1.77 million sqm Prime vacancy average 22.3% DEXUS Perth CBD exposure Net let t able area 130,895sqm Number of propert ies 4 %

• f port folio by value

7% Occupancy by area 98.5% Occupancy by income 97.5% Weight ed average lease expiry 3.5 years

Source: JLL Research actual & DEXUS Research forecast.

• 10%
• 5%

0% 5% 10% 15% 20% 25% 30%

• 100
• 50
• 50

100 150 200 250 300 FY07 FY09 FY11 FY13 FY15 FY17 FY19 FY21 ‘000sqm Net Absorption Net S upply Vacancy (RHS )

DEXUS Property Group – 2017 Half Year Results Presentation and Appendices Slide 73

EXCHANGE RATES AND SECURITIES USED IN STATUTORY ACCOUNTS

Post consolidation equivalent amounts1

6 mths to 31 Dec 2015 12 mths to 30 Jun 2016 6 mths to 31 Dec 2016 Average weight ed number of securit ies2 969,319,156 968,639,060 967,947,692 Closing number of securit ies 967,947,692 967,947,692 967,947,692 31 Dec 2015 30 Jun 2016 31 Dec 2016 Closing rat es for S t at ement of Financial Posit ion US D 0.7286 0.7426 0.7236 Average rat es for S t at ement of Comprehensive Income US D 0.7231 0.7287 0.7546

1. Where the number of securities held by a security holder following the consolidation resulted in a fraction

• f a security, the fraction was rounded up to the nearest whole number.

2. Used to calculate FFO per security. DEXUS Property Group – 2017 Half Year Results Presentation and Appendices Slide 74

GLOSSARY GLOSSARY

Dist ribut ion payout policy: Policy is t o dist ribut e in line wit h free cash flow. Funds From Operat ions (FFO): FFO is in line wit h Propert y Council of Aust ralia definit ion and comprises net profit / loss aft er t ax at t ribut able t o st apled securit y holders calculat ed in accordance wit h Aust ralian Account ing S t andards and adj ust ed for: propert y revaluat ions, impairment s, derivat ive and FX mark t o market impact s, fair value movement s of int erest bearing liabilit ies, amort isat ion of t enant incent ives, gain/ loss on sale of cert ain asset s, st raight line rent adj ust ment s, deferred t ax expense/ benefit , t ransact ion cost s, amort isat ion of int angible asset s, rent al guarant ees and coupon income. Adj ust ed FFO (AFFO): AFFO is calculat ed in line wit h t he Propert y Council of Aust ralia definit ion and comprises PCA FFO and adj ust ed for: maint enance capex, incent ives (including rent free incent ives) given t o t enant s during t he period and ot her it ems which have not been adj ust ed in det ermining FFO. Gearing: Gearing is represent ed by Int erest Bearing Liabilit ies (excluding deferred borrowing cost s and including t he currency gains and losses of cross currency swaps) less cash divided by Tot al Tangible Asset s (excluding derivat ives and deferred t ax asset s) less cash. Covenant gearing is t he same definit ion but not adj ust ed for cash. Gearing (look t hrough): Represent s Gearing defined above adj ust ed t o include debt in equit y account ed invest ment s. Port folio value: Unless ot herwise st at ed, port folio value is represent ed by invest ment propert ies, invent ories and invest ment s account ed for using t he equit y met hod, and excludes cash and ot her asset s. S ecurit ies on issue: FFO per securit y is calculat ed based on t he weight ed average number of DEXUS securit ies for t he relevant period. Weight ed Average Lease Expiry (WALE): A measure in years of t he average t erm t o expiry of in-place rent . Includes vacancies.

DEXUS Property Group – 2017 Half Year Results Presentation and Appendices Slide 75

IMPORTANT INFORMATION

• This present at ion is issued by DEXUS

Funds Management Limit ed (DXFM) in it s capacit y as responsible ent it y of DEXUS Propert y Group (AS X:DXS ). It is not an offer of securit ies for subscript ion or sale and is not financial product advice.

• Informat ion in t his present at ion including, wit hout limit at ion, any forward looking st at ement s or opinions (t he Informat ion) may be subj ect t o

change wit hout not ice. To t he ext ent permit t ed by law, DXFM, DEXUS Propert y Group and t heir officers, employees and advisers do not make any represent at ion or warrant y, express or implied, as t o t he currency, accuracy, reliabilit y or complet eness of t he Informat ion and disclaim all responsibilit y and liabilit y for it (including, wit hout limit at ion, liabilit y for negligence). Act ual result s may differ mat erially from t hose predict ed

• r implied by any forward looking st at ement s for a range of reasons out side t he cont rol of t he relevant part ies.
• The informat ion cont ained in t his present at ion should not be considered t o be comprehensive or t o comprise all t he informat ion which a

DEXUS Propert y Group securit y holder or pot ent ial invest or may require in order t o det ermine whet her t o deal in DEXUS Propert y Group st apled securit ies. This present at ion does not t ake int o account t he financial sit uat ion, invest ment obj ect ives and part icular needs of any part icular person.

• The repayment and performance of an invest ment in DEXUS

Propert y Group is not guarant eed by DXFM, any of it s relat ed bodies corporat e or any ot her person or organisat ion.

• This invest ment is subj ect t o invest ment risk, including possible delays in repayment and loss of income and principal invested.

DEXUS Property Group – [presentation title] Slide 76 DEXUS Property Group – [presentation title] Slide 76

DEXUS PROPERTY GROUP

2017 HALF YEAR RES ULTS PRES ENTATION – 15 FEBRUAR Y 2017

DEXUS Funds Management Limited ABN 24 060 920 783 AFS L 238163 as responsible entity for DEXUS Property Group