Commercial Real Estate Challenges and Sustainability

This assignment examines pressing issues within the commercial real estate sector. It highlights the potential challenges posed by upcoming loan refinancing obligations and emphasizes the significance of sustainable practices for environmental resource conservation. Additionally, it points out concerns regarding property overvaluation, drawing attention to the need for careful assessment and risk management in this dynamic market.

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Part 1:
Business operations:
The company undertaken fore review is the Dexus property group which is an Australian Real Estate
Investment Trust which invests, develops, manages and trades the Australian office and also the
industrial property. The company owns a diversified portfolio which mainly consist of central business
district offices which are held for longer term and are also leased (Are, 2017).
Investments and investment activities:
The following are the investment activities included:
 Capital expenditure on fixed assets
 Capital expenditure on other assets
 Net assets from acquisitions
 Sale of the fixed assets and businesses
 Purchase and sale from investments
 Sale and maturity of investments (Are, 2017).
The following are the financing activities of the company:
 Cash dividends on common equity shares and preferred shares
 Change in the capital stock
 Repurchase of the common and preferred stock
 Sale of common and preferred stock

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 Proceeds from stock options
 Other proceeds from sale of stock
 Issuance or repayment of debt (Market watch, 2017).
Financial reporting practices:
The company’s financial statements have bene prepared using the historical cost basis. But the
derivative financial instruments, investments in the financial assets along with the defined benefit
obligations have been prepared on the basis of the fair values. These statements have been prepared
using the applicable Australian Accounting standards including the interpretations of the country of
austral and the Corporations Act 2001. These also comply with the International financial Reporting
Standards and the interpretations as have been issued by the International Accounting Standards
Board.
Part 2:
Industry size:
The industry has the size of $43.8 billion which was recorded during august, 2002.
Industry growth:
The industry shows an equity growth of 87.50 % (SMH, 2017).

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Industry supply chain:
The supply chain efficiencies drive in the demand and supports the large retailers and the transport and
the logistics occupiers which supports in the industrial demand. This takes in the advantage of the
competitive pro commitment market which improve and consolidates the supply chains.
There are larger retailers and the transport and the logistic occupiers that support the industrial
demand. There are consolidated supply chains in respect of which there is an occupier demand which
varies widely between the status of Sydney and the Melbourne, Brisbane. This is mainly due to the
compliance in the demand of the solid pre lease demand in these markets and also due to the stronger
values that would be achieved for the fully leased buildings. The year 2017 is most likely to be more
subdued which follows the reduction in the projects that have bene planned in Brisbane and Perth. The
rents are also likely to remain subdued and also stable since there is a pre-commitment in the market
which remains competitive. There are land constraints too.
Major players:
The major players include Investa Property group, GPT group, ALE property group, Westfield corp
Charter Hall group (PIR, 2017).
Market shares of Industry players:
Dexus market – 9.61 B (Bloomberg, 2017).
Investa Property group- $4,561 M (Invests smart, 2017).
GPT group- 8.68 B AUD (Bloomberg, 2017).

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ALE property group- 927.95 M AUD
Westfield corp- 15.88 B AUD (Bloomberg, 2017).
Charter Hall group – 2.46 B AUD (Bloomberg, 2017).
Critical success factors:
The Company is one of the leading real estate group in the country. It drives its success from the
passionate innovation and collaboration which seeks to deliver in the right amount of space for the
customers all across the extensive portfolio of the properties relating to the offices, industry and retail.
The company caters to the needs of the customers and also delivers the services that are designed so as
to add in the value to the partners. The company focusses on being the wholesale partner of choice.
The demand for the top quality office buildings remains strong even when there are some of the
challenges that exists in the lesser quality of the buildings (Dexus, 2017).
Major threats:
The following are the factors that threatened the same:
 The population of the country is ageing and so, the people have a different way of doing things and
hence, they may not be able to afford the prices
 There is an underfunding of the state and the local retirement system which would present a
challenge for the industry (Hoak, 2017).
 There is a change in the demand of the office space
 This also goes in line with the change in the demand for the retail space
 There is an issue related with the amount of the commercial real estate loans which would be
required to be refinanced in the next couple of years.

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 An attention has to be paid to the sustainability which would serve as the main thing when it comes
to the saving of the environmental resources
 There are many of the commercial properties that are overvalued (Market watch, 2017).

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References:
Are, W. and Business, O. (2017). Dexus - Capabilities. [online] Dexus.com. Available at:
http://www.dexus.com/who-we-are/our-business/capabilities [Accessed 1 Sep. 2017].
Are, W. and Business, O. (2017). Dexus - History. [online] Dexus.com. Available at:
http://www.dexus.com/who-we-are/our-business/history [Accessed 1 Sep. 2017].
Bloomberg.com. (2017). CHC:ASE Stock Quote - Charter Hall Group. [online] Available at:
https://www.bloomberg.com/quote/CHC:AU [Accessed 1 Sep. 2017].
Bloomberg.com. (2017). DXS:ASE Stock Quote - Dexus. [online] Available at:
https://www.bloomberg.com/quote/DXS:AU [Accessed 1 Sep. 2017].
Bloomberg.com. (2017). GPT:ASE Stock Quote - GPT Group/The. [online] Available at:
https://www.bloomberg.com/quote/GPT:AU [Accessed 1 Sep. 2017].
Bloomberg.com. (2017). WFD:ASE Stock Quote - Westfield Corp. [online] Available at:
https://www.bloomberg.com/quote/WFD:AU [Accessed 1 Sep. 2017].
Cummins, C. (2017). Mixed outlook for AREIT sector. [online] The Sydney Morning Herald.
Available at: http://www.smh.com.au/business/property/mixed-outlook-for-the-areit-sector-20161006-
grwbfz.html [Accessed 1 Sep. 2017].
Hoak, A. (2017). The top 10 threats facing real estate. [online] MarketWatch. Available at:
http://www.marketwatch.com/story/the-top-10-threats-facing-real-estate-2012-07-17 [Accessed 1 Sep.
2017].
InvestSMART. (2017). Investa Property Group. [online] Available at:
https://www.investsmart.com.au/shares/asx-ipg/investa-property-group [Accessed 1 Sep. 2017].

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Marketwatch.com. (2017). DuluxGroup Ltd.. [online] Available at:
http://www.marketwatch.com/investing/stock/duluf/financials/cash-flow [Accessed 1 Sep. 2017].
www.pir.com.au. (2017). Competitors. [online] Available at: https://www.pir.com.au/listed [Accessed
1 Sep. 2017].