Dexus taps Du Vernet to replace long-serving CEO

Mr Vernet, along with Dexus’ funds management head, Deborah Coakley, had emerged as strong internal candidates for the top job as Dexus undertook a global search to replace Mr Steinberg.

A 20-year veteran of the sector – with experience across corporate transactions, strategy, development and funds management in Australia and abroad – Mr Du Vernet takes over amid a period of transition in the commercial property sector, as it grapples with the impact of higher interest rates and uncertain business conditions.

Much of that is reflected in Dexus’ stock price, which has been trading at a 30 per cent discount below its net tangible assets for an extended period.

Under Mr Steinberg’s leadership, Dexus took key steps towards transformation. Once best known as the country’s largest office landlord, the company is steadily expanding to become a manager of real assets, including infrastructure.

That strategy includes diversification of its portfolio, reducing its exposure to office assets, while forging into new sectors such as healthcare property and stepping up its funds management activity.

The outlook for commercial real estate investment has changed dramatically in the wake of the COVID-19 pandemic. Soaring inflation had led a sharp rise in interest rates around the world, which in turn has weighed on earnings and portfolio valuations for major property companies.

Hardest hit have been office assets, where valuation declines have been exacerbated by weaker demand and changing workplace needs due to the work-from-home trend. In August, Mr Steinberg warned that the commercial property sector was halfway through a two-year adjustment to higher rates.

“Dexus is at an exciting stage in its evolution, with strong foundations and a unique set of capabilities in the platform,” Mr Du Vernet said in a statement on Monday.

After taking over the $4 billion Commonwealth Property Office Fund almost a decade ago – a deal that made Dexus the country’s biggest landlord at the time – the pace of change at the company has accelerated in the past three years. Signalling its intention to gain more exposure to the solid returns from logistics, Dexus in 2021 led an unexpected buy-out Perth’s Jandakot Airport and its highly valuable industrial estate.

Last year Dexus took control of the bulk of AMP Capital’s $28 billion platform of commercial property and local infrastructure, bringing with it exposure to renewable energy assets. It also led a strong push into healthcare real estate, an emerging sector tipped for strong growth.

Leadership renewal is underway across the sector. In September, property fund manager GPT finalised an extended search to replace outgoing chief executive Bob Johnston.

The shake-up kicked off two years ago, when Tony Lombardo took over the helm at Lendlease from Steve McCann.  Subsequently, a former senior Lendlease executive, Tarun Gupta, stepped into the top job at Stockland last year, while at Scentre Group, the owner of Westfield malls, former chief financial officer Elliott Rusanow is now in charge.

Earlier this year, as Mirvac’s investment head Campbell Hanan took over as chief executive from Susan Lloyd-Hurwitz.  Growthpoint, a $2 billion property trust, is in the market for a new chief executive.

The most senior property leaders staying the course are Charter Hall’s David Harrison, who has led the fund manager since 2006, and Greg Goodman, who has been in charge of the industrial giant Goodman Group for 25 years.