Dexus CEO Darren Steinberg to depart as property group looks beyond offices

Dexus CEO Darren Steinberg gave the property company a new lease on life and transformed it into a real assets manager with the potential to go beyond its roots.

One of the property industry’s leading figures, Darren Steinberg, will step down after more than 11 years at the helm of office property and funds giant Dexus.

The chief executive had told the board that he plans to step down in 2024, but will stay in his post until a successor – likely to come from within the company’s ranks – starts.

The board has commenced a process for his replacement that will likely include a global search for other candidates.

The move comes amid tough times for the sector as commercial property values are being hit by the unstable bond market and offices have been hurt by a shift to working-from-home.

But Mr Steinberg’s tenure was marked out by a dramatic refashioning of the once low-profile Dexus operation into an integrated real asset group with a $61bn empire spanning property and infrastructure. He also developed a profile as a non-executive director and joined the board of the Sydney Swans.

Dexus has grown to own $17.4bn of office, industrial, healthcare, retail and infrastructure assets and handles another $43.6bn via its funds unit, with growth to come via its $17.4bn property development pipeline.

But the share market has punished office companies globally as top international markets have been turned upside down in the wake of the coronavirus pandemic. Dexus shares approached $14 in mid-2019, and it was mooted as a private equity target, but it now trades under $7, albeit ahead of the $5 range when Mr Steinberg began at the company.

Dexus CEO Darren Steinberg at the property group’s offices in Sydney. Picture: Britta Campion/The Australian

Mr Steinberg’s departure comes as a generation of top property executives exit. GPT’s Bob Johnston is leaving, with Charter Hall CFO Russell Proutt to take the top post at that organisation. Mirvac’s Susan Lloyd-Hurwitz exited, with Campbell Hanan stepping into the top post in March this year.

The Dexus chief executive’s departure clears the way for two clear internal candidates, executive general manager, funds management, Deborah Coakley, and chief investment officer Ross Du Vernet.

Ms Coakley has led the dramatic growth of the funds management platform and pushed into new areas, taking Dexus beyond its traditional base into areas like healthcare property, while Mr Du Vernet has struck many of the deals that helped the company get where it is today.

Dexus chair Warwick Negus said Mr Steinberg’s “commitment to excellence and innovation is impressive”. “The very high standard of governance you see in Dexus is a reflection of the attitudes of the Board, CEO and senior management over a long period of time,” he said.

The process to appoint a new chief has been quietly progressing this year.

“The board has been busy in 2023 with ongoing planning for succession and internal leadership development. We approach this decision with the benefit of a great deal of planning and will revert to security holders in the coming months post the conclusion of a formal global search when this important decision is finalised,” Mr Negus said.

Mr Steinberg said his decision to step down next year allowed time for continuity.

“Dexus has a team of experienced and talented people, and I will leave knowing that the business is in a strong position to continue to deliver long-term value. I am proud of everything we have achieved as a team for our investors, our customers and our people, and am committed to ensuring a smooth transition,” he said.

Appointed in the shadow of the global financial crisis in 2008, he orchestrated the group’s exit from its US holdings and then poured capital into what would become a local commercial real estate boom.

A reinvigorated Dexus operation was an active dealer, taking over the Commonwealth Property Office Fund, and securing other major portfolios. The group also stepped up its industrial property unit, well ahead of that area rising, and made major retail plays via its funds arm when that sector was firing.

The firm also struck up close ties with international funds, including South Korea’s NPS and Singapore’s GIC, as well as building deep links in the local superannuation market.

Mr Steinberg’s most recent bout of deal-making took the company deeper into the funds management world, picking up Collimate Capital – the renamed AMP real estate and infrastructure empire – as well as the APN property funds operation.

The big shift took Dexus beyond its base in offices and transformed it into a manager of real assets, making it a first port of call both for large investors wanting to get into Australia and for companies looking to strike a deal.

In his era, Dexus rode the extraordinary growth in office markets, by developing, trading and repositioning assets during good and bad times. The company went early on selling offices in the wake of the coronavirus crisis, which has had longer lasting effects than initially expected.

After an initial jump amid near zero rates, the market has fallen sharply as big companies re-evaluate their space needs and the property cycle inevitably turns.

Dexus has taken discounts to boom values, with the CEO recently predicting further pain before the market finds its feet.

He remains a believer in the future of the best office towers and Dexus and its funds are developing the $2.5bn Waterfront Brisbane, which will become another legacy.

Artist impression of 'Waterfront Brisbane' development, Eagle Street, Brisbane. Picture: Richard Walker

But in a sign of where the company is headed, Dexus this week launched its second opportunistic property fund, revealing its first two purchases were of apartments in new developments.

While commercial property has changed dramatically with Mr Steinberg at the helm, the at times dazzling corporate deal-maker has created a platform that will endure.