Dexus exits US and buys up in Sydney
Dexus has exchanged contracts to acquire interests in a portfolio of three Sydney office properties including in a joint venture with DEXUS Wholesale Property Fund.
The properties to be acquired include: a 25 per cent interest in 225 George Street, a premium-grade office building known as Grosvenor Place, a 50 per cent interest in office towers based at Sydney Olympic Park, and the purchase of 39 Martin Place.
The portfolio has been acquired off-market from the Direct Property Investment Fund, a wholesale office fund, managed by the property division of Colonial First State Global Asset Management. DPIF is a closed-end fund and is in a wind-down phase.
The chief executive of Dexus, Darren Steinberg, said he was pleased to be able to announce the reinvestment of a significant portion of the proceeds from the sale of its US industrial portfolio into quality Australian office assets.
On Thursday, Mr Steinberg announced Dexus had raised $561 million through the sale of most of its US industrial portfolio. The deal was done in two transactions, with 26 of 27 US properties sold, including 23 industrial properties and three land parcels in Texas.
He said an entity advised by Chicago-based Heitman exchanged contracts to acquire a portfolio of 25 properties.
Brokers said the deals were positive for Dexus and the real estate investment trust sector, which is poised for a more active year in 2013. The head of property research at Bank of America Merrill Lynch, Simon Garing, said he thought Mr Steinberg had done a good job in achieving a number of quick wins.
"The sale by Dexus of the bulk of its US portfolio at a 13 per cent premium to book value would now set the stage for the next phase of growth," Mr Garing said.
"The company highlighted gearing will be 24 per cent after the sale, with management happy to ramp up to 35 per cent at this point in the cycle, giving the company about a $1 billion 'war chest' with the focus on Australian CBD office acquisitions."
An analyst at Moelis & Co, Simon Scott, said the sale of the US assets "improves the quality and risk profile of the group's earnings".
Frequently Asked Questions about this Article…
Dexus agreed to buy interests in a three‑property Sydney office portfolio for about $503.7 million. The deal includes a 25% interest in 225 George Street (Grosvenor Place), a 50% interest in office towers at Sydney Olympic Park, and the purchase of 39 Martin Place.
Dexus raised roughly $561 million from the sale of most of its US industrial portfolio — 26 of 27 US properties were sold, including 23 industrial properties and three land parcels in Texas.
An entity advised by Chicago‑based manager Heitman exchanged contracts to acquire a portfolio of 25 US properties, according to Dexus. The broader US disposals were completed in two transactions.
The Sydney portfolio was acquired off‑market from the Direct Property Investment Fund (DPIF), a wholesale office fund managed by Colonial First State Global Asset Management. DPIF is a closed‑end fund currently in a wind‑down phase.
Brokers called the deals positive for Dexus and the REIT sector. Simon Garing at Bank of America Merrill Lynch noted the US sale was at a 13% premium to book value and positioned the company for growth. Moelis analyst Simon Scott said the disposals improve the quality and risk profile of Dexus’s earnings.
Dexus reported gearing of about 24% after the US sales, and management said it would be comfortable increasing gearing to around 35% if appropriate. That capacity, combined with sale proceeds, gives the group roughly a $1 billion 'war chest' to pursue Australian CBD office acquisitions.
225 George Street, commonly known as Grosvenor Place, is described in the article as a premium‑grade office building. Dexus exchanged contracts to acquire a 25% interest in that asset as part of the Sydney portfolio purchase.
Based on the article, brokers and analysts view the shift as a positive repositioning: Dexus monetised US industrial assets at a premium, reduced some overseas exposure, and reinvested proceeds into Australian CBD office assets. Commentators say the moves improve earnings quality and leave Dexus with balance‑sheet capacity to pursue growth — signals that many investors in REITs saw as constructive for 2013.
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