Dexus exits US, looks to buy local assets

Dexus Property Group has completed its exit from the US with an unconditional agreement to sell its remaining US industrial property in Los Angeles for $US56.2 million.

By InvestSMART · 3 Apr 2013

By InvestSMART ·
3 Apr 2013

Comments

Dexus Property Group has completed its exit from the US with an unconditional agreement to sell its remaining US industrial property in Los Angeles for $US56.2 million.

In December the group raised close to $521 million with the sale of 27 US assets, the bulk of its portfolio, with the funds used towards the purchase of Sydney assets in a joint venture with its unlisted fund.

Dexus chief executive Darren Steinberg said the departure from the US was ahead of schedule and allows the group to concentrate on Australia.

The group has been suggested as a possible purchaser of some of the assets within GE Capital's portfolio, which some analysts have dismissed, as well as the NSW properties.

Mr Steinberg has said Dexus is also interested in expanding its footprint in Melbourne.

He said on Monday that the funds raised from the Los Angeles sale would be used to repay the short-dated debt associated with the property.

In a recent report, UBS analysts said office-focused real estate investment trusts are expected to be net acquirers of assets.

"Dexus has the highest quality office portfolio in the Australian market and the company has $1 billion acquisition capacity within its wholesale funds and about $500 million on its balance sheet," the UBS report says.

"In a high [lease] incentive environment, Dexus has the highest-quality funds from operations and faces the least headwinds from incentives of the office REITs."

Go to Google News, then click "Follow" button to add us.

Share this article and show your support

Frequently Asked Questions about this Article…

What did Dexus sell to complete its exit from the US?

Dexus completed its exit from the US by agreeing unconditionally to sell its remaining US industrial property in Los Angeles for US$56.2 million.

How much did Dexus raise from previous US asset sales earlier this year?

In December Dexus raised close to $521 million from the sale of 27 US assets, which was the bulk of its US portfolio.

Why is Dexus exiting the US and what will it focus on next?

Dexus said the departure from the US was ahead of schedule and lets the group concentrate on Australia, focusing on local opportunities and strengthening its domestic portfolio.

How will Dexus use the proceeds from the Los Angeles sale?

Dexus' CEO Darren Steinberg said the funds from the Los Angeles sale would be used to repay the short‑dated debt associated with that property.

Is Dexus planning to reinvest the US sale proceeds into Australian assets?

Yes. Dexus used funds from earlier US sales toward purchasing Sydney assets in a joint venture with its unlisted fund, and the group has indicated ongoing interest in buying local assets.

Is Dexus being considered as a buyer for GE Capital or NSW properties?

The group has been suggested as a possible purchaser of some assets within GE Capital's portfolio and of NSW properties, although some analysts have dismissed those suggestions.

Does Dexus have the capacity to make further acquisitions in Australia?

According to a UBS report cited in the article, Dexus has strong acquisition capacity: about $1 billion available within its wholesale funds and roughly $500 million on its balance sheet.

What do analysts say about office REITs and Dexus in a high lease incentive environment?

UBS analysts expect office‑focused REITs to be net acquirers of assets. They noted Dexus has the highest‑quality office portfolio in Australia, the highest‑quality funds from operations, and faces the least headwinds from lease incentives among office REITs.