Australia’s Dexus

Australia’s Dexus To Divest A$1.3bil Worth Of Office Bldgs

AUSTRALIA – Local real estate investment trust (REIT) Dexus is poised to unload office towers in Sydney to the tune of A$1.3 billion, reported The Australian on Wednesday evening (19 August, SGT).

The commercial properties comprise office buildings in Sydney’s central business district (CBD), namely 383 Kent Street and a half-stake in 309/321 Kent Street, where Dexus will retain management rights. It also includes other office towers in the city, namely 100-130 Harris Street in Pyrmont and 130 George Street in Parramatta.

Collectively, the assets measure over 110,000 sq m (1.18 million sq ft). They have an average occupancy rate of 98 percent and each office building is occupied by established tenants. They are also located in office submarkets that will directly benefit from major infrastructure developments.

Given that these commercial properties are well-positioned to flourish after the COVID-19 pandemic, they are likely to command a premium exceeding their total valuation of A$1.3 billion.

For instance, 383 Kent Street is situated within the heart of Sydney’s CBD. Sandwiched between the train stations of Town Hall and Wynyard, the 12-storey Grade A office tower comes with floor plates spanning 1,577 sq m (16,975 sq ft).

Close by is 309-321 Kent Street. It forms part of a 2-building complex near Darling Harbour. The 17-level Grade A office building stands out for its glass exterior.

Both 383 Kent Street & 130 George Street have development potential. They could be carved out from the portfolio called prime Sydney portfolio, enabling real estate developers to acquire these commercial properties.

As for the boutique office block in Harris Street, it features 24,000 sq m (258,334 sq ft) of Grade A office space. Situated in Pyrmont’s fringe office market, it was previously a wool store building with intricate brick facades. It has been refurbished to include spacious expansive floor plates of up to 5,026 sq m (54,099 sq ft).

The sale is expected to be participated by major real estate buyers planning to gain immediate scale in the country’s office market.

Dexus is divesting the office towers as it’s planning to finance its own gargantuan growth program, including supporting the development of Atlassian’s A$1.4 billion headquarters in Sydney. Another is the adjacent A$2.5 billion block called Central Place Sydney in the city’s new technology district that it is jointly building with Frasers.

The Aussie REIT has engaged property agents – Rob Sewell of McVay Real Estate and Josh Cullen of Cushman & Wakefield (C&W) – to market the Sydney office buildings.

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