Dexus Teams Up With Singapore's Mercatus

Dexus Teams Up With Singapore’s Mercatus Co-operative To Buy 33% Stake In Sydney Office Tower

AUSTRALIA – In line with its belief that commercial property would recover from its pandemic-induced slump, Australia’s biggest office lessor Dexus is buying an additional one-third stake in the 1 Bligh Street office tower for A$375 million, reported The Sydney Morning Herald on Sunday evening (21 March, SGT).

But most of the capital will be contributed by Mercatus Co-operative, an investment fund based in Singapore. This is because Dexus and Mercatus have formed a joint venture (JV) to acquire the 33.3 percent interest in the office building within Sydney’s central business district (CBD). And under their deal, the latter will own 90 percent of the JV entity, while Dexus will hold the remaining 10 percent.

Given that Dexus and its unlisted wholesale fund each already hold a one-third stake in the premium grade office tower, Dexus’ effective stake in the commercial property will rise to 36.66 percent.

Moreover, the Australia office landlord was named as the manager of the JV entity and will continue to be in charge of the office block. Meanwhile, Savills and Cushman & Wakefield (C&W) negotiated the deal.

“This transaction demonstrates the ongoing strength of demand from international institutions for high-quality Australian office asset exposure under Dexus platform management,” commented Dexus’ CEO Darren Steinberg.

Completed in 2011, 1 Bligh Street’s major tenants include Clayton Utz and Bloomberg. It also houses the offices of Australia’s parliament as well as of the Prime Minister.

Notably, the additional one-third interest in 1 Bligh Street was acquired from Cbus Property, which jointly developed the 29-storey office tower with Dexus. Cbus Property & Dexus also co-owns 5 Martin Place office building in Sydney’s CBD.

Cbus Property is the real estate division of Cbus, Australia’s biggest superannuation fund for the building, construction, & related sector.

The divestment comes as Cbus Property plans to focus on a A$4 billion development pipeline, which includes the redevelopment of the David Jones menswear store along Castlereagh Street into a luxury mixed-use project with office space. Another is an upcoming office building in Pirie Street in Adelaide’s CBD, and a huge office tower along Bourke Street.

“This transaction forms part of our ongoing strategy to recycle capital into our future investment and development portfolios, and to pursue other major opportunities across Australia,” stated Adrian Pozzo, Chief Executive of Cbus Property.

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