Face Rents Of Dexus Office Properties In CBDs Largely Unchanged
AUSTRALIA – The country’s biggest office lessor, Dexus, has revealed that face rents of its office buildings in key central business districts (CBDs) were not significantly impacted by the COVID-19 pandemic, reported the Australian Financial Review (AFR) on Tuesday morning (9 February, SGT).
Face rents of office properties in core CBD markets across Australia remained largely unchanged, said its Executive General Manager for office, Kevin George. Notably, face rents exclude rental incentives like rent-free periods, fit-out contributions, and rent reductions (rent abatements).
However, effective rents which take into account the aforementioned are under pressure as rental incentives continue to grow. Still, Dexus expects rental incentives to ease in some office markets for the remaining months of 2021.
During the first half of its 2021 financial year that ended on 31 December 2020, its average rental incentive across its A$22.5 billion office portfolio rose to 22 percent from 17.1 percent six months ago.
George also said that the company expects to face headwinds in Melbourne’s office market in the short-term.
“The uncertainty created by COVID-19 delayed some decision-making, particularly in Melbourne, where inspections of commercial premises have only until recently been prohibited under the extended lockdown,” he explained.
Nonetheless, rent collection for its entire office portfolio reached 96 percent during H1 FY2021.
“Despite the widespread impact of the pandemic, the first half of FY21 has been characterised by increased leasing activity, relatively strong rent collections, initiatives to grow our funds management business and the selective recycling of assets,” said Dexus CEO Darren Steinberg.
Another indicator that it was not significantly impacted by the health crisis is that funds from its operations only dipped 0.7 percent to AU$375.6 million during the period under review as compared to the same period in 2020.
Furthermore, it expects its distribution per unit (DPU) for the whole of FY2021 to be consistent with the prior year’s DPU of 50.3 cents.
“Our high-quality portfolio, the strength of investment demand for quality assets, and our platform capabilities will enable us to drive performance in this next stage of the real estate cycle,” Steinberg added.
Among the office landlord’s major deals last year was the divestment of a half-stake in Sydney’s Grosvenor Place in November to China’s sovereign wealth fund for A$925 million.
