Acquired in November 2012, 40 Market Street, Melbourne was identified as a trading property and secured Dexus $17 million in trading profits in FY15 following its disposal.

Dexus approach

  • Acquired in November 2012 as an identified trading property for $46.7 million, well below replacement value, at a capitalisation rate of 8.0%
  • Secured a 15 year lease renewal from existing tenant Powercor for the whole of the building, 15 months post acquisition and well ahead of the lease expiry, ensuring 100% occupancy of the commercial space until 2030
  • Commenced capital works as part of the new lease, including an extensive base building upgrade in line with the tenant’s requirement and targeting a 3 star NABERS Energy rating from a zero rating
  • Exchanged contracts in September 2014 to pre-sell the property for $105 million

Value created

  • Settlement occurred in May 2015 following the completion of the building’s upgrade, delivering trading profits of $17 million in FY15 and an internal rate of return of 26%