Dexus announces acquisition and equity raising
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21 June 2017
Dexus announces acquisitions and equity raising
Dexus Funds Management Limited (“DXFM”) as responsible entity of Dexus (“Dexus” or the “Group”) today announced that it has entered into agreements to acquire two Sydney office buildings. It is also in exclusive due diligence to acquire a core industrial property in Melbourne (together with the acquisition of the two Sydney office buildings, the “Acquisitions”). The total consideration under the acquisition agreements together with the offer for the industrial property is $739.3 million1.
The Acquisitions include a 25% interest in the MLC Centre, 19 Martin Place, Sydney for $361.3 million and a 100% interest in 100 Harris Street, Pyrmont for $327.5 million2.
In relation to the MLC Centre acquisition, Dexus Wholesale Property Fund (“DWPF”) is also acquiring a 25% interest alongside Dexus, consistent with DWPF’s strategy of owning high quality assets in core markets.
The key benefits of the Acquisitions for Dexus include3:
- Enhances Dexus’s exposure to the Sydney office market, Australia’s largest office market
- Increases the Dexus office portfolio’s Sydney weighting from 65% to 67%
- Expands Dexus’s footprint in the core Martin Place precinct when combined with Dexus’s existing owned and managed portfolio
- Provides exposure to the Pyrmont office precinct, a location with strong appeal to technology orientated customers
- Leverages Dexus’s platform and capabilities to capture significant growth opportunities through market rent reversion, leasing and further development
- Opportunity to capture rental reversion in a strong Sydney office market from existing vacant net lettable area (NLA) and expiring leases
- Introduces more than 65 new customers to the Dexus platform, with increased exposure to growing technology related businesses
- Potential development and redevelopment opportunities at MLC Centre in the medium term
If all Acquisitions proceed in accordance with their terms, including the offer for the core industrial property in Melbourne, they will be funded via:
- Undertaking an equity raising, comprising
- A fully underwritten $500 million institutional placement (Placement)4; and
- A non-underwritten Security Purchase Plan (SPP) to eligible Dexus security holders in Australia and New Zealand to raise up to $50 million5
- Utilising debt facilities to be entered into by Dexus of up to $288.6 million
Darren Steinberg, Dexus CEO said: “These acquisitions continue our dominant positioning across Australia’s major cities and reinforce our belief that Sydney will continue to benefit from the global trend of urbanisation and enhanced infrastructure links over the coming years.
“With these transactions we’ve broadened our customer base and identified a number of future opportunities to leverage our skills to unlock additional value and accelerate growth.”
Download the PDF to view the full announcement and presentation.