Dexus secures future trading profits while growing DALT
30 July 2020
Dexus secures future trading profits while growing Dexus Australian Logistics Trust (DALT)
Dexus today announced that it has entered into agreements to sell a high quality portfolio of industrial assets to the Dexus Australia Logistics Trust (DALT or the Fund), while at the same time contracting future trading profits for Dexus in FY21 and FY22.
The portfolio comprises five high quality industrial assets in Truganina, VIC and a high quality industrial business park in Botany, NSW including:
- 47-53 Foundation Drive, Truganina VIC
- 380 Doherty’s Road, Truganina VIC
- 7 Custom Place, Truganina VIC1
- 9 Custom Place, Truganina VIC2
- 58 Foundation Road, Truganina VIC
- 11 Lord Street, Botany NSW (Lakes Business Park South)
The Truganina assets comprise newly developed premium grade facilities located within Dexus’s Foundation at Truganina industrial estate, located 18 kilometres west from the Melbourne CBD with convenient access to the Princes and West Gate Freeway, Western Ring Road and the Deer Park Bypass.
Lakes Business Park South is strategically located in Botany, 12 kilometres south-east from the Sydney CBD with immediate connections to Sydney Airport and Port Botany, together with easy freeway access via the Eastern Distributor.
The portfolio is 91% occupied with a WALE of 7.4 years and has been contracted to be sold to DALT at a price of $269.4 million3 representing a passing yield of 5.3%.
For DALT, in which Dexus has an interest, this acquisition enables access to a portfolio of properties off market, while delivering on its active acquisition and development mandate. When combined with the DALT acquisitions of two high quality assets at Greenacre, NSW and Mickleham, VIC which were announced to the Australian Securities Exchange (ASX) on 7 July 2020, this portfolio will increase the size of the Fund by circa $445 million.
Dexus has exchanged contracts to sell the first tranche of the portfolio in October 2020 and entered into put and call option arrangements to sell the second tranche in mid-20214. Details relating to the properties are included in the Appendix.
Deborah Coakley, Executive General Manager, Funds Management said: “These acquisitions continue to build on the Dexus Australian Logistics Trust’s strategy to acquire high quality and well leased assets that deliver favourable total returns.”
Dexus retains management and an ownership interest in the assets via its interest in DALT.
Darren Steinberg, CEO of Dexus said: “We are pleased to have been able to retain exposure to these quality industrial assets via our interest in the Dexus Australian Logistics Trust, while contracting trading profits for Dexus investors.
We have leveraged our extensive market knowledge, development and leasing capabilities and track record to successfully deliver these projects. Since 2010, we have developed and leased 47 industrial development projects across 784,000 square metres in Sydney, Melbourne and Brisbane.”
For Dexus, this transaction is consistent with the strategy for these trading assets which was to develop, lease and sell for a trading profit. The sale is expected to contribute circa $35 million in trading profits pre-tax over FY21 and FY22 (in the event the options are exercised), with further trading profits that could be realised, subject to favourable leasing outcomes being achieved.
Dexus has also exercised its put option in relation to the sale of its remaining 25% interest in 201 Elizabeth Street, Sydney for $157.5 million, originally announced to the ASX on 9 August 2019. This sale will contribute circa $34 million in trading profits pre-tax in FY21.
The sale of the North Shore Health Hub, Stage 1 currently under development at 12 Frederick Street, St Leonards and originally announced on 2 September 2019, will also contribute to trading profits in FY21.
Further details relating to trading profits will be provided at Dexus’s Annual Results to be released to the ASX on Wednesday 19 August 2020.
Appendix information is available in the PDF.