The assets include Dexus Office Partnership’s 50 per cent interest in 5 Martin Place, Sydney, for $296.2 million; 130 George Street, Parramatta, for $69.1 million; and 18 Motorway Circuit, Ormeau, for $17.9 million.
According to the company, sale proceeds will initially be utilised to repay debt, with the divestments continuing Dexus’ asset recycling initiatives.
The sale prices were first reflected in its most recent draft valuations released last week, which saw 170 of its 1,761 assets, comprising 30 office properties and 140 industrial properties be externally valued as at 30 June 2024.
Namely, the draft external independent valuations saw a total estimated decrease of around $1.3 billion or 9 per cent on book values across the stabilised portfolio and development assets for the six months to the end of June.
The value of the office portfolio saw the largest decrease – of some 11.3 per cent – driven by higher capitalisation rates and discount rates, partially offset by market rental growth.
According to Dexus, the industrial portfolio also decreased by around 1.2 per cent, with strong rental growth largely offsetting the impact of higher capitalisation rates and discount rates.
Ross Du Vernet, Dexus group chief executive and managing director, said: “The investment metrics displayed by recent sale activity support a softening in office market valuations.
“However, as a long-term investor, we have confidence in the value of our high-quality portfolio through the cycle. There is continued occupier demand for well-located, high-quality buildings as seen in our portfolio occupancy.”
Moreover, the weighted average capitalisation rate across the total stabilised portfolio expanded by circa 42 basis points over the past six months to 5.87 per cent.
Across this, the weighted average capitalisation rate of the office portfolio expanded by approximately 48 basis points from 5.53 per cent at 31 December 2023 to 6.01 per cent at 30 June 2024 and expanded by around 27 basis points to 5.45 per cent over the same period for the industrial portfolio.
The divestment comes almost two months after Dexus raised more than $300 million for a first close for its dedicated real estate opportunity fund – the Dexus Real Estate Partnership 2 (DREP2) – putting it on track to raise up to $1 billion in equity.
At the time, the firm clarified that multiple funding rounds are still expected to close before the end of the year. According to Dexus, once completed, and with gearing, the fund expects to invest as much as $2 billion commencing with the funds from the first close.
