Dexus locks in 80 Collins St for $1.5b
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Property giant Dexus confirmed yesterday it has agreed to buy one of the crown jewels in the "Paris end" of Melbourne's central business district—80 Collins Street —for $1.476 billion.
Dexus Funds Management will acquire a 75 per cent ownership while the Dexus Wholesale Property Funds will acquire the remaining 25 per cent interest.
Currently owned by fund giant QIC, the 80 Collins Street project comprises 105,000 square metres of Net Lettable Area across an existing 47 level A-grade office tower and three new buildings currently under construction — a new 35 level premium office tower, a new retail podium with 21 tenancies, and a new 255 room boutique hotel.
The newly developed space will rise next to the existing 47 level QIC-owned tower on the site that also will be refurbished.
The company confirmed on March 28 that it was in exclusive talks to buy the complex with capital partners, The Australian reported.
But questions had arisen as to whether Dexus' capital partners were still in the negotiation mix.
On Thursday morning, Dexus advised it will fund its share ($1.107b billion) of the purchase through a fully underwritten $900 million institutional placement and a non-underwritten Security Purchase Plan to eligible Dexus Security holders in Australia and New Zealand to raise up to $50 million.
Citi, JPMorgan and Merrill Lynch chipped in to help Dexus manage and underwrite the Placement.
The three brokers ran a $425 million exchangeable bond offer for Dexus in March. Having stuck closely to the company during the tough bond offer, they have now been rewarded, says the AFR.
The 80 Collins Street purchase increases Dexus's office portfolio weighting to the strong Melbourne CBD office market from 9 per cent to 17 per cent.
"Following the acquisition of 52 and 60 Collins Street last year, this acquisition further enhances our scale and presence in the tightly held 'Paris end' of the Melbourne CBD, a prime location where our customers want to be," Dexus CEO Darren Steinberg said.
"Importantly, vacancy in the Melbourne CBD office market is nearing an all-time low, supported by strong population growth and significant pre-commitments across the upcoming supply pipeline," he added.
The two adjacent buildings at 52 and 60 Collins Street, when amalgamated, could become home to a $650 million new office tower.
This could mean that Dexus will end up controlling as much as 23 per cent of the Melbourne office market.
Dexus shares went into a trading halt on Wednesday morning, as it prepared to update the market on the 80 Collins Street deal, which it subsequently confirmed on Thursday morning.