World news – Dexus closes a $ 375 million JV deal for the Sydney skyscraper

Dexus, the nation’s largest office rental company, is increasing its stake in the 1 Bligh Street skyscraper in Sydney for $ 375 million, reaffirming its belief that commercial real estate can recover from the pandemic.

Dexus will buy the 33.3 percent stake in the skyscraper from Cbus Property in a new joint venture with the Singapore-based investment fund Mercatus Co-operative. ASX-listed Dexus is pushing to top up its managed funds, and the latest deal reflects growing demand for high-yield brick and mortar plants at a time when landlords are urging tenants to return to the CBDs.

The company signed an agreement last week to merge its Dexus Wholesale Property Fund (DWPF) with AMP Capital Diversified Property Fund (ADPF), a $ 5 billion diversified fund controlled by an independent board of directors, however managed by AMP.

Under the latest plan, Dexus, which already owns most of the tower, will acquire a 10 percent stake in the newly formed joint venture vehicle, with Mercatus holding the remaining 90 percent. Dexus will be the manager of the joint venture and will continue to be responsible for the property.

Dexus and Cbus Property developed the 29-story 1 Bligh Street Tower owned by blue-chip tenants such as Clayton Utz, Bloomberg Australia and the Commonwealth of Australia is anchored. Cbus Property and Dexus are also co-owners of 5 Martin Place in the Sydney business district.

Dexus Managing Director Darren Steinberg said the deal shows the continued demand from international institutions for « high quality exposure to Australian office real estate under Dexus platform -Management « .

Mr. Steinberg was vocal about bringing workers back to the city offices, saying it would create a culture and collaboration among employees that remote working practices cannot.

On the half-year results of the group in February, Steinberg said the key executives and companies he speaks to are interested in getting their employees back into the office. However, he admitted that many tenants would also be on the lookout for flexible office space.

“Flexibility doesn’t necessarily mean less value. In fact, it means potentially more value and opportunities. When you think about what smaller or even bigger tenants are paying for flexibility. They are willing to pay a premium for it, ”said Steinberg.

Super fund developer Cbus Property will use the money for its office and apartment developments, for example for the owner of the Westfield shopping center Scentre in the former David Jones store in der 77 Market Street in Sydney. CEO Adrian Pozzo said the latest deal is another example of how well Cbus Property and Dexus have worked together over the past 13 years.

« This transaction is part of our ongoing strategy to bring capital into our future investment and development portfolios to recycle and take advantage of other key business opportunities across Australia, « said Pozzo.

 » The sale brings our weighted average lease expiration in the Premium portfolio to well over 10 years, with a government contract of around 50 percent representing our overall position in the group portfolio. «