Dexus Offloads 452 Flinders Street for $450m


Real estate investor Dexus has offloaded an A-grade tower in the Melbourne CBD to German investor Deka Immobilien, in a deal worth more than $450 million

Dexus said the sale of the 22-level office tower at 452 Flinders Street would net proceeds of $440 million, representing an 11 per cent premium to the property’s June book value.

The proceeds of the sale will initially repay debt with capacity to recycle into higher returning opportunities.

The sale was negotiated following an off-market campaign with interest from a number of parties around the sale price including Singaporean group Keppel Capital and Charter Hall.

The property, which was acquired in 2011 for $194 million and recently overhauled with a new foyer and lease agreements, has delivered a return of 24 per cent per annum over the past two years.

The 38,000sq m office building includes 17-levels of office space, a three-level basement car park, ground floor retail and end-of-trip facilities.

▲ As of June the building had 100 per cent occupancy with a weighted average lease expiry of 6.3 years.
▲ As of June the building had 100 per cent occupancy with a weighted average lease expiry of 6.3 years.

The sale to German investor Deka Immobilien is expected to settle in mid-November and is subject to the purchaser receiving FIRB approval.

Deka already owns the 20-level A-grade tower across the laneway at 15 William Street, which it bought in 2009 for $167 million.

At 32-44 Flinders Street, GPT Group is pressing ahead with plans for a 42-level tower that will cost $200 million to build and will add 30,000sq m of office space to Melbourne’s CBD market.

Dexus recently offloaded 45 Clarence Street in the Sydney CBD, which was picked up by Peakstone, a Singapore-based manager of Asian capital, for $530 million, following an unsolicited offer.

And following a competitive shortlisting process, Dexus has also increased its market offering of a stake in the $2 billion-plus Grosvenor Place from 25 per cent to 50 per cent.

The deal is yet to be finalised but Chinese sovereign wealth fund, China Investment Corporation, which already owns a quarter stake in the Harry Seidler-designed tower, is believed to be leading the charge for the asset.

Dexus and joint venture partners Frasers Property Australia also recently announced the design team behind their $2.5 billion Central Place Sydney in the government-backed technology precinct next to Central Station.

The precinct, set to feature two office towers of up to 39 levels, will join anchor tenant Atlassian, which has plans of its own for a $1 billion timber tower, at Sydney’s so-called “Silicon Valley” spanning 24 hectares at the southern end of the CBD.

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