Dexus is offloading $555 million in Sydney office assets as it moves towards other investment opportunities.
The group sold its 50 per cent interest in 309-321 Kent Street, Sydney for $401 million to Hong Kong-listed Liu Chong Hing Investment Limited and Ashe Morgan.
The two office buildings were 93 per cent occupied with a weighted average lease expiry of 3.5 years.
The transaction was a continuation of the duo’s office buying spree which also included 310 Ann Street, Brisbane for $210 million in March.
The other A-grade office building at 150 George Street, Parramatta and adjoining 2271sq m site also sold, just before Christmas, for $154 million to an undisclosed buyer in an unsolicited, off-market deal.
Commonwealth Bank of Australia recently vacated the site with 21,964sq m of space which has approval for a 33-storey office building.
The proceeds of the sales would initially be used to pay off debts as the ASX-listed company works towards “short-term growth prospects in the industrial and healthcare sectors”.
Despite the investment-strategy shift, the group was still confident in the office market which Dexus chief executive Darren Steinberg expected to improve after Australia Day.
There were also approved plans to build a new 159-metre Collins Street office tower, banking on the resurgence of Melbourne’s office market.
The company revalued its 189 assets in mid-December and reported 34 office, 1 healthcare and 89 industrial properties had lifted in value in the past six months, up $421 million or 2.4 per cent.
Steinburg said the value of its office portfolio increased 0.6 per cent and industrial jumped 8.7 per cent on prior book values.
“As evidenced by these latest independent valuations, the value of Dexus’ quality portfolio has remained robust in a Covid-impacted environment,” he said.
“We have continued to see growth in asset values for well-located industrial and logistics facilities, supported by strong investment demand.
“We anticipate the post-lockdown environment will continue to see global capital attracted to Australia, benefiting quality assets across the core property sectors.”