This article is from the Australian Property Journal archive
A WEEK after offloading two adjoining Melbourne industrial facilities for $23 million, Dexus Industria REIT (DXI) has announced a 1.8% decrease in the value of its $1.4 billion portfolio.
DXI had 91 of its 94 assets externally valued, being all assets except those held for sale, resulting in a net devaluation of $28.3 million for the six months to the end of June. Its portfolio was held at $1.6 billion at its half-year results.
The weighted average capitalisation rate across the total portfolio expanded 25 basis points over the six months from 5.13% to 5.38%, while expanding 26 basis points on a like-for-like basis.
“Strong industrial rental growth continues to enhance future cash flows, which has largely offset the impact of cap rate expansion across DXI’s $1.4 billion portfolio.”
DXI will announce its FY23 results on Wednesday, 9th August.
The commercial real estate sector has been waiting for the latest round of revaluations with baited breath after deal making slowed down amid higher interest rates and structural uncertainties around the office sector in particular. The industrial sector, which has become the darling of commercial real estate since the onset of COVID triggered an e-commerce boom, is expected to be cushioned from heavy blows more so than the office sector. Dexus last week saw 7.7% wiped off the value of its office towers after sales of major Sydney towers well below book value, while Charter Hall has had 3.7% had been cut from the value of its office portfolio.
Meanwhile, private investment company Arrow Capital Partners has emerged as the purchaser of the two separately titled industrial facilities DXI has just sold off, at 3 & 4 Forbes Close in Knoxfield for $22.925 million.
They total 12,674 sqm on a combined landholding of 2.4 hectares.
The asset sold with a fully occupied with a weighted average lease expiry of 2.5 years by income, allowing for significant future positive rental reversion in the short-term given the passing rental is considered well below current market levels.
The deal was negotiated by Chris Jones, Adrian Rowse and Charlie Holmes of Cushman & Wakefield in conjunction with Ben Hegerty and Jack Kelliher of JLL.
Industrial vacancy levels through Melbourne’s eastern corridor are at less than 1%.
“The property generated significant interest from a wide cross-section of privates, syndicators and funds who were attracted to the asset’s strong location characteristics, high underlying land value and the precinct’s minimal vacancy,” Jones said.
