This article is from the Australian Property Journal archive
DEXUS Property Group and the Dexus Wholesale Property Fund have bought equal stakes in a new North Sydney premium office tower development.
Dexus and DWPF have acquired 90 and 100 Mount St North Sydney for an initial acquisition price of $41.0 million. They have also entered into a fixed price design and construction contract with Laing O’Rourke Australia for the demolition of the two existing buildings and the construction of a DA approved 34 levels 41,163-sqm premium office tower.
The total development cost including the initial acquisition price is $467.5 million. A long-term lease across 6,229 sqm has also been secured with Laing O’Rourke from final practical completion in December 2018, with lease up expected to continue throughout 2019.
Dexus CEO Darren Steinberg said the project is expected to be completed at an opportune time in relation to Sydney office market supply fundamentals.
“This is an excellent opportunity for us to develop a well-located premium office tower in the North Sydney CBD. This development is set to benefit from improved amenity in the North Sydney market, including the proposed Sydney Metro line, as well as continued tenant demand for quality product in a market which has limited Prime grade options,” he added.
“We are excited by this opportunity to further diversify DWPF’s office exposure into the North Sydney market, while increasing the quality of the fund’s portfolio,” DWPF fund manager Penny Ransom said.
As a result of this transaction, the office weighting within Dexus’ total property portfolio will increase by 0.4% on a fully completed pro-forma basis.
The initial acquisition will be funded through debt facilities and Dexus will continue to maintain gearing within its target gearing range of 30-40%.
Settlement is subject to a number of conditions precedent and is expected to occur during or after April 2016 once those conditions are met.
The acquisition will have no impact on Dexus’ FFO per security or distribution per security guidance for FY16.
Australian Property Journal
