Australian real estate group Dexus said on Wednesday that it has conditionally exchanged contracts to sell a 50% interest in Grosvenor Place, a premium grade office tower in Sydney to Chinese sovereign wealth fund Chinese Investment Corporation for A$925 million.
”The sale will realise total net proceeds of $925 million for the 50% interest or $694 million for Dexus, representing a circa 5% discount to the property’s book value at 30 June 2020, reflecting the current vacancy and short term leasing risk in the asset,” said in the statement.
Grosvenor Place is a 44-level, premium grade office tower with ground floor retail, designed by Harry Seidler and built in 1988. The property interest is leasehold with 78 years remaining on the ground lease. At 30 June 2020, the property was 89% occupied and had a weighted average lease expiry of 3.4 years. Major customers include Deloitte and Wilsons Parking.
Dexus acquired an initial interest in Grosvenor Place in 2013, with the investment generating an unlevered annualised total return of circa 12% since acquisition.
The purchaser is an existing co-owner of the property and the sale is subject to FIRB approval, with settlement expected in early 2021.
“This transaction continues our asset recycling strategy, realising value for both Dexus and our Dexus Office Partner. The sale further strengthens our balance sheet and enables us to organically fund higher return growth initiatives in our funds and development businesses. It also provides improved capacity to undertake capital management initiatives should there be a continued disconnect between public and private markets,” said Ross Du Vernet Dexus Chief Investment Officer.