Dexus knocks down the competition to capture QIC’s development precinct on Melbourne’s Collins Street with the highest bid of $1.4 billion.
Real Estate giant Dexus (ASX: DXS) has reached to end the final round of acquiring the octagon-shaped premier office building from the Government’s investment company, QIC, after valuing the property at $1.4 billion. The property outlines the 52-storey office tower at the 80 Collins Street of Melbourne.
It marks the largest deal of the recent times in Melbourne’s commercial real estate market. The deal gave the tough fight to rivals Charter Hall and Mirvac who were seen in the final round with Dexus.
Chief Investment Officer, Ross Du Vernet earlier stated that the acquisitions in Melbourne provide a significant presence to Dexus in the tightly held ‘Paris end’ of Collins Street in the central business district (CBD).
The takeover of 80 Collins Street adds to the Dexus’ already established a strong portfolio of the office building on Collins Street, a major street in the centre of Melbourne. It includes 150-storey office accommodation at 60 Collins Street and 35 levels of A-grade office building at 360 Collins Street among others.
During the half-year ended 31 December 2018, Dexus entered into an agreement to acquire adjoining properties at 60 and 52 Collins Street to develop its portfolio of prime office site in the Melbourne CBD. The acquisition along with the development at 140 George Street increased the company’s development pipeline to $2.8 billion.
The management believes that these highly valued acquisitions underscore a unique opportunity to conduct office development in a prime location, thereby creating long term value for investors in the supply cycle.
Further, the development works at 240 St Georges Terrace in Perth is currently underway which is expected to be completed in late 2020 early than previous expectations of the company. The construction at 100 Mount Street in North Sydney is reportedly scheduled to be completed in May 2019 while the development works continue to progress at 12 Creek Street in Brisbane and 180 Flinders Street in Melbourne.
Another opportunity is getting developed by Queensland Investment Corporation (QIC) around the 80 Collins Street tower. It includes a 39-storey office building which has already secured the tenants pre-commitment including Macquarie Bank, management consultants McKinsey and installation of eateries like Chris Lucas, Chris Lucas among others.
However, the pricing of the complex has yet not finalised as the building is under construction and depends upon the varying degree of risk components including lease agreements and guarantees.
DXS has edged up by 0.157% in day-trade to close at $12.770 on 27 March 2019. The stock last traded near to its 52-week high level with a price to earnings multiple of 8.890 x and a market capitalisation of $12.97 billion.
Over the past 12 months, the stock witnessed a surge of 38.74% including a positive price change of 15.28% recorded in the past three months.