Dexus And DWPF To Acquire Remaining 50% Interest In MLC Centre


Dexus (ASX: DXS), Australia’s REIT (Real Estate Investment Trust) firm provides real estate services. The Company manages and invests in a portfolio of diversified properties, including office and industrial buildings, retail shopping centres, and car parks. Dexus serves customers in Australia and New Zealand.

The company, on 13 March 2019, has come up with the announcement that they have agreed to jointly acquire the remainder of 50% stake in MLC Centre. The company and DWPF will each acquire an additional of 25% stake in the impugned property for a total consideration of A$800.0 Mn. 

The rationale behind this purchase is that the MLC Centre reside in one of the major freehold sites in the Sydney CBD and will directly benefit from the new Martin Place Metro Station which is due for the completion in the year 2024. Moreover, the Office tower is under-rented, providing an opportunity to benefit from robust Sydney CBD office market fundamentals with circa 28,000 square metres expiring or to be leased by the end of FY21. This acquisition of the remaining interest provides the company with full management and operational control.

Dexus will fund its share of the acquisition through debt and will concurrently launch a fully underwritten offering of A$425 million Guaranteed Exchangeable Notes (“Notes”) due June 2026, which will be exchangeable into Dexus securities at the election of the holder anytime starting 41 days from closing, until ten days before maturity.

The acquisition is expected to have an immaterial impact on distributions of dividends in the Financial Year 2019. The company has stuck to its FY19 guidance of distribution per security rise of roughly 5%.

Dexus’s net profit after tax was $726.4 million or 71.4 cents per security, a decrease of $270.7 million from the previous corresponding period (HY18: $997.1 million). The key drivers of this movement were Net revaluation gains of investment properties of $456.5 million, representing a 3.4% uplift across the total portfolio, were $273.7 million lower than the HY18 gains. This was partially offset by a $20.4 million increase in trading profits (net of tax) to $34.7 million and an $8.4 million increase in Total Property FFO to $372.4 million compared to the previous corresponding period

On the price-performance front, the stock has posted the YTD return of 18.35%. The company also has posted returns of 15.17%, 13.39% & 3.23% over the past six, three & one-month period respectively. At the time of writing (14 March 2019), the stock of the company is trading at a price of $12.44, down 0.08% during the day’s trade with a market capitalisation of ~$ 12.66 Bn. The stock opened the day at $ 12.440, touched day’s high of $ 12.460 and touched the day’s low of $ 12.370. It had a 52-week high price of $ 12.730 and a 52 weeks low price of $ 9.090, with an average volume of 3,664,468 approximately.


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