Dexus acquires 80 Collins for $1.476 billion

Dexus (ASX: DXS) announced it will acquire the 80 Collins St precinct in Melbourne for $1.476B from QIC Global Real Estate. DXS will own 75% with the unlisted Dexus Wholesale Property Fund owning the other 25%.

The precinct is a large-scale site of 105,000 sqm of NLA located in the Eastern part of Melbourne’s CBD. It features a 47 level A-grade office tower, as well as a new 35 level premium office tower, a new retail centre with 21 tenants and a new 255 room boutique hotel.

This acquisition is expected to boost DXS’s portfolio weighting of the listed fund to the Melbourne office market from 9% to 17%. The assets mark a yield equivalent to 5.3% and an IRR of around 8%. The new premium office tower has already undergone leasing activity with a WALE of 8.4 years on committed space. It is also located strategically to capture the foot traffic and within close proximity to transport hubs.

DXS will fund their 75% share totalling $1.1B via an equity raising and existing facilities. $900M will be raised via a fully underwritten institutional placement with $50M being available to retail investors via a security purchase plan. The remaining will come from existing cash held.