Larry Schlesinger | 21 December 2012

Dexus pays $271 million for 25% of Harry Seidler-designed Grosvenor Place in Sydney CBD

Listed commercial property group Dexus has acquired a 25% stake in 225 George Street, the iconic 44 storey Sydney office tower, more commonly known as Grosvenor Place, for $271 million, as part of a $503.7 million portfolio investment just before Christmas.

It follows the successful sale of Dexus’s US industrial portfolio earlier this week, the proceedings used to fund the office investments.

Apart from the Harry Seidler-designed tower, Dexus also acquired a 50% interest in 2 and 4 Dawn Fraser Avenue, Sydney Olympic Park - two adjoining seven level A-Grade office towers opposite the Sydney Olympic Park for $82.7 million and made a joint (50/50) purchase of 39 Martin Place, a 20 level B-Grade property located adjacent to Martin Place railway station, Sydney with the Dexus Wholesale Property Fund (DWPF) for $149.75 million.

The portfolio was acquired in an off-market transaction from the Direct Property Investment Fund (DPIF), a wholesale office fund, managed by the property division of Colonial First State Global Asset Management.

DPIF is a closed-end fund and is currently in its wind-down phase.

Colonial First State had acquired its 25% interest in Grosvenor Place in 2003, which was valued at $273.8 million in June this year.

The primary tenants are Deloitte, which lease 26% of the building until 2023, law firms Ashurst (16% until 2015) and Norton Rose (11% until 2019) and McCann World Group.

The building was opened in 1988 and won a number of architectural awards for its unique design, including the two large crescent shaped floor plates.

“We are pleased to be able to announce the reinvestment of a significant portion of the sale proceeds from the US industrial portfolio into quality Australian office assets in one of our core office markets. The unique off-market nature of this transaction and our team’s ability to confidentially execute on an accelerated timetable concurrently with the US sale, reinforces our strength in the origination and execution of deals,” says Darren Steinberg, CEO of Dexus.

Steinberg says the new acquisitions “enhances the quality and diversification” of its office portfolio and is a key milestone in its strategy of delivering superior risk-adjusted returns from high quality Australian real estate primarily comprising CBD office buildings.

“DEXUS now holds interests in four out of seven premium office buildings in the Sydney market,” he says.

The other premium Sydney investments include 1 Bligh Street and 201-217 Elizabeth Street.

The purchase of the Sydney portfolio increases Dexus’s footprint in the Sydney office market from 365,075 square metres to 403,599 square metres giving it around 8% of the market

Grosvenor Place comprises 84,527 square metres of office accommodation (86% occupancy by income) over 44 levels together with 984 square metres of retail space (100% occupancy by income), parking for 566 cars and a three storey lobby.

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