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Dexus announces acquisition of the 80 Collins precinct, Melbourne and equity raising

People & Companies / Latest News


May 03 2019

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Dexus Funds Management Limited (“DXFM”) as responsible entity of Dexus (“Dexus” or the “Group”) today announced that it has agreed to acquire the 80 Collins precinct, alongside Dexus Wholesale Property Fund (“DWPF”), for a Total Acquisition Cost of $1.476 billion1 (the “Acquisition”) from QIC Global Real Estate. Dexus will acquire a 75% ownership interest in the 80 Collins precinct and DWPF will acquire the remaining 25% interest.

The 80 Collins precinct is a large-scale site that is strategically located in the Eastern Core of Melbourne’s CBD. The precinct comprises 105,000 square metres of Net Lettable Area (“NLA”) across:

  • an existing 47 level A-grade office tower;
  • a new 35 level premium office tower;
  • a new retail podium with 21 tenancies; and
  • a new 255 room boutique hotel.

New components of the 80 Collins precinct are currently being developed. Dexus’s contribution to the development is limited to the acquisition price2.

The rationale for the Acquisition includes:

Rare opportunity to invest in a whole block precinct, strategically located in Melbourne CBD’s tightly held Eastern Core

  • Unique corner site, benefiting from considerable foot traffic, proximity to public transport hubs and access to a deep pool of quality tenants
  • Dexus will own or manage circa 20% of the total office stock (by area) in the Eastern Core post the acquisition of the 80 Collins precinct and the development of the neighbouring Dexus owned 52 and 60 Collins Street

Access to circa 92,600 square metres of prime grade office space, including a brand new premium office tower with large floor plates and a 5 star energy rating

  • Significant positive rental reversions forecast on existing tower
  • Substantial leasing progress made on new premium tower with 8.4 year Weighted Average Lease Expiry (“WALE”) on committed space

Increases Dexus’s office portfolio weighting to the strong Melbourne CBD office market from 9% to 17%

  • Melbourne has the fastest growing population of any capital city in Australia
  • Melbourne CBD office vacancy rate of 3.7% supports significant rental increases
  • Melbourne office capital values per square metre compare favourably with global gateway office markets

Attractive acquisition structure and metrics

  • Fixed price acquisition with Dexus driving leasing outcomes from initial settlement2,5
  • Monthly coupon payment equating to 5.4% per annum in relation to Tranche 1 and 2 payments contributed towards the South Tower, Retail Podium and Hotel until handover by the Vendor6
  • Equivalent yield of 5.3% and IRR of circa 8%



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