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Dexus raises $925m from sale of half stake in Grosvenor Place

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Dexus chief investment officer Ross Du Vernet said the transaction continues the company’s asset recycling strategy, realising value for both Dexus and its office partnership.

“The sale further strengthens our balance sheet and enables us to organically fund higher return growth initiatives in our funds and development businesses,” Mr Du Vernet said.

Dexus has confirmed it has made an approach to AMP Capital for its diversified property fund amid speculation it could look at the whole funds management platform. Lendlease is also a strong contender for the AMP Capital business.

Listed property giant GPT has also joined the ranks of office block sellers, putting a one-quarter stake in Sydney’s $2.4 billion Governor Phillip and Governor Macquarie Towers on the block.

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Sitting at the northern end of the newly-revamped George Street, Grosvenor Place is a 44-level, premium grade office tower designed by Harry Seidler and built in 1988.

The property interest is leasehold, with 78 years remaining on the ground lease. The major tenants include Deloitte, which is moving to AMP’s Quay Quarter in late 2021 and Wilsons Parking.

Dexus bought its initial interest in Grosvenor Place in 2013, with the investment generating an annual total return of about 12 per cent since acquisition.

Despite the impact of the global pandemic on office leasing demand, where a majority of office workers remain at home, demand for owning the hard assets remains solid, particularly from overseas investors.

CBRE Research’s capital flows report, covering the period from the start of the pandemic in late March to the end of September, revealed offshore investors accounted for around 40 per cent of all Australian property transactions, which is slightly above the long-term average.

Simon Rooney, Stuart McCann and Flint Davidson of CBRE and joint agents Rob Sewell, Luke Billiau and Simon Storry from JLL advised on the sale.

Mr Rooney, head of retail capital markets, said the Grosvenor Place transaction is one of the largest and most competitive office transactions to occur globally in 2020 and demonstrates the underlying strong investor appetite for core products in gateway cities, particularly among foreign buyers.

“Offshore investors … are relative investors and Sydney, more than ever, is viewed positively on a regional and global basis,” Mr Rooney said.

“The attractive yield spread, historically low financing costs, low vacancy levels on a relative basis and a resilient economy firmly in control of the COVID-19 pandemic, are all key factors leveraging strong offshore engagement and cross border capital inflows”.

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