Frasers Property’s Australian branch acquires a pair of Sydney business parks from Dexus Industria REIT for a cut price of A$160.5 million ($106.2 million) as the Singapore heavyweight continues to strengthen its global presence.
Frasers Property Australia is set to complete its purchase of two adjacent buildings in Sydney’s Olympic Park next week and add 25,048 square meters (269,614 square feet) of office and parking space to its Australian portfolio, Adam Woodward, head of capital markets office for Colliers Australia which brokered the deal, Mingtiandi told Monday.
Dexus Industria REIT is selling 1A and 1C Homebush Bay Drive, Rhodes at a 15% discount on the current book value of A$189 million to give the trust sponsored by the country’s largest office owner some breathing room to through the global economic turmoil.
The deal marks Frasers’ third new venture into the Australian industrial market in three months, after the company won approval from the New South Wales state government to develop a $3 billion commercial project Australians with Dexus in Sydney’s southern central business district in October. .
Treasury of Dexus
Located in Sydney’s Olympic Park shopping and entertainment hub, west of Sydney’s central business district, 1C Homebush Bay Drive already has Frasers and logistics giant DHL as anchor tenants, occupying most of the building of 10,406 square meters.
Its five office floors were 93% occupied and had a book value of A$87 million as of June 30, according to company data. The two-decade-old property has achieved a 5-star NABERS Energy rating under the Australian Green Building Rating System, and has a weighted average lease expiry period of 2.1 years.
The neighboring building, which spans 14,642 square meters, has six office levels and underground parking for 339 vehicles, with local online bookstore Booktopia as its anchor tenant. Built in 2007, it was valued at A$102 million at the end of June when it had 19 per cent occupancy and an average term to expiration of leases of 1.5 years .
Frasers is paying the equivalent of A$64.10 per square meter of combined net leasable area for the properties and company representatives did not respond to questions about their plans for the assets.
Dexus Industria REIT said proceeds from the sale will be used to pay down debt and strengthen its balance sheet. The ASX-listed trust will end up with 92 assets worth A$1.5 billion in its portfolio after the sale.
“The sale advances our strategy to create Australia’s first industrial REIT, improves balance sheet resilience and reduces income risk across the portfolio, and following the planned cancellation of excess debt facilities, the next refinancing event will not occur until mid-2024,” said trust fund manager Alex Abell.
Frasers ramps up in Australia
The Sydney Olympic Park purchases are the latest move by Frasers to bolster its presence Down Under after its local branch saw pre-tax profits jump by a third from a year earlier to $80.8 million Singaporeans ($58.5 million) for the year ending September 30. due in part to proceeds from the sale of assets.
During the period, however, Frasers Australia saw a 40% drop in revenue after recoveries were derailed by the “build, deliver and settle program schedule”.
Despite recent divestments, Frasers Australia is aiming to double its portfolio to A$5.5 billion in four to five years, Frasers executive managing director Ian Barter was quoted as saying by local media.
Late last month, Frasers Australia announced that a joint venture between the company and Dexus had won approval from state regulators to develop a 130,000 square meter retail complex in Sydney’s southern CBD, estimated at $3 billion.
Dubbed Central Place Sydney, the project aims to build a pair of office skyscrapers of 35 and 37 floors each, preceded by an eight-storey commercial block. The partners will begin construction next year, with the first phase expected to be completed by 2027.
A month before the joint venture was approved, Frasers Property Industrial acquired two neighboring industrial sites spanning 73.4 hectares (181 acres) on Aldington Road in Kemps Creek, western Sydney, for an undisclosed sum .
An account from The Property Tribune said the company plans to build “warehouses, distribution centers, freight facilities and high-end health and wellness amenities” within the complex.