Dexus Raises $500m in latest Notes Issue

15 November 2022

Merrill Lynch Equities (Australia) Limited has been busy raising $500m in capital for Dexus as part of a Notes offer to replace $100m of existing notes and add capital to the balance sheet of the listed real estate manager.

Consistent with Dexus’s ongoing capital management strategy, Dexus launched the fully underwritten offering of A$500 million Guaranteed Exchangeable Notes (“New Notes”) due November 2027, which will be exchangeable into Dexus securities at the election of the holder any time starting 41 days from closing date until 10 days prior to maturity and a reverse bookbuilding process to receive indications of interest from certain eligible holders of Dexus’s existing outstanding exchangeable notes due June 2026 (“Existing Notes”) to purchase for cash (“Concurrent Repurchase”) of up to A$100 million of the Existing Notes”.

The New Notes further diversify Dexus’s funding sources. The net proceeds from the issue of the New Notes will be used to fund the Concurrent Repurchase, with any surplus used for general corporate purposes. The New Notes are being offered at a coupon of 3.50% and at a premium of approximately 30.0% to 32.5% to the Reference Price described in Appendix A. The final coupon and exchange price is expected to be announced on 15 November 2022, following completion of the offer bookbuild.

The New Notes will rank as unsubordinated and unsecured obligations of Dexus in line with Dexus’s existing indebtedness. Any New Notes not exchanged before their maturity will be redeemed by Dexus at 101.37% to 104.15% of their principal amount (to be confirmed following completion of the offer bookbuild) on the maturity date.

The price payable under the Concurrent Repurchase is a fixed price of 96.25% per A$100,000 in principal amount of Existing Notes, plus any accrued interest to the settlement date of the Concurrent Repurchase. The Issuer is not under any obligation to accept any offer of Existing Notes for repurchase pursuant to the Concurrent Repurchase. Offers of Existing Notes for repurchase may be rejected in the sole discretion of the Issuer for any reason and none of the Issuer or the Sole Lead Manager are under any obligation to holders of Existing Notes to furnish any reason or justification for refusing to accept an offer of Existing Notes for repurchase or the termination of the Concurrent Repurchase. The Issuer will retain absolute discretion on repurchase allocations and may preferentially allocate those investors who participate in the New Notes offering. The settlement of the Concurrent Repurchase is subject to, among other things, the settlement of the New Notes. To the extent any Existing Notes offered by the holders thereof are accepted for purchase by the Issuer, the trading markets for the Existing Notes that remain outstanding may be significantly more limited.

Merrill Lynch Equities (Australia) Limited is acting as Sole Lead Manager and Underwriter to the issue of the New Notes and as Dealer Manager to the Concurrent Repurchase.

The issue of the New Notes, and the Concurrent Repurchase, are not expected to have a material impact on Dexus’s gearing and Dexus maintains its guidance to deliver distributions of 50.0 – 51.5 cents per security for the 12 months ended 30 June 2023.