Dexus Sells North Sydney Office Asset

2 November 2020

Dexus sold a North Sydney office tower in Miller Street to a Hong Kong based investor for $273m in a deal which reflects strong interest in the Office market.

The property sits on the prominent corner of Miller Street and the Pacific Highway and comprises a contemporary A-grade building with 12 levels of office space, two levels of retail and three levels of basement parking for 155 vehicles, as well as a five storey annex building fronting Mount Street offering generous floor plate sizes. The property has a 5.0-star NABERS Energy rating

The buildings’ major tenant is Flight Centre and Cover Moore offering a WALE of 3.6 years. The property is also home to the Treehouse Cafe / Restaurant which is amongst the best dinning locations in North Sydney.

The property was sold at a price above its 30th June book value of $265m, reflecting a cap rate of 5.1%.

Whilst the existing improvements are modern and well suited to the market, the site has the capacity to become a major redevelopment opportunity. The recent changes to the North Sydney LEP will permit the development of around 32 levels of office space, approximately twice the current height.

The deal will add to the $1.3bn of assets sold out of Dexus since June this year. These assets include, 45 Clarence Street, sold to Zone Q investments, 452 Flinders Street, sold to Deka and the $270m sell down of the Industrial portfolio to the Groups Wholesale fund.

Dexus are also in the process of selling a number of other assets including a 25% interest in Grosvenor Place.

Dexus Chief Investment Officer, Ross Du Vernet said: “This transaction reinforces private market demand for quality office assets in Australia’s gateway cities. The sale improves portfolio composition and enables us to organically fund growth in our development and funds management businesses, while preserving capacity for further capital management initiatives.”

The net sale proceeds will initially be used to repay debt