Singapore’s Frasers Buying Pair of Sydney Office Buildings From Dexus Industria REIT For $106M

The Australian arm of Frasers Property is acquiring a pair of Sydney business parks from Dexus Industria REIT for a discounted price of A$160.5 million ($106.2 million) as the Singaporean heavyweight continues to boost its global presence.

Frasers Property Australia is set to close next week on its purchase of two adjacent buildings in Sydney’s Olympic Park and add 25,048 square metres (269,614 square feet) in office and car park space to its Aussie portfolio, Adam Woodward head of office capital markets for Colliers Australia who brokered the deal, told Mingtiandi on Monday.

Dexus Industria REIT is divesting 1A and 1C Homebush Bay Drive, Rhodes at a 15 percent discount to current book value of A$189 million to give the trust sponsored by the country’s largest office landlord some wiggle room to maneuver through the global economic turmoil.

The deal marks Frasers’ third new venture in the Australian industrial market within three months, after the company obtained approval from the New South Wales state government to develop an A$3 billion commercial project with Dexus in the southern rang of Sydney’s central business district in October.

Dexus Hoards Cash

Located in the commercial and entertainment hub of Sydney Olympic Park, west of Sydney’s central business district, 1C Homebush Bay Drive already has Frasers and logistics giant DHL as its major tenants, occupying most of the 10,406 square metre building.

Its five office floors were 93 percent occupied and had a book value of A$87 million as of 30 June, based on company data. The two-decade old property has earned a 5 star NABERS Energy rank under Australia’s rating system for green buildings, and has a weighted average lease expiry period of 2.1 years.

The neighbouring building, which spans 14,642 square metres, has six levels of office space and basement parking for 339 vehicles, with local online bookstore Booktopia as a major tenant. Built in 2007, it was valued at A$102 million at the end of June when it had a 19 percent occupancy rate and an average term to lease expiry of 1.5 years.

Frasers is paying an equivalent of A$64.10 per square metre of combined net lettable area for the properties and company representatives did not respond to queries on their plans for the assets.

Dexus Industria REIT said that proceeds from the sale will be used to repay debts and strengthen its balance sheet. The ASX-listed trust will be left with 92 assets worth A$1.5 billion in its portfolio post-disposal.

“The sale progresses our strategy of creating Australia’s leading industrial REIT, enhances balance sheet resilience and reduces income risk across the portfolio, and following the anticipated cancellation of surplus debt facilities, the next refinancing event will not be until mid-2024,” said the trust’s fund manager, Alex Abell.

Frasers Ramps Up in Australia

The Sydney Olympic Park buys are Frasers’ latest move to boost its presence Down Under after its local arm saw pre-tax earnings jump by a third compared to a year earlier to reach S$80.8 million ($58.5 million) for the financial year ending 30 September due in part to proceeds from asset sales.

During the period, however, Frasers Australia posted a 40 percent drop in revenue after collections were derailed by the “timing of construction, delivery and settlement programme.”

Despite the recent disposals, Frasers Australia is aiming to double its A$5.5 billion portfolio in four to five years, Frasers executive general manager Ian Barter was quoted as saying in local media reports.

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 metre commercial complex in Sydney’s southern CBD estimated to reach $3 billion.

Dubbed Central Place Sydney, the project aims to build a pair of office skyscrapers of 35 and 37 storeys each, fronted by an eight-storey commercial block. The partners will commence construction next year with the first phase targeted for completion by 2027.

A month prior to the approval of that JV, Frasers Property Industrial acquired two neighboring industrial sites spanning 73.4 hectares (181 acres) on Aldington Road at Kemps Creek, in western Sydney, for an undisclosed amount.

An account by The Property Tribune stated that the company plans to build “warehouses, distribution centres, freight transport facilities and premium health and wellbeing amenities” within the complex.