Dexus strikes A$273m Sydney office sale and other APAC REIT news

ASX-listed Dexus has agreed to sell an A-grade office tower in North Sydney for A$273m, representing a circa 3% premium to its book value.

60 Miller Street, North Sydney (image: LinkedIn)

Located in the centre of North Sydney’s financial district, the 17-level tower at 60 Miller Street comes with 19,350 sq.m. of ground floor retail.

The property has a 97% occupancy rate and a weighted average lease expiry of 3.5 years, with key tenants including Covermore and Flight Centre.

The off-market sale is expected to close in mid-2021. Dexus said it will use the net sale proceeds to repay debt initially.

“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,” said Dexus Chief Investment Officer, Ross Du Vernet.

Dexus shares closed 0.78% higher at A$9.06 on Thursday.

Fitch downgrades Lippo Malls credit rating

Singapore-listed Lippo Malls Indonesia Retail Trust told the market that credit rating agency Fitch downgraded its long-term credit rating to ‘BB-’ on Wednesday.

The credit rating agency downgraded the trust’s long-term issuer default rating, as well as its US$250m senior unsecured notes due 2024, from ‘BB’ to ‘BB-’, with a negative outlook.

Fitch analysts said LMIRT’s financial metrics would remain weak for a prolonged period, as the recovery in Indonesia’s retail sector was taking longer than estimated.

“LMIRT’s 3Q20 results show continued weak retail operations, even after the government eased strict nationwide coronavirus pandemic-related movement restrictions imposed in 2Q20,” Fitch analysts wrote.

“LMIRT’s reported net property income of SGD13 million was 20% below our forecast; we expect the funds from operation (FFO) fixed-charge coverage ratio to dip below our negative sensitivity of 1.5x until at least 2021 and do not expect EBITDA to return to pre-pandemic levels during this time.”

Shares in Lippo Malls Indonesia Retail Trust closed slightly higher to S$0.084 on Wednesday.