Dexus takes over Sydney’s MLC Centre in US$565m deal

Australian REIT Dexus and its wholesale property fund have gained full control of the landmark MLC Centre in Sydney after acquiring the outstanding 50% stake for A$800m (US$565m).

Australian property firm GPT agreed to sell its interest in the tower after announcing its intention to offload the stake in January this year.

The tower has 66,900 sq.m. of office and 10,600 sq.m. of retail in central Martin Place, Dexus said in an announcement.

MLC Centre (image: Dexus)

The MLC Centre occupies one of the largest freehold sites in the Sydney CBD and is set to benefit from the new Martin Place metro station due for completion in 2024.

Dexus says the office tower is under-rented and offers rental growth opportunities, with about 28,000 sq.m. of space expiring or set to be leased by the end of the 2021 financial year.

Dexus and the Dexus Wholesale Property Fund acquired their initial interest in July 2017, and have seen more than 15,000 sq.m. of the asset’s space let in that time.

JLL advised Dexus on the transaction.

To fund its share of the transaction, Dexus has launched a A$425m guaranteed exchangeable note issue.

The notes, which can be exchanged into Dexus securities, are set to mature in June 2026, and are being offered at a coupon range between 2.05-2.30%.

Citigroup, JP Morgan and Merrill Lynch are acting as joint lead managers and underwriters on the issue.

The deal follows Dexus’ A$231m disposal of a Macquarie Park office park in Sydney late last month.

Dexus is listed on the Australian stock exchange, and has A$28.9bn of assets under management.

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