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Dexus Raising Capital for 80 Collins St
May 2, 2019
Dexus confirmed this week that it has agreed to acquire the 80 Collins precinct, alongside Dexus Wholesale Property Fund from QIC Global Real Estate, for a total acquisition cost of $1.476 billion. Dexus will acquire a 75% ownership interest in the 80 Collins precinct and the wholesale fund will acquire the remaining 25% interest.
Dexus’s funding requirement for its 75% share is $1.107 billion and will be made in four tranches between May 2019 and August 2020. Tranches 1 and 2, totalling $833 million, will be paid in May and June 2019. Tranches 3 and 4 totalling $274 million are expected to be paid in July and August 2020 respectively.
Dexus intends to fund Tranche 1 and 2 via undertaking an equity raising comprising:
A fully underwritten $900 million institutional placement, and
A non-underwritten Security Purchase Plan to eligible Dexus Security holders in Australia and New Zealand to raise up to $50 million
QIC will manage the development of the South Tower, Retail Podium and Hotel. Development costs, including certain third-party claims associated with the development, will be funded by the Vendor with Dexus’s contribution effectively limited to the agreed purchase price.
Dexus will receive a monthly coupon payment at 5.4% per annum from the Vendor based on Tranche 1 and 2 payments contributed towards the South Tower, Retail Podium and Hotel from settlement until handover of the South Tower and Retail podium to Dexus and DWPF which is expected in July 2020.
The Transaction is accretive to FY20 distributions per security and is expected to have the following financial impacts:
an increase in pro forma NTA of 12 cents per security to $10.19
pro forma look through gearing of 24.7%
The Institutional Placement will have an issue price of $12.10 per new stapled security which represents:
3.2% discount to the last traded price of $12.50 on Tuesday, 30 April 2019
5.3% discount to the five-day VWAP of $12.78 on Tuesday, 30 April 2019
New Securities issued via the Placement will rank equally with existing securities from the date of issue and will be entitled to the full distribution for the six months ending 30 June 2019.
Dexus' unit price is up 31% over the past 12 months compared to 11.2% for the AREIT Index.
DXS Trading Chart vs ASX200 AREIT Blue - DXS, Purple ASX200 AREIT