Dexus sells Flinders Gate complex to Asian investor PAG
Dexus has sold its Flinders Gate complex in Melbourne.
Property heavyweight Dexus has offloaded a Melbourne office building for close to $260m as it trims its gearing with more of its assets likely to hit the market.
The office landlord and fund manager has been flagged that it will sell non-core assets as it looks to go into higher-returning areas, including its real assets portfolio.
Under chief executive Ross Du Vernet, the company and its funds have been selling office buildings; partly they focus on newer stock, including the underdevelopment Atlassian headquarters in Sydney and Waterfront Brisbane project.
Dexus has quietly sold the Flinders Gate complex that adjoins Melbourne’s renowned Adelphi Hotel, in a move flagged by The Australian last month. It sold to Asian private equity and real estate company PAG in a sign of institutional interest in the city.
Dexus CEO Ross Du Vernet has flagged office disposals and a focus on real assets.
The building, which comprises two boutique buildings and a multi-deck carpark that was redeveloped by Dexus in 2020, is opposite Federation Square and diagonally across from Flinders Street Station. The upper floors sport views over the Cathedral, Southgate and the Domain.
The Asia-based manager has previously bought while Melbourne’s office market was at a low point, in 2024 picking up a tower at 367 Collins Street from listed group Mirvac for about $340m.
The sale was brokered by CBRE’s Kiran Pillai and Scott McGlone, but they and the parties declined to comment. The deal shows some resilience in Melbourne’s market, as it was valued last year at $271m on a capitalisation rate of around 6 per cent.
Buyers are moving partly as there has been relatively little stock available in Melbourne’s CBD despite a number of buildings along St Kilda Road being offered. Other landlords are moving, with US fund manager AEW Capital offering 31 Queen Street with hopes of reaping about $175m.
Another Dexus vehicle that has been selling office assets also reported strong results.
The Dexus Industria REIT sold Brisbane Technology Park for $155.3m as part of its plans to shift to be fully focused on being an industrial Australian REIT. It sold about 70 per cent of the park to Corval and about 30 per cent to Exceed Capital.
Dexus and its flagship wholesale fund are also in talks to sell the AM60 complex in Brisbane to AsheMorgan for about $200m.
They may also rekindle a sale of the skyscraper at 100 Mount Street in North Sydney that came close to selling to US investment manager Hines for more than $600m.
