Dexus weighs $800m industrial sale as bidders chase full control

Dexus chief executive Darren Steinberg is considering divulging the company of an industrial property portfolio. Picture: Britta Campion

Property heavyweight Dexus is considering a move to completely sell out of the $800m industrial property portfolio it put on the block in June.

The company went to market seeking a capital partner for 75 per cent stake in the prize portfolio but bidders have expressed interest in taking full control of the properties.

This could bring more offshore real estate investment trusts seeking a local beachhead in Australia into play for the portfolio, which is one of only six offered worth more than $700m.

The 10-strong collection holds strong appeal, with interest coming from offshore groups and also local players who could also be keen to win management of the portfolio.

Joint venture discussions are ongoing with investors, but Dexus is also running a simultaneous divestment strategy for the portfolio.

The process is being handled via real estate agency JLL, which started with the mandate to find a capital partner, which has now been expanded.

Industrial portfolios have been among the biggest trades in recent years. Big deals include Asian warehouse giant ESR buying the Milestone portfolio for $3.8bn, and the Fife Capital portfolio trading in an $850m deal to PGIM and Manulife.

The latest play would also leave the Darren Steinberg-led operation cashed up as it locks down remaining funds it acquired as part of the acquisition of Collimate Capital’s local operation from AMP.

AMP’s plans for a clean exit from Collimate came unstuck last month after Mirvac won control of its flagship $7.7bn wholesale office fund. It will take over the running of the AMP Capital Wholesale Office Fund after a long battle in which it garnered the support of superannuation fund investors.

After the loss of the office trust and, separately, a $3bn mandate for UniSuper to GPT, the most that will shift across is $20.2bn.

Dexus is protected as it will not have to pay certain earn out provisions, and it remains focused on using the Collimate platform to push into infrastructure. And sources said there was little sign of an AMP shopping centre fund shifting, despite approaches from Vicinity and GPT.

The Dexus portfolio comprises eastern seaboard assets, with more than half weighted to Sydney. The remainder are in Melbourne and Brisbane. The portfolio will have an end value of about $800m with scope for growth, including further development opportunities.

It is a core offering with eight of the 10 assets stabilised. A project in the Brisbane suburb of Hemmant, which is pre-leased to Visy, and another in the Melbourne suburb of Truganina are fund-through developments which Dexus will complete and deliver.

The assets already house more than 50 tenants including Visy, Brisbane City Council and Scott’s Refrigerated Freightways, and there are also opportunities to lift rents in future.

Dexus already has a logistics venture backed by US private equity house Blackstone.