- Office occupancies down by about 1% following lease expiries in Melbourne
- Industrial occupancies up 2%-3%
- Strong performance follows acquisitions and mergers across the portfolios
The Property Tribune reported on Dexus‘ (ASX: DXS) “mixed half-yearly results” in early February when the ASX top 50 company saw net profits fall by 55.5%. Whilst profits fell, occupancies and rent collections were at a healthy 96%.
Dexus also saw two major changes throughout the quarter: a corporate structure simplification announcement that came in just before the end of Q3, and more recently, Dexus was approved to take over AMP’s Capital Diversified Property Fund (ADPF).
Rent collection and occupancy rates
Rent collections and occupancy remained largely the same for the third quarter, rent collection the same at 96%, occupancy for offices dipped a few per cent.
Office occupancies by income were down to 95.4%, by area was 94.8%; half-yearly figures for both metrics were 96%.
As cities across Australia slowly come back to life, the company reported an increased number of enquiries in Sydney and Melbourne.
Reduced occupancy rates were due to lease expires in Melbourne, said Dexus, figures offset to a degree by increases in occupancy at two Sydney properties: MLC Centre and 60 Castlereagh Street.
The company also saw buoyed interest in industrial real estate, the leasing of 117,747 square metres across 37 transactions saw the occupancy rise to 97.8% for the industrial portfolio, up from 95.5% in HF21 (by income), or 98.9%, up from 97.3%.
The company reported the development pipeline “now stands at $11.5 billion, of which $6.1 billion sits within the Dexus portfolio and $5.4 billion within third-party funds,” the third party being AMP Capital Diversified Property Funds which was acquired in late April.
For Q3, North Short Health Hub in St Leonards was completed, Central Place Sydney development plans were lodged, 60 Collins Street in Melbourne also saw planning amendments lodged, and Dexus also acquired 6.8 hectares of land in Ravenhall.
Dexus also exchanged contracts to acquire properties within Melbourne’s Biomedical Precinct in Parkville, including two buildings within Monash University’s Parkville Campus; the contract is worth $139 million with settlement expected in May this year.
Funds, simplification, and outlook
The two major items for funds news includes the Dexus AMP merger and the establishment of Mercatus Dexus Australia Partnership (MDAP); MDAP is set to acquire a third of 1 Bligh Street in Sydney for $375 million.
Dexus also said it was proud of the wholesale property fund (DWPF) which was recently approved to merge with ADPF. The approval boded well for DWPF, the fund “continued to outperform its benchmark over 3, 5, 7 and 10 years.”
The company’s healthcare property fund (DHPF) also raised “$125 million of new equity to assist with future acquisitions.”
A corporate structure simplification was approved back in April following an extraordinary general meeting.
It was a busy start to the year, said Dexus CEO Darren Steinberg:
“Moving forward, we will continue to execute on our strategic initiatives which include increasing the resilience of portfolio income streams, expanding and diversifying the funds management business, and progressing the development pipeline to drive superior risk-adjusted returns for investors. With the Australian economy in recovery mode, we are optimistic about the opportunities that are before us.”