Dexus has snapped up the remaining 50 per cent interest in the Harry Seidler-designed MLC Centre for $800 million, giving Dexus full management and operational control of one of the largest freehold sites in Sydney's CBD.
GPT Group entered into a binding agreement with Dexus to sell its half-share in the asset, located at 19-29 Martin Place, after placing it for sale via an international expression of interest campaign just last week.
The purchase will see Dexus and Dexus Wholesale Property Fund DWPF each acquire an additional 25 per cent interest in the property for the total $800 million price tag.
Dexus and DWPF purchased their initial interest in the MLC Centre in July 2017 for $722 million.
GPT said the A-grade property, which comprises 66,900sq m of office space and 10,600sq m of retail space, achieved an annualised return in excess of 20 per cent per year over the past three years.
The sale price of $800 million represents a 3 per cent premium to GPT’s December 2018 book value.
GPT chief executive Bob Johnston said the sale capitalises on significant repositioning of the property over the past five years.
“The proceeds from the sale will be reinvested primarily into our development pipeline, which we believe will generate better long term returns for investors,” Johnston said.
Dexus was advised by Jones Lang LaSalle on the acquisition.
It’s expected the asset will directly benefit from the new Martin Place Metro Station which is due for completion in 2024.
Post-acquisition Dexus expects its pro forma gearing to increase by 90 basis points to 24.6 per cent.
Dexus maintains its FY19 guidance of distribution per security growth of around 5 per cent.
GPT reiterates its 2019 guidance of 4 per cent growth for both Funds from operations per security and distributions per security.
The transaction is expected to settle early next month.