Windfall for Dexus on Melbourne Industrial Asset

Dexus Industria REIT (DXI) has capitalised on Melbourne’s tightening industrial property market, offloading a property in Kilsyth for 17 per cent above book value.

Dexus Industria REIT sold the property at 147-153 Canterbury Road for $22.17 million. 

Dexus Industria REIT fund manager Alex Abell said the sale prices represented a 233 per cent increase in value from the prices they paid for the property—$9.5 million—in May, 2019. The sale generated a 3.9 per cent passing yield. 

“The sale price ... demonstrates that our asset selection and active management creates significant value,” Abell said.

The site’s 11,882sq m warehouse was built in 1972. 

“Sale proceeds will be used to repay debt and strengthen the balance sheet and over time will be used to fund higher returning opportunities including DXI’s developments in Sydney and Perth, as well as the on-market securities buyback program,” Abell said.

Settlement on the property is expected to be finalised in June.

Demand is on the rise in Victoria’s industrial property market with a decline of 19 per cent in vacancies in the first quarter of 2022, compared to the previous quarter, according to Knight Frank’s latest report. 

Office vacancies had risen by 9.9 per cent in the fourth quarter of 2021 but, according to Knight Frank, had dropped back in 2022’s first quarter by 19 per cent to around just 632,878sq m available in Melbourne. 

The report also said that rents grew by 4.7 per cent quarter-on-quarter. Rents grew fastest in the north and east during the quarter—by 7.2 per cent on average. 

Compared to the same period last year, rents for industrial properties in Melbourne have grown by 10.1 per cent.

Nearly 60 per cent of leasing deal volumes in Melbourne’s industrial market is due to pre-commitment activity and take up on spec builds.

Nationally, NAB’s 2021 fourth quarter commercial property index showed that confidence in the market had increased by 13 points over a 12 months and by 23 points over a two-year period. 

The markets were tightest in NSW, South Australia and the Northern Territory.