Dexus sells Melbourne’s Southgate Complex for $578m

Dexus Property Group has found buyers for two major commercial properties, including Melbourne’s famous Southgate complex on the Yarra River.

The company on Monday announced it had sold Southgate for for $578 million – a $62 million premium on the building’s book value at the end of June – in a deal with Singapore-listed ARA Asset Management.

And it has also offloaded Adelaide office tower 108 North Terrace – of which it owns 50% – for $86.5 million.

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It was revealed last month that ARA Asset Management was closing in on a deal to buy Southgate and was in due diligence with Dexus to pick up the property for a price close to $600 million.

The complex, opposite Flinders St Station at the gateway to Melbourne’s arts precinct in the heart of Southbank, includes the HWT Centre and IBM Tower, as well as other retail and food outlets. Dexus bought it in 2000 for just over $482 million.

The Southgate complex includes the HWT and IBM towers.

Dexus chief investment officer Ross du Vernet says the company leapt at the chance to sell Southgate for a price significantly above market value.

“This transaction is an excellent opportunity for us to divest one of our office properties at a significant premium to book value at what we believe is an opportune time, following recent leasing success and the receipt of several unsolicited offers.”

Dexus will continue to manage Southgate once the sale, which is subject to Foreign Investment Review Board approval, is completed.

Adelaide office tower 108 North Terrace is spread over 12 levels.

Realcommercial.com.au reported in April that Dexus had put 108 North Terrace up for sale, with its 12 levels and 20,000sqm of lettable space to attract significant local and offshore interest.

Dexus CEO Darren Steinberg says the proceeds from both sales will be poured into new projects.