Dexus industrial empire to draw fresh capital
An artist’s impression of Dexus’ proposed $420m industrial project at Greystanes in western Sydney.
Ownership of a series of industrial properties controlled by Dexus could be shaken up as the National Pension Service of Korea tests market interest for a stake in an almost $1bn fund managed by the local group.
Industrial portfolios have been among the signature trades over recent years and a transaction would show the strength of values in the area where demand for space is still running hot.
Big deals in recent years 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.
In late 2021, US group Blackstone also inked a $2.1bn deal to buy a half share in another prime logistics portfolio run by Dexus, the Dexus Australian Logistics Trust. It bought that from Asian sovereign fund GIC.
Dexus set up the vehicle in which NPS is invested – the Australian Industrial Partnership – more than a decade ago and it has since grown to become one of the most successful vehicles in the area, where rapidly rising rents are offsetting the impact of higher capitalisation rates.
The Australian Industrial Partnership is a joint venture between the offshore fund and the Dexus Australian Logistics Trust, which is 50 per cent owned by Dexus and 50 per cent by US group Blackstone.
While NPS is testing interest in its stake, a pre-emptive arrangement means Dexus’ funds management business has the right to purchase the portfolio owned by the offshore group, which would see their interest in the partnership remain on the Dexus platform, and the local group staying on as the investment manager and asset manager.
The stake being offered represents 50 per cent of a super prime portfolio of 20 assets located in two large scale, institutional-grade industrial precincts. They are Quarry East at Greystanes in western Sydney and the Dexus Industrial Estate in Truganina in west Melbourne.
The portfolio has been developed out by Dexus to 20 properties across about 340,000sq metres of high quality logistics space. The assets are fully occupied with a weighted average expiry of 3.8 years which provides the opportunity for rental reversion.
Dexus in 2012 unveiled the joint venture transaction with the NPS, advised by real estate investment manager Heitman, and oversaw its dramatic growth. The initial portfolio, valued at $360m, included 50 per cent ownership of 13 industrial properties at three Dexus industrial estates; Quarry in Greystanes, NSW, and two Melbourne assets – Laverton Industrial Estate and the Target facility at Altona.
The venture was billed as the start of a long-term capital partnership between the company and one of the world’s largest pension funds.
Dexus, which has since become one of the largest real assets managers in the country via the purchase of the Collimate Capital platform, declined to comment.
