Real estate investment trust Dexus says it will buy the 80 Collins precinct in Melbourne for $1.48 billion and undertake an equity raising to help fund the acquisition.
The REIT will seek to fund its purchase through a fully underwritten $900 million placement to institutional investors at $12.10 a share. Dexus shares closed on Tuesday at $12.50.
It will also undertake a non-underwritten security purchase plan to raise up to $50 million.
The property consists of consists of an existing 47-level office tower where the Ministry of Finance is a major tenant, and three buildings under construction.
There’s a 35-level officer tower, a retail podium with 21 tenancies, and a 255-room boutique hotel, all set for completion in fiscal year 2021.
“Following the acquisiotn of 52 and 60 Collins Street last year, this acquisition further enances our scale and presence in the tightly held ‘Paris end’ of the Melbourne CBD, a prime location where our customers want to be,” Dexus chief executive Darren Steinberg said.
“Importantly, vacancy in the Melbourne CBD office market is nearing an all-time low, supported by strong population growth and significant pre-commitments across the upcoming supply pipeline.”
Companies have already pre-committed to nearly two-thirds of the space in the tower under construction, with major tenants including Cenitex and Macquarie Group.
Dexus, alongside related entities, will buy the property from QIC Global Real Estate.
The deal is expected to positively impact the company’s distribution per security in the 2020 financial year.