Dexus (DXS) offloads Sydney office block

Dexus (DXS) +0.90%: property manager Dexus is poised to sell one of their prime Sydney office blocks for $530m. Singapore’s Peakstone approached Dexus with an offer for 45 Clarence Street in line with the carry value seen at the half year result which was enough for the current owner to take notice. The deal will still require FIRB approval, while when the money lands it will be used to pay down some debt. What caught my eye was the keen buyer despite the uncertainty – particularly around office space in a rapidly evolving work environment.

In an afternoon release, Dexus announced it had undertaken external valuations of 90% of its assets with the book value falling just 1.2%. CEO Darren Steinberg said it highlighted the resilience of the book, particularly given book values actually increased in the industrial portion. The operating environment seems hazy for the medium term as companies re-work office requirements for staff, but for the moment, land still has a buyer. We are cautious the space for the moment, though DXS is fairly priced at around 0.9x book value.

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