Dexus upgrades guidance as it looks to lockdown Collimate Capital

The office landlord and property funds manager has lifted its guidance as it prepares to take control of the local operations of Collimate Capital.

Office landlord and property funds manager Dexus is riding the return to work trend and has boosted its guidance even ahead of taking control of the local operations of Collimate Capital.

The Darren Steinberg-led company bought the local operations of Collimate Capital from AMP last month in a deal worth up to $1bn and is now in talks with investors across the $27.9bn real estate and domestic infrastructure equity platform.

Once bedded down it will position Dexus as a top real asset manager, with new capabilities, although the company is facing a challenge from Mirvac which is seeking to run the near $8bn AMP Capital Wholesale Office Fund.

The business is split across real estate at $18.2bn and Infrastructure at $9.7bn. Dexus says it is holding consultation sessions with Collimate investors over the coming weeks to discuss the merits of the deal and determine the assets to be transferred to its business.

Dexus pays for the funds on a sliding scale, limiting its exposure if wholesale investors depart, with UniSuper already headed to GPT for a $2.8bn mandate.

Mr Steinberg said the company had a busy quarter as it continued to deliver on its objective of being a real estate partner of choice by growing and diversifying its funds management business.

He added the company had made solid progress towards activating key development projects, Waterfront in Brisbane and Atlassian in Sydney. “We expect we will be able to bring these city-shaping developments online this calendar year,” he said.

Dexus has kept up occupancy levels and Mr Steinberg said industrial markets remain strong, and the company was seeing the “first signs of improvement in Sydney office market effective rents”.

The group upgraded its guidance to deliver distribution per security growth of not less than 2.5 per cent for this financial year, with the upgrade primarily driven by better than expected outcomes across the business.

The company undertook $2.1bn worth of deals as Dexus shifts towards higher returning opportunities. It sold 12 Creek Street, Brisbane, and 201 Miller Street, North Sydney, and led a consortium that bought Perth’s Jandakot Airport.

Dexus’s group development pipeline has hi $17.8bn and during the quarter, it completed 81,400sq m of industrial development, comprising 60,000sq m across two facilities at Ravenhall and a 21,400sq m facility in Merrifield in Victoria.

It will fund, develop and invest in Atlassian’s new $1.8bn headquarters in Sydney. The development will comprise a timber 40-level office tower, with Atlassian to occupy the office space under a 15-year lease.

At Waterfront Brisbane, Dexus has agreements with two tenants to shift into about 28 per cent of the office space in the first of the two proposed office towers.

The Dexus Wholesale Property Fund raised $100m of new equity during the quarter, while the manager is still working through the AMP Capital Diversified Property Fund redemption requests, having fulfilled $1.3bn to date.

Dexus remains on track to fulfil the remaining $900m redemption requests and complete the merger by the end of 2022.