DEXUS Property Group is tapping its investors for $450 million to buy a large office and retail complex in Brisbane from owners the Future Fund and Stockland.
The Waterfront Place, which is said to also include the adjoining Eagle Street Pier, is valued at about $630 million and was put on the block last year.
DEXUS will undertake the deal with an unnamed capital in a 50-50 split.
Once completed it will be the biggest deal this year in the commercial real estate sector and expand the DEXUS footprint along the eastern seaboard.
Brokers also said some cash could be set aside if DEXUS looks to participate in any purchase of the Investa platform being offered by Morgan Stanley.
A range of potential buyers are in the data room for the Investa business, and a successful bidder could look to sell assets, which would be attractive to all the office-focussed real estate investment trusts.
In the notice after the close of trade, DEXUS said it will use the cash to also help keep the group's gearing at its "optimum" 30 to 40 per cent level. Deutsche Bank and Goldman Sachs are the advisors and underwriters to the institutional raising, which will be a book build between $7.32 to $7.55 a security.
DEXUS chief executive, Darren Steinberg, said the group continues to identify value enhancing investment opportunities.
"This equity raising is intended to give DEXUS the flexibility to pursue these opportunities, while at the same time ensuring gearing remains at the lower ene of its target range of between 30 to 40 per cent," Mr Steinberg said.
"The opportunities include interests in prime grade CBD office properties, at various stages of consideration. All of the opportunities are in line with DEXUS‟s strategy, and one of them is an office property in exclusive due diligence with a capital partner on a 50/50 basis"
Analysts said the property was expected to be Waterfront Place.
Mr Steinberg added that DEXUS believes that each of the opportunities identified, has the capacity if concluded, to enhance the quality of the portfolio and deliver superior risk–adjusted returns to investors. Until invested, the proceeds of the equity raising will be used to repay debt.
He said the equity raising is estimated to add about 3¢ to DEXUS‟s net tangible asset per security of $6.47, as at December 31, 2014.
Including the impact of the equity raising, DEXUS reaffirms its 2015 financial year guidance of funds from operation per security of 59.48¢ and distribution per security of 41.04¢, being a 9.3 per cent growth on 2014.
