123 Albert Street in Brisbane is the largest asset in the portfolio (Image: Dexus)
BGO has made its third major commitment to Australia’s office sector, teaming with a pair of local partners to buy a trio of properties from ASX-listed Dexus for A$715 million ($500.5 million), according to announcements by the companies on Monday.
Together with local partner Cliffbrook Capital, BGO has agreed to buy both 30-34 Hickson Road and 36 Hickson Road in Sydney), and is partnering with Investa to purchase 123 Albert Street in Brisbane, from Dexus. The deal will add more than 60,000 square metres (646,000 square feet) of grade A office space to the North American player’s Australia portfolio, in a deal which allows the purchasers to delay payment of a third of the compensation for nearly three years.
“We believe this is an attractive point in the cycle to invest in high-quality office assets in Australia’s leading CBD markets. Sydney and Brisbane continue to benefit from constrained new supply and strengthening demand for well-located, highly amenitised workplaces, creating opportunities for disciplined capital investment and active asset management, Marcus Merner, managing partner and head of Asia at BGO said in a statement.
The transaction with Dexus, which is working to reassure investors after a recent court setback, follows a $395 million BGO office buy in North Sydney during February of this year and the company’s purchase of Investa’s 10-20 Bond Street in the city’s financial district in November 2024, at a reported A$580 million.
Big-Name Tenants
The centrepiece of the deal is 123 Albert Street, a 26-floor tower in Brisbane’s central business district completed in 2011. The 39,300 square metre tower is anchored by aerospace giant Boeing, and, as of December, was 96 percent leased with a 5.5-year weighted average lease term.
Marcus Merner, managing partner and head of Asia at BGO (Image: BGO)
The property was valued at A$464 million as of December, with BGO and Investa’s flagship vehicle, the Investa Commercial Property Fund, each purchasing a half stake in the asset. Dexus will manage the property and the asset following the transaction.
“We are delighted to deepen our partnership with BGO through this transaction,” Investa chief executive officer Peter Menegazzo said in a release. “We share a high conviction in the Sydney and Brisbane office markets and see a compelling opportunity to create long-term value by investing in high-quality assets at this point in the cycle.”
With Cliffbrook as its minority partner in Sydney, BGO is acquiring 30-34 Hickson Road, known as 30 The Bond, and the adjacent 36 Hickson Road, a heritage building dating to the early 1900s.
The purchase of 30 The Bond gives BGO a nine-storey tower completed in 2004, with Roche as an anchor tenant. The 19,500 square metre property was 41 percent occupied as of December, with an average lease term of 0.6 years, when Dexus listed a A$264 million valuation.
36 Hickson Road is composed of two buildings totalling 1,100 square metres and is let to UK digital marketing agency Jaywing. Formerly part of the Australian Gas Light Company gasworks complex, the property was 89 percent occupied as of December, with a 1.1-year lease term and carried an A$19.5 million valuation.
Together, the three assets carried a combined independent valuation of A$747.5 million as of December, putting Monday’s A$715 million price at around a 4.3 percent discount to book. At the stated compensation, BGO and its partners are paying an average of around A$11,940 per square metre for the portfolio.
Payment of the A$715 million compensation is split into two tranches, with around 67 percent due at settlement, which is expected in October 2026, subject to conditions including approval by Australia’s Foreign Investment Review Board (FIRB).
Dexus has agreed for the buyer to defer the remaining third for 30 months from settlement, with the deferred balance carrying a 6.25 percent annual coupon.
Divestment Drive
Dexus announced the divestments from its Wholesale Property Fund as part of a plan to raise A$2 billion from asset sales, with the company indicating that it was ahead of its schedule to reach that goal by the end of its 2027 fiscal year.
“Today’s announcement demonstrates our disciplined approach to capital management and meeting commitments to security holders,” Dexus Group CEO and managing director Ross Du Vernet said in a statement to the ASX. “We have a high quality investment portfolio and transactions like these show we can secure liquidity at pricing which represents a significant premium to what is implied in the Dexus security price.
The deal comes after local news reports last month indicated that the Sydney-based firm is in talks to sell its 480 Queen Street office tower in Brisbane for close to its A$680 million book value.
The group is said to be looking for opportunities to reduce the proportion of office assets in its portfolio, and reduce gearing.
Also in June, the company said it had launched a strategic review of its infrastructure fund business after the NSW Supreme Court upheld a default notice requiring a compulsory sale of shares in Australia Pacific Airports Corporation, a Dexus-controlled company that owns Melbourne Airport and regional Launceston Airport.