DEXUS acquires $34.4 million Sydney distribution facility

DEXUS Property Group (ASX: DXS) announced Wednesday that it has acquired a Sydney industrial property in for $34.4 million, excluding acquisition costs. The 43,300 square metre distribution facility is less than 50 kilometres from Port Botany and Sydney’s CBD, and aligns with DEXUS’ Wholesale Property Fund’s larger strategy to build a diversified industrial portfolio along Australia’s east coast.

“Faced with a highly competitive investment market for prime, long-tenanted industrial properties, this acquisition represents a unique strategic opportunity where we can leverage DEXUS’ industrial asset management capabilities to reposition the property through proactive leasing,” said Wholesale Property Fund Manager Graham Pearson in a statement.

“The acquisition of 4 Inglis Road, Ingleburn increases DWPF’s industrial portfolio allocation to 12%,”
said Pearson. “The Fund has successfully raised $823 million of total equity over the past 12 months and is well positioned to pursue its development pipeline and targeted acquisitions as part of its investment strategy.”

The deal was sealed with a 9% capitalization rate and an initial 13.5% yield, and will remain leased by the seller for the short-term. Looking ahead, the press release notes that demand for industrial space in the area will only increase. With new hubs and road and rail upgrades in the works, DEXUS expects its investments in the area to provide increasing returns to shareholders in the years to come.

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Motley Fool contributor Justin Loiseau has no position in any stocks mentioned in this article. You can follow him on Twitter @TMFJLo.

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