Why the Dexus (ASX:DXS) share price is moving higher today

The ASX has seen a flurry of mergers and acquisitions activity.

| More on:
two businessmen shake hands amid a backdrop of tall buildings, indicating a share price movement or merger between ASX property companies

Image source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The Dexus Property Group (ASX: DXS) share price is gaining in early afternoon trade, up 1.01% to $11.03 per share.

Below we take a look at the commercial property owner and manager's acquisition announcement.

What acquisition was reported?

Dexus' share price is gaining after the company reported the acquisition of a $1.5 billion portfolio of industrial properties. The acquisition is taking place alongside APN Industria REIT (ASX: ADI).

Dexus said the move is part of its objective to invest in sustainable income streams and expand its funds management business.

According to the release the industrial property acquisitions consist of:

  • Jandakot Airport, in Perth, Western Australia (initially 66.7% Dexus, 33.3% ADI), with 49 properties, 80 hectares of developable land and an airport operating business.
  • Lot 2, 884-928 Mamre Road, Kemps Creek, New South Wales (50% Dexus, 50% ADI), a fund-through development.
  • 2 Maker Place, Truganina, Victoria (100% ADI), a logistics facility leased to Australia Post.

Commenting on the acquisitions, Dexus' CEO, Darren Steinberg said:

These are high-quality investments that will further enhance the resilience of our property portfolio. The near-term development potential and scope to enhance returns by introducing third party capital make this a compelling opportunity, and one aligned with our priorities to grow our funds management business and recycle capital into high returning opportunities.

Dexus chief investment officer, Ross Du Vernet added:

The acquisitions will provide our industrial business with a meaningful footprint in Western Australia and new product in the Sydney market to service our growing customer base. Across the group, the industrial portfolio is expected to grow to $11.3 billion (4.6 million square metres) post completion of the near-term developments and recent acquisitions.

ADI is undertaking a fully underwritten $350 million equity raising to partly fund its share of the acquisitions. Shares will be issued at $3.45, almost an 8% discount from yesterday's closing price of $3.74 per share. ADI is currently in a trading halt.

Dexus plans to take up its full $40 million entitlement under ADI's Entitlement Offer. Dexus will fund its part of the acquisitions through debt facilities. It expects gearing will initially increase by around 3.3%.

The company said it will update the market with guidance at its half year 2022 financial year results in February 2022.

Dexus share price snapshot

Dexus' share price has had a strong run in 2021, up 17%. That compares to a year-to-date gain of 10% posted by the S&P/ASX 200 Index (ASX: XJO).

Over the past month Dexus shares have gained 4%.

The company pays a 4.8% dividend yield, 20% franked.

The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

More on Real Estate Shares

A business woman flexes her muscles overlooking a city scape below.
Real Estate Shares

Why is this ASX 200 share rising at nearly quadruple the rate of its peers?

This stock has shot the lights out over the past 12 months.

Read more »

Three smiling corporate people examine a model of a new building complex.
Earnings Results

2 ASX 200 real estate shares leaping higher on earnings news

ASX 200 investors are bidding up the two leading real estate stocks following their earnings reports.

Read more »

Smiling office workers fling a stack of papers into the air.
Share Market News

Here's how the ASX 200 market sectors stacked up this week

The ASX 200 gained 1.71% over the week and one market sector soared a whopping 5.9%!

Read more »

Real estate agent and client exploring property.
Real Estate Shares

Lendlease share price charging higher on $1.3 billion Stockland deal

ASX 200 investors are bidding up the Lendlease share price on Monday morning.

Read more »

Smiling office workers fling a stack of papers into the air.
Share Market News

Here's how the ASX 200 market sectors stacked up this week

The ASX 200 gained 0.5% and the real estate sector led the way this week.

Read more »

A man sits at a desk holding a small replica house in his hand, upset at the sale of his property.
Real Estate Shares

The 2 ASX real estate shares everyone's piling on to right now

Property stocks have been rocketing the past few weeks, and these companies are the ones investors are flocking to.

Read more »

Mini house on a laptop.
Real Estate Shares

'Clear path' to 20%+ earnings growth: The ASX 200 stock doing all the right things

Cutting costs while adding customer volumes could prove to be an excellent catalyst for these shares.

Read more »

A man in his 30s holds his laptop and operates it with his other hand as he has a look of pleasant surprise on his face as though he is learning something new or finding hidden value in something on the screen.
Real Estate Shares

I invested $2,000 in this beaten-up ASX share which had dropped 60%!

I’m aiming to build my wealth with this stock.

Read more »