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

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

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

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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.

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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.

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