Dexus has partnered with Boral to develop a massive 2.5 million square metre logistics precinct in Melbourne’s west, aiming to create Australasia’s largest institutionally held industrial hub.
- Joint venture to develop 630 hectares at Ravenhall
- Potential 2.5 million sqm lettable logistics precinct
- Dexus and third parties hold 50%, Boral 50%
- Phased development with capital-efficient structure
- Project subject to rezoning and business plan approvals
Massive Logistics Precinct Planned in Melbourne’s Western Corridor
Dexus (ASX:DXS) has unveiled a strategic joint venture with Boral Limited to transform 630 hectares of Boral-owned land at Ravenhall into what could become Australasia’s largest institutionally held logistics precinct. The site, located just 20 kilometres from Melbourne’s CBD, is earmarked for a potential lettable area of 2.5 million square metres, a scale rarely seen in the Australian industrial property market.
This development signals a significant expansion of Dexus’s industrial footprint and aligns with its ongoing strategy to secure long-term growth assets in key logistics corridors. The partnership aims to leverage Dexus’s integrated platform, combining development, property management, and funds management to deliver value across multiple stages of the precinct’s build-out.
Joint Venture Structure and Capital Efficiency
The joint venture is structured with capital efficiency front of mind. Dexus and future third-party capital partners will collectively hold a 50% interest, while Boral retains the other 50%. Dexus expects to maintain a minimum 10% principal interest in each superlot within the precinct, with the remaining equity funded by third-party investors. Each superlot is anticipated to be leveraged, allowing for an optimised capital structure that balances risk and return.
Importantly, Dexus will serve multiple roles including trustee, development manager, property manager, and investment manager for the project. Management fees will commence once Dexus invests in each superlot unit trust, ensuring alignment of interests throughout the development lifecycle.
Rezoning and Development Milestones to Drive Progress
Rezoning approval is a key milestone before the project can advance, with Dexus already undertaking significant preparatory work. The phased development approach means funding obligations during the pre-development phase will be limited, minimising any immediate impact on Dexus’s adjusted funds from operations (AFFO). Market updates will follow once rezoning is secured and subsequent milestones are met.
The staged land contribution by Boral will occur post-rezoning at market value, enabling a flexible rollout aligned with market demand and capital partner involvement. This phased approach also opens the door for third-party capital to be progressively introduced, creating multiple investment opportunities for Dexus’s fund clients and securityholders alike.
Strategic Timing Amid Strong Industrial Demand
The announcement builds on Dexus’s recent momentum, including a strong half-year result and capital management initiatives such as a 10% on-market buyback aimed at addressing valuation gaps. The company’s $13.3 billion development pipeline remains a key growth engine, with this logistics precinct adding significant scale and diversification to its industrial portfolio.
Given the ongoing demand for industrial and logistics space driven by e-commerce growth and supply chain reshoring, the Ravenhall precinct could become a cornerstone asset in Australia’s industrial real estate landscape. However, execution risks remain, particularly around rezoning approvals and the timing of capital deployment.
As Dexus advances this project, investors will be watching closely how the partnership navigates regulatory hurdles and attracts third-party capital to realise the precinct’s full potential, complementing the company’s broader industrial growth strategy highlighted in its recent 19.3 cents per security distribution and 10% buyback launch.
Bottom Line?
Dexus’s joint venture with Boral positions it at the forefront of Australia’s industrial property expansion, but rezoning and phased capital deployment will be critical tests ahead.
Questions in the middle?
- How swiftly will rezoning approvals be secured to unlock development?
- What level of third-party capital will Dexus attract for each superlot phase?
- How will market conditions affect leasing demand and pricing in the precinct?