Dexus Locks In $700 Million Sale of Brisbane Office to Fund Growth
Dexus has agreed to sell its half stake in 480 Queen Street, Brisbane, for $700 million, freeing capital to support higher-return projects and reduce gearing by about one percentage point.
- Sale price of $700 million with net proceeds of $657.3 million
- Transaction reflects circa 4% discount to book value
- Settlement expected December 2026, subject to FIRB approval
- Part of proceeds deferred to June 2028 with 6% coupon
- Dexus retains significant Brisbane office exposure via Waterfront precinct
Strategic Capital Release Through Brisbane Asset Sale
Dexus (ASX:DXS) has exchanged contracts to sell its 50% interest in 480 Queen Street, a premium office building in Brisbane’s CBD, for a gross price of $700 million. The net sale price of $657.3 million is roughly 4% below the book value as at December 2025, reflecting current market conditions. Settlement is expected on 1 December 2026, pending approval from the Foreign Investment Review Board (FIRB).
The sale proceeds will provide Dexus with approximately $259 million in cash upon settlement, with an additional $70 million deferred to June 2028, attracting a 6% per annum coupon. This structure offers a blend of immediate liquidity and longer-term income, supporting the company’s broader capital management strategy.
Balancing Portfolio Exposure and Growth Initiatives
CEO Ross Du Vernet emphasised that the divestment aligns with Dexus’s strategy to unlock capital for higher-return opportunities while maintaining substantial exposure to Brisbane’s office market. The company retains its stake in the Waterfront precinct, a riverfront complex comprising multiple towers and retail space, including the 93.8% occupied One Eagle Street and a North Tower already 71% pre-leased.
With occupancy at 89.7% and a weighted average lease expiry (WALE) of 3.8 years, 480 Queen Street remains a quality asset. However, the sale proceeds will reduce Dexus’s pro forma look-through gearing by about one percentage point, enhancing financial flexibility.
Capital Management Amid Market Dynamics
This transaction follows Dexus’s recent momentum in asset sales, complementing earlier divestments that have collectively surpassed $2 billion in proceeds. The company continues to demonstrate disciplined capital recycling, balancing portfolio optimisation with funding for its $11.5 billion development pipeline and other growth initiatives.
Investors will be watching the FIRB approval process closely, as it remains a regulatory hurdle before the deal can settle. The deferred payment component also introduces an element of credit and interest rate exposure that will factor into Dexus’s financial outlook in coming years.
Bottom Line?
Dexus’s sale of 480 Queen Street crystallises capital to fuel growth while prudently managing gearing, with FIRB approval and deferred payments shaping the near-term financial picture.
Questions in the middle?
- Will FIRB approval proceed without conditions or delay?
- How will Dexus deploy the released capital amid evolving office market dynamics?
- What impact will the deferred payment and coupon have on future cash flows?
