Dexus Property Group has sold the bulk of its industrial properties in the United States for $US770 million ($A746.16 million).
Dexus, Australia’s second-largest industrial property owner, will use the money from the deal, flagged in early April, to buy back about five per cent of its shares and pay down debt.
Affiliates of Blackstone Real Estate Partners VII are buying the 65 industrial properties, including three leased to Whirlpool.
Chief executive Darren Steinberg said the sale was in line with the company’s plan to exit non-core markets in the US, where it plans to focus on its west coast properties.
He said Dexus’ remaining 28 properties in the US were in good markets and represented just eight per cent of the company’s total portfolio.
“We’ve exited a portfolio of non-core US assets and as a result of that we’ve ended up deleveraging and being able to focus more on our core market which is Australia,” Mr Steinberg said.
“The ongoing US west coast strategy will be determined as part of the overall group strategy review but in the meantime US operating costs will be reviewed to reflect the revised scale of operations.”
Dexus plans to use proceeds from the sale to initially repay debt.
But it will also use part of the money to buy back up to $200 million of its shares.
And it will revise its distribution policy for the 2013 financial year, paying out between 70 and 80 per cent of funds from operations.
However the asset sale would have no impact on Dexus’ fiscal 2012 guidance of a distribution of 5.35 cents per security.
Meanwhile, Mr Steinberg expects demand for commercial real estate to remain stable in the next 12 to 24 months, with vacancy rates levelling out.
He said interest in the sector from offshore was strong and inaction by the Reserve Bank of Australia to cut interest rates had not weighed on the market.
“The core for us is the commercial markets and we see very little supply coming to the market over the next 12 to 24 months,” he said.
“As a result we’ll see some withdrawals of properties from the market which should see the vacancy rate stabilising.
“We don’t see a lot of new demand.”
Dexus is also poised to confirm a new tenant for its flagship office tower at 1 Bligh St, Sydney.
The lease would secure 82 per cent of the new building which is ahead of the group’s goal of having 80 per of the building leased by June 30.
However, Mr Steinberg said there were no plans to discount rents for the remainder of the building which will be occupied by Clayton Utz, Oil Search and the Commonwealth government.
Dexus’ units were one cent higher at 91 cents at 1438 AEST.
