Dexus has conditionally exchanged contracts to sell a 50% interest in Grosvenor Place, Sydney.

The 50% interest comprises 25% owned by Dexus and 25% owned by the Dexus Office Partnership, in which Dexus holds a 50% interest.

The sale will realise total net proceeds of AUD925 million (USD670 million) for the 50% interest or AUD694 million for Dexus, representing a circa 5% discount to the property’s book value at 30 June 2020.

The discount reflects the current vacancy and short term leasing risk in the asset, said Dexus.

Grosvenor Place is a 44-storey, premium grade office tower with ground floor retail spaces that was built in 1988.

The property interest is leasehold with 78 years remaining on the ground lease.

At 30 June 2020, the property was 89% occupied and had a weighted average lease expiry (WALE) of 3.4 years.

Major customers include Deloitte and Wilsons Parking.

Dexus acquired an initial interest in Grosvenor Place in 2013, with the investment generating an unlevered annualised total return of circa 12% since acquisition.

The net sale proceeds will initially be used to repay debt.