The era of cheap debt that allowed investors to bid up the value of commercial real estate is over, says Dexus chief executive Darren Steinberg. But the ASX-listed property heavyweight is already diversifying.
The Australian Financial Review.
Led by Mr Steinberg, Dexus has been steadily diversifying its platform, into alternative real estate sectors, such as healthcare property, and into funds management. The AMP capital deal should boost Dexus’ recurrent earnings through funds management fees as well as its exposure to infrastructure, a sector which many investors allocate into as part of a broader real assets strategy.
Commercial real estate values have come under renewed attention in the past week after banking crises in the US and Europe turned the spotlight on the issue of the losses crystallised when long-dated assets – such as bonds or real estate –Mr Steinberg said Dexus had effectively bolstered its balance sheet to accommodate the changing conditions, selling down $9 billion of assets – $5 billion from its balance sheet and $4 billion from its managed funds – over the past two years.
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