OUE Commercial Reit (OUE C-Reit) is acquiring a large stake in the One Raffles Place complex for around $1 billion from its sponsor Overseas Union Enterprise (OUE).
The commercial and retail development, which is above Raffles Place MRT station at the heart of Singapore’s financial district, comprises two towers with a mall.
One of the two towers – at 62 storeys – is among the tallest buildings in Singapore. Its second tower is 38-storey high.
The real estate investment trust (Reit) will acquire an effective stake of 61.16 per cent to 67.95 per cent in the complex from listed OUE at a purchase consideration of between $1.03 billion and $1.15 billion, depending on the stake acquired.
This will be done through an indirect acquisition of a 75 per cent to 83.33 per cent interest in OUB Centre Limited (OUBC), which owns 81.5 per cent of the property. The deal will lift the value of the Reit’s portfolio to around $3.4 billion.
Ms Tan Shu Lin, chief executive of OUE Commercial Reit Management, the manager of OUE C-Reit, said the proposed acquisition “is a strategic and significant step for OUE C-Reit as it will strengthen its positioning within the Singapore office market”.
She added that the total portfolio net lettable area is expected to increase from approximately 825,000 sq ft to about 1,545,000 sq ft.
The Reit will also benefit from enhanced income diversification and resilience, as well as a stronger and more diverse tenant base, said Ms Tan. The Reit is expected to grow after this acquisition, because of the potential of strong positive rental reversion. There is also limited new office supply in Raffles Place.
The recently refurbished mall covers six storeys with an aggregate net lettable area of approximately 860,000 sq ft.
The deal involves OUE C-Reit acquiring all the shares of Beacon Property Holdings, a wholly owned unit of OUE that holds shares in OUBC.
For OUE, the deal is also a positive one. The injection will enable OUE to unlock capital while continuing to enjoy rental income and potential capital value upside through its holding of units in the Reit. The move will also help to grow OUE’s fund management business as part of its overall business strategy.
Commenting on the deal, OUE’s executive chairman, Mr Stephen Riady, said: “This is part of our commitment to grow OUE C-Reit into an efficient platform for holding commercial properties. As OUE C-Reit expands, OUE will benefit from such growth.”
Approval from OUE shareholders and the Reit’s unitholders is required. Circulars will be sent out in due course.
One Raffles Place faces the entire length of Raffles Place Park and, after the revamp, is expected to offer many more shopping, dining and leisure options for those working in Raffles Place.
The upper levels of the 62-storey One Raffles Place Tower 1 enjoys 360-degree panoramic views of the city.
The Reit invests, directly or indirectly, in a portfolio of income- producing real estate which is used primarily for commercial purposes in financial and business hubs within and outside of Singapore, as well as property-related assets.
OUE C-Reit’s portfolio comprising OUE Bayfront in Singapore and Lippo Plaza in Shanghai had a total asset value of about $1.7 billion as at March 31.
OUE shares closed two cents higher at $2.03 yesterday while the Reit’s shares lost 0.5 cent to end at 81 cents.
ONE RAFFLES PLACE NET LETTABLE AREA
Tower 1: About 410,000 sq ft
Tower 2: About 350,000 sq ft
One Raffles Place Shopping Mall: About 100,000 sq ft
Total: About 860,000 sq ft