Half-stake In OUE Bayfront Sold For S$633.75m
SINGAPORE – OUE Commercial Real Estate Investment Trust (OUE C-REIT) has offloaded a 50 percent stake in its OUE Bayfront properties to a special purpose vehicle (SPV) overseen by Allianz Real Estate for S$633.75 million, according to a Singapore Exchange (SGX) filing released on Monday midnight (18 January, SGT).
The selling price values the assets at nearly S$1.27 billion or S$3,170 psf based on its combined net leasable area of 399,846 sq ft. As such, it translates to a 7.6 percent premium over Cushman & Wakefield’s independent valuation of S$1.18 billion as of 31 December 2020.
It is also 26.1 percent higher than the S$1 billion originally paid by OUE C-REIT for the properties. After including the estimated divestment fee & other divestment-related expenses, the seller will receive net proceeds of roughly S$262.6 million.
Based on its selling price and annualised net property income of S$45.8 million for the nine months ended 30 September 2020, the estimated net property yield is about 3.6 percent per year.
The divested properties consist of OUE Bayfront, OUE Tower, and OUE Link. The first one is an 18-storey Grade A office building overlooking Marina Bay that was built in 2011. The second is a heritage tower presently leased by a fine-dining restaurant, while the third is an airconditioned overhead pedestrian bridge with double frontages that houses retail shops.
“The properties enjoy superb connectivity and accessibility to major transport networks. Other than easy access to Raffles Place and Telok Ayer Mass Rapid Transit (MRT) stations, the Downtown MRT Station is also within walking distance via an underground pedestrian linkway,” said OUE C-REIT’s manager in its filing.
Under the latest sale and contribution agreement signed by both parties, the properties will be injected into BPH Propco LLP. OUE C-REIT will own a 50 percent stake in the entity, while Allianz Real Estate’s SPV, ACRE Angsana Pte Ltd, will hold the other half-stake.
The parties also entered into a deed of guarantee and undertaking, whereby the trustee (DBS Trustee Ltd) will guarantee the assets’ net property income to be at least S$50.0 million and S$52.5 million for the first year and second year respectively, following the completion of the divestment. The guarantee is subject to an aggregate limit of S$6.0 million.
“We are pleased to enter into this partnership with ARE which is an endorsement of the OUE Bayfront property’s high quality and value as a landmark asset in the Singapore CBD,” commented Tan Shu Lin, CEO of OUE C-REIT’s Manager, OUE Commercial REIT Management Pte Ltd.
“In retaining a 50 percent stake in a premium Grade A office building with a blue-chip tenant profile, OUE C-REIT will maintain significant exposure to the Singapore office market, which has demonstrated resilience amidst a challenging operating landscape,” she added.
Its major tenants include law firm Allen & Overy, Bank of America Merrill Lynch, and Saudi Arabian oil company Aramco. As of 30 September 2020, the office space there was fully occupied.