Allianz Real Estate, on behalf of the National Pension Service of Korea (NPS) and Allianz group companies (Allianz), has agreed to acquire a 50% stake in OUE Bayfront in Singapore for S$634 million (US$477 million). The deal with the manager of OUE Commercial REIT is expected to close at the end of February.
The agreed value translates to a passing yield of 3.6%. The seller will guarantee, subject to an aggregate cap of S$6 million, the net property income for the first year and second year following the completion of the deal.
The property is strategically located between Raffles Place and Marina Bay precincts, directly overlooking Singapore’s Marina Bay. Completed in 2011, it offers a total net lettable area of around 400,000 square feet, comprising of OUE Bayfront, an 18-storey prime grade-A office building with a rooftop restaurant; OUE Tower, a building whose architectural conservation is preserved, with panoramic views of the Marina Bay; and OUE Link, a link bridge with retail units.
The asset has a 99.9% committed occupancy rate and was awarded the Green Mark Gold Award by the Building and Construction Authority in Singapore, a recognition of the developer’s commitment to corporate social responsibility and achievements in environmental sustainability.
The transaction is being made via the AREAP Core I fund, a US$2.3 billion investment platform in the form of a Singapore-domiciled, close-end fund where NPS and Allianz are 50:50 investors.
The deal is in line with the fund’s strategy to build a diversified portfolio of high-quality assets across Asia-Pacific and comes on the back of the acquisition of a 90% stake in a 662,000 square foot grade-A business park office property in Zhangjiang Hi-Tech Park, Shanghai, earlier in the month.
“We believe OUE Bayfront will be a great addition to an already strong and stable NPS real estate portfolio,” says Hyo-Joon Ahn, chief investment officer of the National Pension Service of Korea. “Highest quality real estate assets in irreplaceable locations prove to be resilient even in the current economic climate and provide long-term value and stable cash flow.”
Rushabh Desai, Asia-Pacific chief executive officer of Allianz Real Estate, notes: “The Singaporean government has managed the Covid-19 pandemic extremely well. Over the medium to long term, the investment prospects of Singapore offices will remain favourable, as the market is well positioned from a supply, occupancy cost, market transparency, technology and business environment perspective to cushion any potential adverse impact of the near-term market volatility.”
Allianz Real Estate’s exposure in Asia-Pacific amounted to US$7.5 billion at the end of September 2020.