OUE Commercial REIT in talks with Allianz Fund for OUE Bayfront stake sale

OUE Bayfront is considered to be the most prominent from OUE Commercial REIT’s portfolio, which includes two hotels, a shopping centre and four office properties.

OUE Commercial REIT has confirmed that it is in exclusive talks with an entity connected with Allianz Real Estate regarding a potential sale of an interest in OUE Bayfront, reported Mingtiandi.

“The Manager wishes to clarify that while it is currently in exclusivity with an entity linked to Allianz Real Estate with respect to the sale of a partial stake in OUE Bayfront, negotiations between the parties and due diligence by the purchaser are currently still ongoing and parties have yet to enter into any binding agreement for the sale,” read the SGX filing by the REIT’s manager in response to an article by The Business Times, which reported the deal negotiations first.

It is believed that AREAP Core I – a US$2.3 billion (S$3 billion) private fund set up in June this year with Korea’s National Pension Service (NPS) – is the Allianz-linked entity.

The Allianz-NPS fund is said to be in discussion for the acquisition of a 50% stake in the 399,824 sq ft office tower for around S$640 million.

The discussions regarding 18-storey tower are not certain to translate into a transaction, the REIT’s manager warned, however, that “should they move forward under the terms currently being discussed in the market, an eventual sale could see the trust controlled by Indonesia’s Riady family bringing in a premium price for a prime asset”, said the MIngtiandi report.

The REIT’s annual report showed that the deal under discussion would see the Allianz-NPS fund acquiring OUE Bayfront at a valuation equivalent of S$1.28 billion, or over 7%premium from the S$1.18 billion that the office tower was valued at on 31 December last year.

Based on the reported transaction price, the nine-year-old property would be changing hands at S$3,200 per sq ft (psf), in the event of a successful sale.

Dubbed as one of Singapore’s most desirable business addresses, OUE Bayfront is fully-tenanted, with tenants including Warburg Pincus, Singapore’s Mandatory Provident Fund (MPF) and Bank of America Merrill Lynch. Asking rent at the property stands at around S$11 to S$11.50 psf per month, showed recent market data. 

OUE Bayfront is considered to be the most prominent from OUE Commercial REIT’s portfolio, which includes two hotels, a shopping centre and four office properties.

SOurce: CommercialGuru, 27 Nov 2020