SINGAPORE - Keppel Reit is divesting a 20 per cent stake in Ocean Financial Centre to Allianz Real Estate for $537.3 million, retaining a majority 79.9-per cent interest in the property, its manager Keppel Reit Management said on Friday (Nov 30).
This is the German insurer's property investment arm's first core office investment in Singapore.
Independent valuer Cushman and Wakefield VHS had valued the property at about $2.62 billion as of Nov 15, or $525.3 million based on 20 per cent of the property.
The agreed purchase price of $537.3 million is 16.8 per cent or $77.1 million higher than the historical purchase price of $460.2 million, and net gain is estimated at $6.9 million after deducting transaction costs, said the Reit manager.
The manager believes that the sale will help it realise capital gains for its unitholders, while maintaining exposure to a strengthening Singapore office market.
It is also of the view that the deal will aid in portfolio optimisation, with proceeds from the sale providing it with the financial flexibility to continue its unit buyback programme, distribute capital top-ups, pare down debt or fund growth through reinvestments. In addition, a divestment fee of $2.7 million will be paid to the manager in accordance with terms of the trust deed.
Keppel Reit currently holds a 99.9 per cent interest in Ocean Financial Centre through Ocean Properties LLP (OPLLP). Upon completion of the divestment, which is targeted by end-December, Keppel Reit Management will continue to be the asset manager for OPLLP in relation to Ocean Financial Centre.
Ocean Financial Centre is a 43-storey Grade A office tower located at the intersection of the Raffles Place and Marina Bay financial precincts, with retail component on its ground floor and basement level. The property, with its distinctive plant-covered external walls, has a total net lettable area of 877,635 square feet and a committed occupancy rate of 95.5 per cent as at Sept 30.
Mr Stuart Crow, head of capital markets, Asia Pacific, for real estate consultancy JLL, said: "This transaction is indicative of global investors' confidence in Singapore thanks to its ongoing political stability, robust infrastructure and strong market fundamentals. Singapore's prime office rents have climbed a total of 18 per cent over six consecutive quarters since 2017."
Units in Keppel Reit closed at $1.16 apiece on Thursday, up 1.8 per cent, or two cents.