Allianz-linked entity moves to buy stake in OUE Bayfront
The deal is expected to price the entire asset at about S$3,200 psf on NLA or S$1.28 billion
Singapore
AN entity linked to Allianz Real Estate is said to be in exclusive due diligence with a view to acquiring a partial stake in OUE Bayfront.
The deal is expected to price the asset - the jewel in OUE Commercial Reit's crown - at about S$3,200 per square foot of net lettable area, or S$1.28 billion.
Assuming the intending buyer picks up a 50 per cent stake, the absolute quantum would come up to around S$640 million.
Market watchers suggest Allianz could be acting on behalf of The National Pension Service of Korea (NPS) .
Another possibility is for the acquisition to be made via the US$2.3 billion property fund set up by Allianz and NPS earlier this year.
With leverage, Allianz Real Estate Asia-Pacific Core I will have the capacity to invest in US$4.6 billion of real estate in the Asia-Pacific region.
Allianz group of companies and South Korea's NPS contributed 50:50 to the closed-end fund's equity. Allianz Real Estate is also the fund's investment manager and general partner.
Domiciled here, the fund targets equity investments in Singapore, Japan, Australia, Hong Kong and China across office, logistics, multifamily residential and student housing sectors.
Last year, South Korea's NPS bought a half-stake in Frasers Tower, a 38-storey premium Grade A-specification office building in Cecil Street, for S$982.5 million.
OUE Bayfront, a prime Grade A office asset, stands between Raffles Place and Marina Bay new downtown. The development's NLA of 399,824 sq ft comprises predominantly offices and a 5 per cent retail component. Bank of America Merrill Lynch is an anchor tenant. OUE Bayfront was valued at S$2,954 psf or S$1.18 billion at the end of last year. OUE Commercial Reit's asking price for this asset a few months ago was reported to be at least S$3,300 psf.
Completed in 2011, the office asset has floor plates of about 26,000-30,000 sq ft and is on a site that has a balance tenure of 86 years. Its committed office occupancy as at June 30 was 100 per cent.
OUE Bayfront commands among the highest weighted average office rents in Singapore's CBD, say leasing agents.
According to data from Savills Singapore, nearly S$3 billion of office deals have been sealed year to date. The figure for the whole of last year was slightly over S$6 billion.
Despite some uncertainty on the near-term office space requirements of companies, the outlook for Singapore's office market remains resilient due to relatively tight supply, said Savills Singapore's deputy managing director of capital markets, Galven Tan.
"There is currently a shortage of good quality stock for sale, which is affecting the pipeline volume of transactions in 2021. Buying interest remains strong from real estate private equity funds and family offices."
READ MORE: OUE C-Reit confirms in talks with Allianz entity for OUE Bayfront partial sale
