Allianz Real Estate, on behalf of National Pension Service of Korea (“NPS”) and Allianz group companies (“Allianz”), via its AREAP Core I fund has entered into definitive agreements to acquire a 50% stake in OUE Bayfront.
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The agreed transaction value is approximately SGD 634 million and is subject to closing, which is expected to happen at the end of February 2021. The agreed value translates to a passing yield of 3.6%. The seller will guarantee, subject to an aggregate cap of SGD 6 million, the net property income for the first year and second year following the completion of the proposed transaction.
The asset is strategically located between the Raffles Place and Marina Bay precincts, directly overlooking Singapore’s Marina Bay. The property was completed in 2011 and offers a total net lettable area of around 400,000 square feet, comprising of (i) OUE Bayfront, an 18-storey prime grade-A office building with rooftop restaurant, (ii) OUE Tower, a building whose architectural conservation is preserved, with panoramic views of the Marina Bay and (iii) 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.
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This transaction is in line with AREAP Core I 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 stabilized 662,000 square feet grade-A business park office property in Zhangjiang Hi-Tech Park, Shanghai, China earlier in the month. The AREAP Core I fund is a USD 2.3 billion investment platform in the form of a Singapore domiciled, close-end fund where NPS and Allianz are 50:50 investors.
“We believe OUE Bayfront will be a great addition to an already strong and stable NPS real estate portfolio,” commented Mr. 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.”
“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 favorable, 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.,” said Rushabh Desai, CEO Asia-Pacific, Allianz Real Estate. The pandemic has re-emphasized the importance of micro location, city density, asset quality and ESG when investing in an office asset. On behalf of NPS and Allianz, we are very happy to be investing in this marquee office building in Singapore with a high-quality institutional partner such as OUE Commercial REIT. ”
Allianz Real Estate’s exposure in Asia Pacific amounted to USD 7.5 billion as at the end of September 2020. The Asia-Pacific business is headquartered in Singapore with branches in Tokyo and Shanghai.
