[SINGAPORE] OUE Real Estate Investment Trust (Reit) is acquiring a further 50 per cent of Salesforce Tower, a 55-storey prime freehold commercial tower in Sydney, Australia, it announced on Friday (Oct 23).
The deal, valued at A$864 million (US$606.4 million), will take the Reit’s control of the property at 180 George Street to 69.9 per cent upon completion.
Funded through debt and partial net proceeds from the divestment of Crowne Plaza Changi Airport, the property is expected to have a distribution per unit accretion of 3.2 per cent on a pro forma basis for the six months ended Jun 30.
The proposed deal builds on the Reit’s entry into Sydney, following its purchase of an initial 19.9 per cent interest on Mar 16.
Han Khim Siew, CEO of the manager, said: “By redeploying the net cash proceeds from the divestment of Crowne Plaza Changi Airport into high-quality, future-ready properties such as 180 George Street, we continue to enhance portfolio quality while capturing opportunities across market cycles and geographies.”
He said that the Reit is “confident in Sydney’s long-term fundamentals”, adding: “Looking ahead, Singapore remains our core market, complemented by selective investments in Australia.”
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Completed in November 2022, the 263 m tower is Sydney’s tallest office building and has an actual occupancy rate of 100 per cent as at Sep 30.
On Wednesday, the Reit posted a 4.6 per cent year-on-year increase in net property income to S$59.6 million for the third quarter ended Sep 30. This came as stronger hospitality performance offset weaker contributions from its commercial portfolio.
OUE Reit rose 4.5 per cent or S$0.015 to close at S$0.345 on Friday, before the deal was announced.