OUE to dispose office components of OUE Downtown to OUE C-REIT for $908 milBy PC Lee
SINGAPORE (Sept 11): OUE property group is planning to dispose the office components of OUE Downtown to OUE Commercial Real Estate Investment Trust (OUE C-REIT) for
$908 million on a willing-buyer and willing-seller basis.
OUE, the sponsor of says OUE C-REIT, says the acquisition will unlock capital for higher growth reinvestment opportunities, provide a capital efficient platform for the company to pursue its corporate strategy and help it derive stable income.
Located on Shenton Way in the Central Business District, the properties are part of OUE Downtown, a recently refurbished landmark mixed-use development comprising two highrise towers, being a 50-storey building (OUE Downtown 1) and a 37-storey building (OUE Downtown 2).
To part finance the proposed transaction,
OUE C-REIT will undertake an underwritten and renounceable rights issue of 1.29 billion new units in OUE C-REIT to raise gross proceeds of $587.5 million.
To show its support for the rights issue, OUE, which owns 867.5 million units in OUE C-REIT representing a
55.9% stake, has provided an irrevocable undertaking to subscribe and pay in full for its total provisional allotments of rights units held through subsidiaries, among other things.
In a report last Friday, OCBC Investment Research was spot on in predicting the proposed disposal. Lead analyst Joseph Ng said OUE Downtown’s offices registered a
stable occupancy rate of 95.1% of June 30 with passing rents at $7 psf.
With the asset enhancement initiatives completed and asset stabilised, Ng expects OUE Downtown’s offices could be a candidate for divestment to OUE Commercial REIT.
With the potential for healthy rental reversions ahead, improving sentiment in the CBD office market and firm cap rates as seen from recent transactions involving Twenty Anson and 55 Market Street, Ng says it makes sense for OUE to explore capital recycling at this point of the cycle.
Source: The Edge Singapore
https://www.theedgesingapore.com/oue-di ... it-908-mil