The National Pension Service of Korea (NPS) and Allianz group companies have jointly acquired 50% of Singapore’s OUE Bayfront for S$634 million ($478 million), seeking stable investment income from a prime-grade property asset in the city-state.
The investment was made through Allianz Real Estate’s AREAP Core I Fund, a Singapore-domiciled close-end fund – a $2.3 billion investment platform – in which NPS and Allianz each holds a 50% interest.
The transaction value translates into a passing, or initial yield, of 3.6%, Allianz Real Estate said in a statement this week. The deal is expected to close by the end of February.
“We believe OUE Bayfront will be a great addition to an already strong and stable NPS real estate portfolio,” Hyo-Joon Ahn, chief investment officer at the NPS, said in the statement. “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 asset is located between the Raffles Place and Marina Bay precincts of the city-state. Completed in 2011, the property offers a total net lettable area of around 400,000 square feet. It comprises of OUE Bayfront, an 18-storey prime grade-A office building with a rooftop restaurant, in addition to OUE Tower, a building whose architectural conservation is preserved, and OUE Link, a link bridge with retail units. The asset has a 99.9% committed occupancy rate.
“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, chief executive officer for the Asia Pacific at Allianz Real Estate.
For the AREAP Core I Fund, the deal comes after it acquired a 90% stake in a 662,000 square feet grade-A business park office property in Zhangjiang Hi-Tech Park in Shanghai earlier this month.
Allianz Real Estate had an exposure worth about $7.5 billion to the Asia Pacific region as of September 2020. The business has its regional headquarters in Singapore, and branches in Tokyo and Shanghai.
