Singapore-listed OUE Real Estate Investment Trust (OUE REIT) said it accepted a pre-emptive offer and received an allocation of roughly half of Sydney’s Salesforce Tower, positioning it for majority ownership.
The proposed acquisition would raise the trust’s interest from 19.9% to about 69.9%. OUE REIT agreed to a property value of A$864 million for the additional stake, matching an independent valuation by Knight Frank. It estimates a payment of A$461.4 million to the seller group, which includes Ping An Real Estate Capital Holding Pty Ltd. That payment reflects debt and other net assets and remains subject to closing adjustments.
OUE REIT puts total acquisition costs at A$539.3 million. The figure includes an estimated A$67.2 million in stamp duty covering both this transaction and its earlier purchase of a stake in the tower.
The trust plans to use borrowing and proceeds from its planned sale of Crowne Plaza Changi Airport to fund the purchase. Based on June 30 figures, its manager estimates that completing both transactions would raise aggregate leverage from 41.5% to 45.3%.
The acquisition would also give Australia a larger place in the trust’s portfolio. Excluding the hotel being sold, OUE REIT projects that Australia’s share of its property value would rise from 5.7% to 17.6%, while the portfolio’s total value would increase from S$5.6 billion to S$6.4 billion.
OUE REIT completed its first purchase, a 19.9% interest, in March. That deal secured pre-emption rights that enabled the trust to take up the newly offered stake. Its manager said majority ownership would give it greater influence over decisions about the property. The manager also said the new agreed price is 3.7% below the value implied by the March purchase.
Completed in November 2022, the 55-story, 263-meter Salesforce Tower is Sydney’s tallest office building, according to OUE REIT. The trust reported that the building was fully occupied as of Sept. 30.
The tower acquisition still requires approval from Australia’s Foreign Investment Review Board, and OUE REIT has given no completion date. The Crowne Plaza Changi Airport sale is scheduled to close Oct. 30 or on a later date agreed by the parties.
