Keppel REIT sells 20% stake in subsidiary holding Ocean Financial Centre to Allianz Real Estate for $537.3 mil

Singapore-listed Keppel REIT Management has divested a 20% minority stake in its subsidiary Ocean Properties LLP, the company which holds the Grade-A office tower Ocean Financial Centre, to global asset manager Allianz Real Estate. The agreed property value of the 20% stake is valued at $537.3 million. The transaction is subject to closing by end-Dec 2018.
The acquisition by Allianz is part of the company’s strategy to allocate five to 10% of its real estate exposure to the Asia-Pacific region. “The Singapore office market is experiencing strong rental growth. From an occupational cost and efficiency perspective, it continues to be favourable vis a vis other comparable markets like Hong Kong,” says Rushabh Desai, CEO Asia-Pacific at Allianz Real Estate.
Keppel REIT says that the divestment will help unitholders to realise part of the capital gains from the property. “We will be realising about $77.1 million of capital gains. This translates to an attractive net asset-level return of 8.3% p.a over the holding period,” says CEO of Keppel REIT Manager, Tan Swee Yiow.
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The sale price is 16.8% higher than Keppel REIT’s purchase price of $460.2 million – based on 20% of the $2.3 billion it paid for the 99.9% ownership in Ocean Financial Centre. The 43-storey property has a committed occupancy rate of 95.5%, as of Sept 30 this year. Keppel REIT Management will continue to be the asset manager for Ocean Properties LLP in relation to Ocean Financial Centre.