Keppel REIT divests 20% stake in Ocean Financial Centre to Allianz for $537.3m

The agreed property value will see $77.1m in capital gains for Keppel REIT.

Keppel REIT is selling a 20% minority stake in Ocean Financial Centre to Allianz Real Estate for $537.3m, an announcement revealed.

Keppel REIT will continue to maintain a majority interest in Ocean Financial Centre through its 79.9% interest in subsidiary Ocean Properties LLP (OPLLP) which holds the property. Keppel will also continue to be the asset manager for OPLLP in relation to Ocean Financial Centre.

Ocean Financial Centre is a 43-storey Grade A office tower located at the intersection of the Raffles Place and Marina Bay financial precincts that also houses retail units on its ground and basement levels. In addition, it has a total net lettable area (NLA) of 877,635 sqf and a committed occupancy rate of 95.5% as of 30 September.

“The partial divestment of Ocean Financial Centre is a unique opportunity for unitholders to realise part of the capital gains from this premium Grade A office building, whilst maintaining exposure to the strengthening Singapore office marker,” Keppel REIT CEO Tan Swee Yiow said in a statement. “Despite this being a divestment of a non-controlling stake, the agreed property value reflects the asset’s quality and underlying value.”

The agreed property value of $537.3m is 16.8% above Keppel REIT’s purchase price of $460.2m, Keppel revealed. Post-completion, Keppel REIT will be receiving approximately $77.1m in capital gains which translates to a net asset-level return of 8.3% per annum over the holding period, Tan added.

The divestment is part of Keppel REIT’s ongoing portfolio optimisation efforts in which the proceeds will be used to continue the firm’s DPU-accretive unit buy-back programme, as well as distribute capital top-ups, pare down debt and fund growth through reinvestments, the announcement revealed.