OUE C-REIT boosts portfolio with a billion-dollar property

And why the market's not surprised.

According to OCBC, currently, OUE owns 50% of OUBC, which has an 81.54% interest in One Raffles Place. As part of the above deal, it will acquire another 25%-33.33% of OUBC from Kuwait Investment Office (KIO), OUBC’s second-largest shareholder.

This would lift its stake to 75%-83.33%. The final number will depend on whether the other shareholders exercise their rights to acquire their pro-rated shares of the stake disposed of by KIO.

Here's more from OCBC:

OUE will inject its final stake in OUBC into OUE C-REIT based on the NAV of OUBC, which reflects the agreed value of OUBC, and after the repayment of a shareholder’s loan to OUE. The agreed price of SD1,715m or SGD2,382 psf for OUBC is broadly in line with valuations from Savills and Cushman & Wakefield of SGD1,734m and SGD1,733m respectively.

The purchase consideration based on the NAV of OUBC will be SGD1,034-1,148.8m, depending on the stake to be acquired. Details will be disclosed in a circular. 

This transaction should have minimal impact on OUE’s valuation, in our estimation. Its pro-forma NTA could dip by 2 SGD cts to SGD4.21. T

he injection would, however, free up capital for OUE for redeployment. As One Raffles Place was listed as part of the
pipeline of assets that OUE C-REIT can acquire from its sponsor, we believe this acquisition should not come as a surprise to the market.