OUE REIT Announces Strategic Expansion into Sydney CBD with Yield-Accretive Acquisition of Salesforce Tower Stake

Key Highlights of the Acquisition

• OUE REIT to acquire a 19.9% interest in Salesforce Tower, Sydney, at an agreed property price of A\$357.2 million (approx. S\$319.8 million).
• Total acquisition cost is estimated at A\$201.2 million (approx. S\$180.1 million).
• Acquisition is expected to be DPU-accretive, with a projected 0.9% increase in Distribution Per Unit (DPU) on a pro forma basis.
• The property is a newly built, 55-storey, prime freehold tower in Sydney’s prestigious Circular Quay precinct, boasting modern workplace specifications and strong ESG credentials.
• Nearly full occupancy of 99.2% as of 31 December 2025, and a long Weighted Average Lease Expiry (WALE) of 5.5 years by gross rental income.
• Expected initial passing yield of approximately 5.8%.
• Acquisition to be funded via a combination of debt and net proceeds from recent divestment of Lippo Plaza Shanghai.
• Post-acquisition, Singapore will remain OUE REIT’s core market, accounting for approximately 94.9% of the portfolio value.
• Aggregate leverage is expected to increase to 40.2%, while NAV remains stable at S\$0.56.

Strategic Rationale Behind the Move

This acquisition represents a significant milestone for OUE REIT, marking the commencement of what the management calls “Phase 3 of OUE REIT’s value creation journey.” The redeployment of capital from the divestment of Lippo Plaza Shanghai (an ageing asset in a challenging market) into a modern, prime freehold asset in Sydney’s core precinct is a deliberate move to enhance portfolio quality, geographical diversification, and long-term growth prospects.

Salesforce Tower’s premium location at 180 George Street, Circular Quay, places it within walking distance of iconic landmarks such as the Sydney Opera House, Royal Botanic Garden, and Sydney Harbour Bridge. The property enjoys excellent connectivity, with access to light rail, bus, heavy rail, and ferry services.

The tenant profile is robust, featuring high-calibre global names such as Salesforce, TikTok, and Jones Lang LaSalle. The long WALE and high occupancy underscore the asset’s resilience and income stability.

ESG Credentials and Market Outlook

• Salesforce Tower is certified with Platinum WELL, Platinum SmartScore, 6 Star Green Star by Green Building Council Australia, 5.0 Star NABERS Indoor Environment, 5.0 Star NABERS Energy, and 4.0 Star NABERS Water.
• Australia’s stable economic outlook, strong capital inflows, and resilient demand drivers make Sydney a compelling market for long-term office demand, further supported by demographic trends and proactive government planning.

Funding, Financial Effects, and Shareholder Impact

• The acquisition will be financed through a mix of debt and partial net sales proceeds from the Lippo Plaza Shanghai divestment.
• Aggregate leverage is projected to rise to 40.2%, which remains within industry norms, while NAV per unit is expected to remain stable.
• The acquisition fee payable to the Manager is A\$3.6 million (1% of the agreed property price), with additional estimated professional and related fees of A\$2.1 million.
• Importantly, the acquisition is DPU-accretive, expected to boost distributions by 0.9% on a pro forma basis, which is a positive signal for income-focused investors.

OUE REIT’s Portfolio Profile

Post-acquisition, OUE REIT will continue to have a strong Singapore-centric portfolio, with six high-quality office, hospitality, and retail assets, including notable properties like OUE Bayfront, One Raffles Place, OUE Downtown Office, Hilton Singapore Orchard, and Crowne Plaza Changi Airport, as well as the Mandarin Gallery retail mall.

The Sponsor, OUE Limited, remains one of Asia’s leading real estate and healthcare groups, with a solid track record and total assets valued at S\$8.9 billion as of end-2024.

Potential Price-Sensitive Information for Shareholders

• The acquisition is DPU-accretive and expected to enhance income for unitholders.
• The strategic entry into the Sydney market diversifies OUE REIT’s portfolio and positions it for participation in a stable, growing market.
• Aggregate leverage will rise, but remains within manageable levels, while Singapore remains the REIT’s core market.
• The quality and tenant profile of Salesforce Tower as well as its ESG credentials may enhance the attractiveness of OUE REIT to institutional investors.
• Potential for future acquisitions and disciplined capital recycling continue, with management highlighting its ongoing search for further yield-accretive opportunities.

Contact and Further Information

For further information, investors may contact Mary Ng at OUE REIT Management Pte. Ltd., Tel: +65 6809 8704, Email: [email protected].

More information is available at www.ouereit.com.

Disclaimer

This article is for informational purposes only and does not constitute investment advice. The value of units in OUE REIT and the income derived from them may fall or rise. Investors should be aware of the risks involved and consult their own professional advisors before making any investment decisions. Past performance is not indicative of future results. The information herein is based on the latest available data but may be subject to change without notice.

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