OUE REIT Announces Proposed Acquisition of a 19.9% Interest in Salesforce Tower, Sydney

Key Details of the Transaction

• Acquisition Target: 19.9% interest in Salesforce Tower, a premium commercial property located at 180 George Street, Sydney, Australia.
• Purchase Consideration: AUD 195.5 million (S\$175.0 million), subject to post-completion adjustments.
• Estimated Total Acquisition Cost: AUD 201.2 million (S\$180.1 million), including acquisition fee and professional expenses.
• Valuation: Independent valuation (by Knight Frank NSW) at AUD 357.2 million for the 19.9% interest, matching the agreed property price and reflecting an initial passing yield of 5.8%.
• Financing: Combination of debt and partial proceeds from the divestment of Lippo Plaza Shanghai.
• Expected Completion: First half of 2026, no later than 27 May 2026.

Transaction Structure

The acquisition will be executed through the purchase of units in three Australian property trusts (Lendlease (CQT Assets) Trust, Lendlease (Circular Quay) Trust, and Lendlease (Jacksons on George) Trust) and shares in the trustee company. The economic value in Salesforce Tower is represented by ownership of units in these trusts.

About Salesforce Tower

• Location: 180 George Street, Sydney, in Circular Quay—Sydney’s core CBD precinct.
• Completion: November 2022; designed by Foster + Partners and Architectus.
• Size: 55-storey tower, 263 meters tall (Sydney’s tallest office building), 61,914 sqm Net Lettable Area (Office: 59,977 sqm, Retail: 1,937 sqm).
• Land Tenure: Freehold.
• Occupancy Rate as at 31 Dec 2025: 99.2%.
• WALE (Weighted Average Lease Expiry): 5.5 years by GRI, 6.0 years by NLA.
• Major Tenants: Salesforce, TikTok, Jones Lang LaSalle (JLL).
• Sustainability Credentials: Platinum SmartScore and 6 Star Green Star ratings.

Rationale and Strategic Benefits

• Rare Access to Premium Freehold Asset: Salesforce Tower is an iconic, premium-grade property in Sydney’s most sought-after CBD location, offering excellent transport connectivity and amenities.
• Favourable Market Trends: “Flight-to-quality” trend in Australia is driving up occupancy and rental rates for prime offices. New premium supply in Sydney CBD is highly constrained until at least 2030 due to high construction and financing costs, providing rental growth potential and reduced incentives for such assets.
• Stable Cash Flows: Long WALE and high occupancy with well-diversified lease expiries—78% of NLA expiring in 2030 or later, and no more than 16% expiring in any single year before 2030.
• Enhanced Portfolio Diversification: Post-acquisition, OUE REIT’s portfolio value will increase from S\$5.8 billion to S\$6.1 billion. Exposure to Australia will rise to 5.1%, with Singapore comprising 94.9%. WALE (by GRI) will extend from 2.2 years to 2.4 years.
• DPU Accretion: The deal is expected to be DPU-accretive by approximately 0.9% (from 2.23 to 2.25 Singapore cents per unit for FY2025, on a pro forma basis).
• Attractive Pricing: Acquired at independent valuation, with an initial passing yield of 5.8%.
• Leverage Impact: Aggregate leverage is expected to rise from 38.5% to 40.2%, which management believes remains prudent and leaves headroom for future opportunities.

Other Investor-Relevant Information

• Classification: The transaction qualifies as a “disclosable transaction” under SGX Listing Manual, with relative figures (net profits and consideration/market cap) at 5.0% and 8.6% respectively.
• No Management Changes: No new directors will be appointed to the Manager as a result of this acquisition.
• Related Party Interests: No directors or controlling unitholders (other than through their unitholdings) have interests in the acquisition.
• Documents for Inspection: The sale agreement and valuation report are available for inspection at OUE REIT Management’s office for three months from the announcement date (24 February 2026).

Potential Price Sensitive Factors

• Entry into the Australian premium office market via a landmark asset may be viewed positively by investors, diversifying income streams and reducing concentration risk.
• Expected DPU accretion and portfolio value enhancement are likely to be important for unitholders, as both could support higher unit valuations.
• Increase in leverage to 40.2% is notable; while still within regulatory limits, it may affect investor perception of financial risk and future acquisition capacity.
• The acquisition is fully priced at independent valuation, but the scarcity and premium nature of the asset, as well as market trends, suggest long-term value growth potential.

Conclusion

The proposed acquisition of a 19.9% stake in Salesforce Tower, Sydney, marks a significant milestone for OUE REIT. The deal provides rare exposure to a freehold, premium-grade office asset in a major global city, comes at an attractive yield and is set to deliver stable income and long-term growth potential. Investors should closely watch subsequent announcements for completion updates and integration outcomes.

Disclaimer: This article is for informational purposes only and does not constitute investment advice, offer, or solicitation. Actual future results may differ materially due to a variety of risks and uncertainties. Investors should review official announcements and consult their financial adviser before making any investment decisions. The past performance of OUE REIT is not indicative of future performance. Units in OUE REIT are subject to investment risks, including the possible loss of principal. The listing of units on the SGX-ST does not guarantee a liquid market.

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