OUE REIT—controlled by Indonesian tycoon Mochtar Riady and his family—is doubling down on its Australian investment with the purchase of an additional 50% stake in the 55-story Salesforce Tower, the tallest skycraper in Sydney, in a deal valued at $607 million.
OUE REIT—controlled by Indonesian tycoon Mochtar Riady and his family—is doubling down on its Australian investment with the purchase of an additional 50% stake in the 55-story Salesforce Tower in Sydney in a deal valued at A$864 million ($607 million).
The Singapore-listed company said late Friday that it will buy the additional stake from China’s Ping An Insurance, increasing its ownership of the 263-meter high Salesforce Tower—the tallest office building in Sydney—to 69.9%. The agreed price is 3.7% below what OUE REIT paid for the initial 19.9 % stake it bought from Mitsubishi Estate in March this year. It will fund the acquisition through debt and proceeds from the recent sale of Crowne Plaza hotel at Changi Airport.
“By redeploying the net cash proceeds from the divestment of Crowne Plaza Changi Airport into high-quality, future-ready properties, we continue to enhance portfolio quality while capturing opportunities across market cycles and geographies,” Han Khim Siew, CEO of OUE REIT said in a statement.
The acquisition will boost the REIT’s portfolio value to S$6.4 billion from S$5.6 billion. It will give OUE REIT greater management control over the Salesforce Tower in Sydney’s central business district, allowing the company to enhance the property’s value while securing stable income and exposure to the city’s prime office market.
Once the deal is completed, Australian properties will account for 17.6% of OUE REIT’s portfolio, up from 5.7%. Singapore will continue to take the lion share of the group’s asset base, accounting for 82.4% of its properties, down from 94.3%. “Singapore remains our core market, complemented by selective investments in Australia,” Han said.
The transaction comes as OUE REIT considers selling one of its iconic properties in Singapore. It is currently in exclusive discussions to sell One Raffles Place, one of the tallest skyscrapers in the city-state’s central business district, to a consortium comprising of Malaysia’s IOI Properties—led by tycoon Lee Yeow Seng—and Singapore state-linked real estate firm CapitaLand Investment.
OUE REIT is a unit of Singapore-listed developer OUE—controlled by the Riady family and run by Mochtar’s son, Stephen. With a net worth of $1.5 billion, the family’s Lippo Group has interests spanning real estate, retail, media, healthcare and education.
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