OUE REIT Acquires 69.9% Stake in Sydney's Salesforce Tower

OUE REIT has agreed to purchase a half interest in Sydney's Salesforce Tower for A$864 million. The deal will increase the trust's holding in the 180 George Street property to 69.9 percent from 19.9 percent, marking a significant portfolio expansion into Australia.

The estimated purchase consideration for the 50.0 percent interest is A$461.4 million. The total estimated acquisition cost is approximately A$539.3 million. Upon completion, OUE REIT's Singapore-centric portfolio value is expected to rise from S$5.6 billion to S$6.4 billion.

Transaction Structure and Funding

OUE REIT is funding the purchase with new borrowings and part of the S$500 million in proceeds from the sale of the Crowne Plaza Changi Airport hotel. This follows the trust's earlier divestment of the Lippo Plaza office building in Shanghai, which unlocked S$357.4 million. The transaction is subject to approval from Australia's Foreign Investment Review Board.

Portfolio Impact and Leverage

The acquisition dramatically increases the trust's exposure to the Australian market. Australia will represent 17.6 percent of the portfolio by value after the transaction, up from 5.7 percent. OUE REIT's aggregate leverage is expected to rise temporarily to 45.3 percent following the acquisition and the hotel sale. Without those proceeds, leverage would hit 48.5 percent. The manager may issue up to S$150 million of perpetual securities to reduce aggregate leverage to approximately 42.8 percent. The Net Asset Value per Unit is expected to remain broadly stable at S$0.55.

Tower Details and Market Position

180 George Street, known as Salesforce Tower, is a 55-storey, 263-metre premium freehold commercial tower completed in November 2022. It is Sydney's tallest office building, with 61,915 square metres of net lettable area. The property was fully occupied as of 30 September 2026. Major tenants include Salesforce, TikTok, Jones Lang LaSalle, Bain & Company, and Accenture.

The tower holds top-tier environmental certifications, including a six-star Green Star rating and Platinum WELL certification. Technology, media, and telecoms tenants account for 71 percent of its gross rental income. Salesforce will become OUE REIT's largest tenant, contributing 14.0 percent of its commercial income. The property also includes a detached four-storey building, Jacksons on George, with public bars and restaurant facilities.

The deal arrives amid limited new supply in Sydney's premium office market. The Property Council of Australia recorded no new supply in central Sydney over the six months to July. Analysts expect no completions in 2026 and only three in 2027, with the next wave not due until 2030 or later. The trust described the four-year-old tower as needing little near-term capital spending. Its majority stake strengthens control over key property decisions and provides flexibility for asset management.

After the purchase, Lendlease will retain a 20 percent stake in the tower. Japan's Odakyu Electric Railway will hold 10 percent, with other investors holding the remaining 10 percent. The acquisition is expected to deliver a pro forma distribution per unit accretion of 3.2 percent for the six months ended 30 June 2026. Completion awaits the Foreign Investment Review Board approval process.