Once the divestment of Shanghai Lippo Plaza is completed, OUE REIT’s entire investment portfolio will be … [+]
OUE REIT, backed by Indonesian billionaire Mochtar Riady, has sold its Shanghai office tower to an undisclosed buyer for S$357.4 million ($264 million), as the Singapore-listed company exits the troubled market China’s real estate market.
The real estate investment trust announced on Friday that it will sell its entire stake in Lippo Properties (Shanghai), which owns 91.2% of Lippo Plaza, a 36-story office complex in Shanghai’s Huangpu business district in Puxi and commercial skyscrapers.
Chief Executive Officer Han Khim Siew said: “As we have no plans to further expand our business in China, this divestment provides an opportunity to monetize the assets and redeploy the proceeds to more strategic uses, thereby strengthening OUE REIT’s balance sheet and enhance financial flexibility to realize future growth opportunities.
OUE REIT expects to receive S$318.2 million in net proceeds from the sale, which is expected to be completed by the end of this year.
Upon completion of the sale, the OUE REIT portfolio (valued at S$6.3 billion at the end of 2023) will be entirely located in Singapore. These include OUE Bayfront, One Raffles Place and OUE Downtown in the Raffles Place central business district, as well as Mandarin Gallery in the Orchard Road shopping belt. It also owns Hilton Singapore Orchard and Crowne Plaza Changi Airport.
OUE REIT is the Singapore property management unit of the Riady family OUE Ltd, run by Mochtar’s son Stephen. The family’s Lippo Group has an immediate net worth of US$1.9 billion and is involved in real estate, retail, media, healthcare and education.
The group has been divesting some assets in recent months to strengthen the company’s balance sheet. Last month, Lippo Karawaci sold an additional 45% stake in Indonesian listed company Siloam Hospitals to Luxembourg private equity firm CVC Capital Partners for 16.6 trillion rupees ($1 billion). Previously, in May, CVC first sold a 10.4% stake in the hospital chain to CVC for US$240 million, allowing the heavily indebted Indonesian real estate company to pay down part of its debt.
