Hongkong Land Selling One-Third Stake in Marina Bay Tower to Keppel REIT for $1.1B

Keppel REIT will up its stake in Marina Bay Financial Centre Tower 3 after agreeing to buy Hongkong Land’s one-third interest in the downtown Singapore office building for S$1.45 billion ($1.1 billion).

Upon completion of the deal on 31 December, Keppel REIT will hold a two-thirds stake in the 46-storey tower, the SGX-listed trust said Thursday in a release. The remaining one-third will continue to be held by banking giant DBS, the building’s anchor tenant.

MBFC Tower 3 contains 1.3 million square feet (120,774 square metres) of net lettable area and forms part of the Marina Bay Financial Centre complex developed by Keppel Land, Jardine Matheson’s Hongkong Land and Li Ka-shing’s CK Asset. The REIT sponsored by Temasek-backed Keppel Ltd said the deal reflected the trust’s confidence in the Lion City’s prime office sector and eagerness to acquire more Grade A commercial assets in the market.

“The exercise of our pre-emptive right to acquire the incremental one-third share of MBFC Tower 3 presents a rare opportunity to increase our interest in an iconic asset in the prime Marina Bay area, with potential for future rental upside and capital appreciation over the long term,” said Chua Hsien Yang, CEO of the REIT’s manager.

Jardines Exits Continue

The pending transaction values MBFC Tower 3 at S$4.36 billion and works out to S$3,268 ($2,526) per square foot of net lettable area. The property was 99.5 percent occupied at the end of September with a weighted average lease expiry of 3.5 years.

Hongkong Land’s exit from MBFC Tower 3 comes two months after the builder completed its sale of Southeast Asia developer MCL Land to Malaysia’s Sunway Group for $579 million. That divestment followed Hongkong Land’s April sale of office floors and retail spaces at One Exchange Square to the Hong Kong Stock Exchange for HK$6.3 billion ($810 million).

In addition, Jardines-controlled Mandarin Oriental in October announced the $925 million sale of 13 floors at its newly completed Hong Kong commercial building, One Causeway Bay, to Chinese e-commerce giant Alibaba Group.

Hong Kong-based Jardines is in the midst of a strategic shift as it continues to chart its evolution from an owner-operator to a long-term investor under the leadership of new CEO Lincoln Pan, who took the helm on 1 December.

$685M Unit Sale

Keppel REIT’s upsized stake in MBFC Tower 3 will boost the trust’s portfolio value to S$11.2 billion across 14 properties in Singapore (79 percent), Australia (17.8 percent), South Korea (2.4 percent) and Japan (0.8 percent).

To fund the acquisition, Keppel REIT has launched a preferential offering of new units to raise gross proceeds of S$886.3 million ($685.3 million), the manager said Thursday.

The trust is adding to its Singapore holdings less than two months after it agreed to buy a 75 percent stake in Sydney’s Top Ryde City Shopping Centre from Blackstone for A$393.8 million ($262 million) as its first pure-play retail asset.

Sydney-based MA Financial is acquiring the remaining 25 percent stake and will serve as the asset manager and property manager of the 2010-built mall, with the deal expected to close by the first quarter of 2026.