The proposed acquisition of Asia Square Tower 2 will be done via its wholly owned subsidiary IOI Marina View Pte Ltd, and scheduled for completion by the second half of the year.
With this latest acquisition, the property developer will be expanding its unit’s investment assets under management (AUM) in Singapore to S$10 billion (RM31.1 billion).
The transaction is subject to IOI Marina View obtaining a confirmation from Singapore’s tax authority that additional conveyance duty for buyers does not apply, and approval of IOIPG’s shareholders.
The group said this will be an opportunity for IOIPG to strengthen its presence in Singapore’s central business district (CBD), particularly in the prestigious Marina Bay area. The move will enlarge its unit’s portfolio with a total net lettable area (NLA) of 2.57 million sq ft.
“The proposed acquisition reinforces the IOI brand and expands the group’s portfolio of high-quality assets, in line with its strategy to deepen its foothold in Singapore’s prime office market,” it said in a statement today.
Completed in September 2013, Asia Square Tower 2 is located adjacent to the group’s IOI Central Boulevard Towers, and has a total net lettable area of approximately 773,000 sq ft.
Trading in the company’s shares was suspended for an hour from 9am today in conjunction with the announcement. At the midday-break, the shares fell 7 sen or 1.8% to RM3.84, valuing the group at RM21.14 billion.
The shares have surged 45% year to date and 115% in the past one year, touching a new all-time high of RM3.96 last week.
The strong momentum was driven by IOIPG’s proposal to establish a real estate investment trust (REIT) for its retail, office and hotel assets in Malaysia, and potentially in Singapore as well.
Research houses and investors are generally bullish on IOIPG based on the potential of it spinning off some of its Singapore property assets into a REIT across the causeway. The proposed acquisition of Asia Square Tower 2 will only add to the speculation.
Hong Leong Investment Bank said the upcoming REIT listing marks the first step in unlocking value from the group’s Malaysia assets, but the larger re-rating driver lies in its Singapore portfolio, which is over three times larger.
“This is further underpinned by a structural upcycle in the Singapore office market, with tight supply and strong demand,” it said in a note last week.
IOIPG is helmed by billionaire brothers Lee Yeow Chor and Lee Yeow Seng, who hold a controlling stake of about 65.7% through the family vehicles of the late founder and their father Lee Shin Cheng.
Yeow Seng leads IOI Properties as the group CEO, while his older brother Yeow Chor runs the affiliated palm oil group IOI Corp Bhd.