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February 2021
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Korea’s NPS, Allianz in S$634 million Singapore property buy

NPS, Allianz
By Hui Ching-hoo   
January 20, 2021

South Korea’s National Pension Service (NPS) and German insurer Allianz Group are buying a 50% stake in a commercial and retail property in Singapore from local property trust OUE Commercial REIT for S$634 million (US$475.5 million).

The investment is being made through AREAP Core I, a $2.3 billion property co-investment fund which NPS and Allianz established in June 2020, and is managed by the insurer’s property investment unit Allianz Real Estate.

Last August, the fund bought a portfolio of Japanese multifamily resident buildings in Japan from unnamed investors for $160 million.

The purchase of the stake in the Singapore property, OUE Bayfront, is expected to be completed at the end of February, Allianz says in a statement on January 19.

It comprises two commercial buildings and retail units with around 400,000 square feet of net lettable area.

Allianz says OUE Commercial REIT, which will own the other 50% of the property, has guaranteed that the net property income won’t be less than 3.6% per annum for the first two years after the deal.

According to NPS Chief Investment Officer Hyo-Joon Ahn, the property will be “a great addition” to the pension fund’s “already strong and stable” real estate portfolio.

“Highest quality real estate assets in irreplaceable locations prove to be resilient even in the current economic climate and provide long-term value and stable cash flow,” he says in the statement.

Rushabh Desai, chief executive officer for Asia Pacific at Allianz Real Estate, adds that the Singapore government has managed the coronavirus pandemic “extremely well” and prospects for office investment in the city state “will remain favourable” over the medium to long term.

As of end-2019, NPS, the world’s third largest pension fund, had 736 trillion won ($669.76 billion) of total assets, with 11.4% allocated to alternative investments, including global real estate. The fund aims to raise its alternatives allocation to 15% by 2024.

Munich-based Allianz had 2.25 trillion euros ($2.72 trillion) of total assets as of June 2020.