OUE Bayfront has obtained planning approval to convert a chiller system area on level 17 into prime office space. The conversion, expected to be completed by 1H2027, will free up over 2,100 sqm of gross floor area that can be converted into prime office space, says the manager of OUE REIT on March 24.
With the estimated capital expenditure of up to approximately $43 million, the space conversion is expected to deliver a stabilised return on investment exceeding 11%, according to OUE REIT.
The manager intends to draw down on existing loan facilities to fully fund the space conversion.
OUE Bayfront began work in 2025 to connect to the District Cooling System (DCS). Once in operation, the DCS will enable OUE Bayfront to “significantly” reduce energy consumption, improve cooling efficiency and lower greenhouse gas emissions, says the REIT manager.
This will contribute to OUE Bayfront’s net-zero transition plan and OUE REIT’s 2030 sustainability target of reducing Scope 1 and 2 absolute greenhouse gas emissions from commercial assets by 40% by 2030.
Connecting to the DCS will also enable OUE Bayfront to decommission its existing chiller system on level 17.
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Han Khim Siew, CEO and executive director of the manager, says: “At OUE REIT, we view sustainability not only as a moral imperative, but as a strategic and structural imperative that is integral to delivering long-term value creation.”
The conversion of the in-building chiller system area into new prime office space follows OUE Bayfront’s upgrade to the BCA Green Mark Platinum certification last year.
“Moving forward, we will continue to identify and implement sustainability-led asset enhancement initiatives that future-proof our portfolio and deliver enduring returns for our stakeholders,” says Han.
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The conversion is not expected to have a material effect on the net tangible assets or aggregate leverage of OUE REIT and its subsidiaries for the financial year ending Dec 31.
OUE Bayfront is one of the REIT’s six office, hospitality and retail assets located in Singapore, alongside One Raffles Place, OUE Downtown Office, Hilton Singapore Orchard, Mandarin Gallery and Crowne Plaza Changi Airport.
In February, OUE REIT announced it is acquiring a 19.9% interest in Salesforce Tower in Sydney for $175 million.
OUE REIT exited China in end-2024, divesting its Shanghai asset, Lippo Plaza, for RMB1,917.0 million ($357.4 million then).
OUE REIT units are down 1.4% year to date, trading at 36 cents as at 4pm on March 25.
