SINGAPORE (Dec 18): United Overseas Insurance (UOI) is acquiring an office property located at 146 Robinson Road from United Overseas Bank (UOB) for $52 million, the group reported on Wednesday. 

The property is a 12-storey office building with a gross floor area (GFA) of 4,631.49 sqm, and has a leasehold estate of 99 years from June 3 1992. 

UOI, which is the insurance arm of UOB, will be satisfying the total consideration in cash from internal sources. A $2.6 million deposit was paid to UOB upon signing of the agreement on Wednesday. 

The proposed acquisition marks UOI’s foray into real estate investment, and is intended to be held as a long term investment to enhance the fixed asset base of the group. 

“The property would provide a hedge against rental increases in the property market,” notes UOI, adding that rental income from leasing out excess space would diversify its income stream and lessen profit volatility. 

“The directors are of the view that upon acquisition and relocation to the Property, UOI will receive an immediate boost to its corporate image and branding,” says UOI. 

As the property’s price represents approximately 13.74% of UOI’s latest audited net tangible assets as at 31 December 2018, the acquisition is subject to the approval of shareholders at an extraordinary general meeting (EGM). 

The acquisition is considered an “interested-party transaction” as UOB is deemed to have a 58.39% interest in UOI. 

UOI says that UOB and its associates will also abstain from voting on the resolution to approve the proposed acquisition at the group’s EGM. 

Upon approval, the transaction is slated to be completed by February 28 next year. 

According to an independent valuation conducted by Colliers International, the value of the property was $52 million as at June 10. 

Shares in UOI closed closed flat at $7.08 on Wednesday prior to the announcement, while shares in UOB closed 34 cents higher, or 1.3% up, at $26.58.