OUE REIT acquired a 19.9% stake in Salesforce Tower, a premium office tower in Sydney, for 45 cents. The acquisition, funded through debt and divestment proceeds, marks OUE REIT&rsquo s entry into Sydney&rsquo s core CBD office market and supports its growth strategy towards higher-quality assets.

Analysts keep &lsquo add&rsquo call management&rsquo s positive view on rental revisions for commercial assets

 

[SINGAPORE] CGS international raised its target price for   OUE Real Estate Investment Trust (Reit)   : TS0U +1.33% to S$0.41 from S$0.38 on the back of better-than-expected 2025 earnings and positive outlook for 2026. 

 

Analysts Lock Mun Yee and Li Jialin kept their &ldquo add&rdquo call on the counter, given the management&rsquo s positive view on rental revisions for commercial assets, and the better outlook for the hospitality segment, driven by a stronger event calendar.

 

They also expect interest expense savings and benefits from the potential acquisition of a Sydney CBD Office, they said in a note on Wednesday (Jan 28). 

 

Earlier that week, the manager of OUE Reit posted a distribution per unit (DPU) of S$0.0125 for the second half ended December, up 10.6 per cent year on year from S$0.0113.

 

For the full year, DPU rose 8.3 per cent to S$0.0223, from S$0.0206 a year earlier. The amount available for distribution grew 13.9 per cent on year to S$123.8 million.

 

This was above CGSI&rsquo s full-year estimate, driven by a rebound in the hospitality segment, finance expense savings and one-offs, the analysts noted. 

 

The analysts expect further financial cost savings in 2026, with weighted average cost of debt likely to fall by another 40 basis points, according to the management&rsquo s guidance. 

 

They also expect further interest expense savings, from the refinancing of interest rate swaps and their S$150 medium-term note in 2026.

 

Meanwhile, Lock and Li also noted that OUE Reit was reported to be in exclusive talks with Mitsubishi Estate Asia for a potential acquisition of a partial stake in Salesforce Tower, Sydney. 

 

They believe this transaction could be a &lsquo low-hanging opportunity&rsquo for OUE Reit to execute its growth strategy. 

 

Funding this S$317 million acquisition fully with debt could lift gearing to approximately 40.7 per cent, they noted.

 

However, revenue falls 4.2% due to no contributions from Lippo Plaza Shanghai, which the Reit had divested

 

[SINGAPORE] The manager of OUE Real Estate Investment Trust (Reit) on Monday (Jan 26) posted a distribution per unit (DPU) of S$0.0125 for the second-half ended December, up 10.6 per cent year on year from S$0.0113.

 

The stronger performance came amid continued resilient operating performance across the Reit&rsquo s portfolio, alongside stronger capital structure, which allowed the trust to benefit from the lower interest-rate environment, said the manager.

 

The distribution for the period will be paid on Mar 10, after book closures on Feb 3.

 

Excluding the capital distribution from the divestment of 50 per cent of OUE Bayfront in 2021, DPU for the half-year period would have risen by 15.7 per cent year on year.

 

Revenue fell 4.2 per cent to S$142.5 million in H2 2025, from S$148.8 million in the corresponding year-ago period. Net property income (NPI) dropped 2.3 per cent to S$114.2 million.

 

The declines were mainly due to the absence of revenue from Lippo Plaza Shanghai, which OUE Reit divested in FY2024.

 

The amount available for distribution for H2 2025 grew 16 per cent on year to S$69.4 million.

 

Full-year results

For the full year, DPU rose 8.3 per cent to S$0.0223, from S$0.0206 in the year-ago period. The amount available for distribution grew 13.9 per cent on year to S$123.8 million.

 

FY2025 distribution yield stood at 6.2 per cent, based on the closing price of S$0.36 as at the last trading day of the financial year. This is down from the 7.2 per cent distribution yield for FY2024, based on the closing price of S$0.285 as at the last trading day of FY2024. 

 

Revenue was down 7.4 per cent year on year at S$273.6 million, while NPI was 6.2 per cent lower at S$219.6 million. 

 

As at end-December, the valuation of OUE Reit&rsquo s properties decreased by 1.2 per cent on year to S$5.1 billion. The decline was mainly due to lower valuations of hotels and retail assets, which were partially offset by higher valuations of office properties.

 

Consequently, the Reit&rsquo s net asset value per unit fell to S$0.56 as at Dec 31, 2025, from S$0.58 a year ago. 

 

OUE Reit had S$2.2 billion of total debt as at Dec 31, and weighted average cost of debt stood at 3.9 per cent per annum. Its aggregate leverage was 38.5 per cent, down from 40.9 per cent as at Sep 30, 2025.

 

In H2, revenue and NPI for the commercial segment grew 4.2 per cent and 5.7 per cent on year to S$87.8 million and S$65.2 million, respectively. Growth was driven by higher average passing rents across all office assets.

 

For the full year, revenue was 3.9 per cent higher at S$173.9 million and NPI was 5.4 per cent higher at S$130.4 million.

 

Committed occupancy of the Reit&rsquo s Singapore office properties remained healthy at 95.4 per cent as at end-2025, with full-year positive rent reversion of 9.1 per cent. Average passing rent rose 0.6 per cent quarter on quarter to S$10.97 per square foot (psf) per month.

 

Citing CBRE forecasts, the manager noted that office rents will grow about 5 per cent on year in FY2026. It added that conditions for the office market are expected to turn &ldquo increasingly landlord-favourable, as large contiguous floor plates remain scarce, with Shaw Towers being the only major office completion scheduled&rdquo . 

 

OUE Reit&rsquo s retail asset &ndash Mandarin Gallery &ndash had positive reversion of 12.4 per cent in FY2025. Its committed occupancy declined 1.7 percentage points on quarter to 95.7 per cent, representing a &ldquo cautious leasing environment and the ongoing redesignation of selected spaces for place-making initiatives&rdquo , said the manager. Average passing rent was S$22.45 psf per month. 

 

It noted that the outlook for FY2026 &ldquo remains constructive, albeit with a moderation in growth&rdquo . 

 

&ldquo While retailers continue to face headwinds from manpower constraints and elevated operating costs, new retail supply is expected to remain broadly in line with historical averages.&rdquo

 

Han Khim Siew, chief executive officer of the manager, said: &ldquo While volatility in the global outlook persists, we remain encouraged by the strong underlying fundamentals of the Singapore market.&rdquo

 

He added: &ldquo Looking ahead, we will continue to optimise asset performance and actively enhance our portfolio through disciplined capital recycling and selective deployment into prime gateway assets, including targeted opportunities in Sydney.&rdquo  

There is no certainty that any transaction will materialise at this juncture, says manager

[SINGAPORE] OUE Real Estate Investment Trust (OUE Reit) is in &ldquo exclusive talks&rdquo with Mitsubishi Estate Asia for a potential acquisition of a partial stake in Salesforce Tower in Sydney.

 

Located at 180 George Street in Circular Quay, Sydney, New South Wales, Australia, the building has 55 storeys and stands at a height of 263 m. 

 

It is the second-tallest building in the state after integrated resort Crown Sydney. 

 

The Reit manager indicated in a Thursday (Jan 8) bourse filing that negotiations between the parties are still ongoing, and that they have yet to enter into any binding agreement for the acquisition. 

 

It added that there is no certainty that any transaction will materialise at this juncture.

Proceeds will be used for capital expenditure, working capital and general funding purposes

 

[SINGAPORE]   OUE Real Estate Investment Trust   : TS0U 0% (OUE Reit) has entered into a S$100 million unsecured loan facility agreement, said the Reit&rsquo s manager in a bourse filing on Friday (Dec 12). 

 

The loan will be used to finance capital expenditure, working capital needs, and general corporate funding purposes. It may also be used to refinance the Reit&rsquo s other existing unsecured loan facilities, as well as covering the fees and expenses associated with obtaining the facility.

 

The manager did not elaborate on the maturity date or other details of the facility. 

 

Target price is raised to S$0.38 from S$0.30 previously

 

[SINGAPORE] Analysts are positive on   OUE Real Estate Investment Trust (Reit)   : TS0U +1.45% on the back of its declining cost of debt in Q3 &ndash with Maybank Securities equity analyst Krishna Guha on Tuesday (Oct 28) upgrading his call on the counter to &ldquo buy&rdquo from &ldquo hold&rdquo . 

 

In Guha&rsquo s report, he noted that this rating comes amid &ldquo lower finance costs&rdquo by the Reit and a relatively unchanged operating trend &ldquo with stable occupancy for Singapore commercial assets continued&rdquo . 

 

The analyst raised his target price on the counter to S$0.38 from S$0.30 previously. 

 

This comes after the manager of the Reit reported its earnings for the third quarter ended Sep 30 &ndash a 5.6 per cent fall in net property income (NPI) to S$57 million for the period, from S$60.3 million the year before. Revenue declined 5.8 per cent to S$70.5 million, from S$74.8 million previously. 

 

But analysts from OCBC and Maybank Securities argued that the decline was mainly due to the divestment of Lippo Plaza in Shanghai in December 2024. Revenue and NPI, on a same-store basis, in fact grew 1.2 per cent and 2 per cent on the year respectively, led by performance of its Singapore-centric portfolio.

 

&ldquo As interest rates decline, and with dry powder from the divestment of Lippo Plaza Shanghai still sitting on the Reit&rsquo s balance sheet pending deployment, we think the possibility of inorganic growth has increased for the Reit,&rdquo said OCBC equity research analyst Ada Lim in her Oct 24 note. 

 

Finance expenses of the Reit fell 19.7 per cent during the period, due to 70 basis points (bps) decline in cost of debt, the analysts noted.

 

&ldquo This therefore nudges our terminal growth rate assumption up by 25 bps to 1.25 per cent,&rdquo she added. Lim raised her target price on the Reit to S$0.36 from S$0.335 previously, while reiterating a &ldquo buy&rdquo rating. 

 

The analysts observed that OUE Reit&rsquo s aggregate leverage stood at 40.9 per cent as at Sep 30, up from 40.3 per cent as at Jun 30. Assuming the net proceeds from the sale of Lippo Plaza are fully utilised to repay loans however, this figure is expected to fall to 37.7 per cent.

 

Weighted average cost of debt improved 10 bps to 4.1 per cent over the quarter, and management expects distribution per unit (DPU) to increase by S$0.0004 for every 25 bps decline in interest rates. 

 

&ldquo With Singapore dollar rates trending lower and the bulk of interest rate swaps coming off in the next two years, management sounded optimistic of capturing greater finance cost savings going forward as loans are progressively refinanced, in our view,&rdquo Lim said. 

 

Hotels under OUE Reit had continued revenue per average room decline of 5.7 per cent year on year spread across both Hilton Singapore Orchard (HSO) and Crowne Plaza, Changi Airport. 

 

Still, Maybank&rsquo s Guha believes that the new management for HSO is likely to result in stable performance and 2 to 5 per cent revenue per average room growth for FY2026.

 

&ldquo We raise FY2025/FY2026 DPU by 2 per cent and 0.5 per cent, factoring in higher margins for hotels and lower borrowing costs,&rdquo he said. 

Revenue also drops 5.8% to S$70.5 million

 

[SINGAPORE]   OUE Real Estate Investment Trust   : TS0U 0% (Reit) posted a 5.6 per cent decline in net property income (NPI) to S$57 million for the third quarter ended Sep 30, from S$60.3 million a year earlier.

 

Revenue similarly fell 5.8 per cent to S$70.5 million, from S$74.8 million previously. Both declines were mainly due to the divestment of Lippo Plaza Shanghai in December 2024, the Reit manager said in a business update on Thursday (Oct 23).

 

This was partly offset by a 19.7 per cent fall in finance costs to S$21.6 million, as interest rates eased.

 

OUE&rsquo s aggregate leverage stood at 40.9 per cent as at Sep 30, up slightly from 40.3 per cent as at Jun 30. Total debt rose to S$2.42 billion, from S$2.4 billion three months earlier. The weighted average cost of debt was 4.1 per cent per annum, compared with 4.2 per cent previously.

 

Assuming the net proceeds from the divestment of Lippo Plaza are fully utilised to repay loans, the aggregate leverage is expected to fall to 37.7 per cent as at Sep 30, the manager said.

 

It sold the 36-storey Grade A commercial building to an unrelated entity for 1.9 billion yuan (S$346.4 million) in December last year, and had said it expected to reap net proceeds of about S$318.2 million from the transaction.

 

The commercial segment &ndash comprising office and retail properties &ndash accounted for 64.3 per cent of the Reit&rsquo s revenues, with the remainder coming from the hospitality segment.

 

The commercial segment recorded a 4.2 per cent rise in revenue to S$43.6 million, and a 3.8 per cent increase in NPI to S$32.5 million. &ldquo The stronger performance reflected higher average passing rents achieved across the commercial portfolio,&rdquo the manager said.

 

The hospitality segment &ldquo delivered a resilient performance&rdquo despite the shift of the Singapore Grand Prix 2025 to October, outside the reporting period, the manager added. In previous years, the annual race weekend had boosted room demand and rates.

 

OUE Reit unit issues S$150 million green notes due 2032 at 2.75% offering 2.8 times oversubscribed

The segment&rsquo s revenue and NPI for the quarter declined 3.4 per cent and 0.4 per cent year on year to S$26.9 million and S$24.5 million, respectively.

 

OUE REIT has established a $500 million commercial paper programme which will have tenors of not more than 364 days.

 

DBS Bank and Oversea-Chinese Banking Corporation are the arrangers of the programme and have been appointed as dealers under the programme.

The REIT says that it will from time to time issue fixed or floating rate notes. It has not specified what proceeds from the notes will be funneled into.

Net proceeds will go exclusively towards projects that meet at least one eligibility category in the real estate investment trust&rsquo s green financing framework

 

[SINGAPORE] OUE Reit Treasury, a wholly owned subsidiary of   OUE Reit   : TS0U +1.49%, has priced its offering of S$150 million worth of green notes due in 2032.

 

The notes will be issued under the S$2 billion euro medium-term note programme of DBS Trustee, the trustee of OUE Reit, and OUE Reit Treasury, the issuer. 

 

They are set to be issued on Oct 8, 2025, at an issue price of 100 per cent of their principal amount. They will bear an interest rate of 2.75 per cent per annum, payable semi-annually in arrears. 

 

Net proceeds from the issuance will be used exclusively for the financing or re-financing of new as well as existing green projects, in part or in whole, the real estate investment trust&rsquo s manager said on Monday (Sep 29). Such projects must meet at least one of the eligibility categories in accordance with OUE Reit&rsquo s green financing framework established in November 2023. 

 

OUE Reit and the notes have been rated &ldquo BBB-&rdquo by S& P Global Ratings. 

 

Application will be made to the Singapore Exchange for the listing and quotation of the notes on its official list. They are expected to be listed on the bourse on or around Oct 9, 2025. 

 

The notes will be offered outside the US and in Singapore, to institutional investors and accredited investors, and will mature on Oct 8, 2032. 

 

 

OUE REIT, which offers a still attractive distribution per unit (DPU) yield of around 5.7% (as of Sept 1 after outperforming the market ytd), is one of a handful of REITs with only Singapore properties, which could get it revalued higher as Singapore assets, including the Singapore dollar, are increasingly viewed as safe havens during a period of geopolitical tension.

 

The REIT sharpened its focus in December 2024 with the divestment of Lippo Plaza in Shanghai, China. Han Khim Siew, CEO of OUE REIT&rsquo s manager, says: &ldquo We hold very prime core assets, which gives us the ability to preserve capital, retain value for our unitholders. The sale of Lippo Plaza is an example of how such assets give us the flexibility to realign our portfolio when necessary.&rdquo

 

With the exit from Lippo Plaza, OUE REIT is one of a handful of S-REITs with an all-Singapore portfolio. It comprises three Grade A office properties, OUE Bayfront, One Raffles Place and the office components of OUE Downtown, all located within Singapore&rsquo s central business district (CBD).

 

OUE REIT also owns two hotels, Hilton Singapore Orchard and Crowne Plaza Changi Airport, that are located along the prime Orchard Road belt and within the Changi Airport vicinity, offering a total of 1,655 upper upscale hotel rooms. The Mandarin Gallery, which sits below Hilton Singapore Orchard, also belongs to OUE REIT.

 

Since the start of the year and, in particular, since April, following the Trump administration&rsquo s so-called Liberation Day, global markets have grown increasingly volatile. Investors have become more risk-averse, prompting an increased reallocation of capital towards Singapore, drawn by its steady currency, political stability and robust legal and financial frameworks.

 

&ldquo As global uncertainties persist, Singapore&rsquo s reputation as a safe and stable market status continues to attract global capital and businesses, and this directly benefits our portfolio,&rdquo says Han. &ldquo Our prime offices enjoy resilient occupier demand, and with steady tourism recovery and a rising middle class in Asean, driving further growth in our hotels and retail assets.&rdquo

 

Catch the consumer pulse

 

Despite Singapore&rsquo s hub status, which attracts a constant stream of visitors to the island, luxury in Asia has taken a back seat, with tourists, especially those from China, holding back on luxury purchases.

 

&ldquo Luxury has been redefined. It&rsquo s not ostentatious luxury anymore. Quiet luxury has taken over. Preferences have changed. If you look at Chinese spending, they used to spend a lot on fashion and luxury. That trend actually has moderated significantly and has shifted mostly into F& B and experiences,&rdquo Han points out.

 

Apart from the different spending patterns, retail tenants have often highlighted other operating challenges, such as labour shortage.

 

&ldquo Labour has become one of the main concerns. Some of our tenants shared that they can&rsquo t find locals who want to work for them. Securing a foreign worker quota is challenging for small retailers that lack the scale to meet local hiring requirements,&rdquo Han acknowledges.

 

Despite the challenges, Mandarin Gallery&rsquo s 34.4% y-o-y rent reversion in 2Q2025 shows retail thrives on strong tenant-landlord partnership. Committed occupancy for Mandarin Gallery as of 2Q2025 is 99.0%, higher than pre-Covid levels in 2019, a result of a curated mall with active asset management. For instance, Han and his team are taking advantage of trends, such as the popularity of Korean cuisine. Even in mid-afternoon, the unusual Korean dining experiences such as Modu, Singapore&rsquo s first samgyetang speciality restaurant, at Mandarin Gallery had queues.

 

Han describes: &ldquo It is important for the landlord to evolve in line with trends, current trends and future trends. As a landlord, we have several responsibilities. One is to provide a wonderful place for retailers to trade. This includes curating the right tenant mix and minimising cannibalisation from having the same trade mix or offering identical products. We&rsquo re not a large format mall, but we attract many retailers who want to enter the Singapore market and establish their flagship stores at Mandarin Gallery.&rdquo

 

For example, luxury luggage brand Rimowa has only two stores in Singapore, and Mandarin Gallery is one of them,&rdquo Han says.

 

Tourism recovery

 

Singapore Tourism Board, along with property owners on Orchard Road, are in discussions to revive Singapore&rsquo s most famous shopping district. &ldquo There are two parts to Orchard Road retail. You have locals coming in for a specific product or service. Outside of that, it&rsquo s mostly driven by tourists,&rdquo Han says.

 

Tourist arrivals recovered steadily after the global pandemic lockdown and Singapore&rsquo s own Circuit Breaker. Visitor arrivals in 2023 surged to 13.6 million from just 6.3 million in 2022 and continued to rise in 2024 to 16 million.

 

&ldquo The forecast for this year is it will be close to 17.0 million to 18.5 million, but we are still trading below that in terms of visitor arrivals of 19 million in 2019. There is a direct correlation between Orchard Road&rsquo s performance and visitor arrivals,&rdquo Han observes.

 

Singapore, being an open economy and a financial and transportation hub, is inevitably affected by geopolitics, the shape of which has caused the Singapore dollar to be a haven currency, to the detriment of tourism, as well as corporate travel.

 

Tourism-dependent hotels account for 33% of OUE REIT&rsquo s revenue. In June 2025, 53% of the REIT&rsquo s hotel guests were from North and Southeast Asia.

 

OUE REIT is protected from the volatility of the hospitality sector through rental agreements signed with its sponsor, OUE, that protect the downside but provide the REIT with upside. Hilton Singapore Orchard and Crowne Plaza Changi Airport operate under master lease rent structures that comprise variable components tied to hotel performance, with minimum rent guarantees of $45 million and $22.5 million per annum, respectively.

 

&ldquo Regional countries have gotten cheaper relative to Singapore. The Singapore dollar has appreciated a lot against our neighbouring countries. Singapore is becoming expensive for tourists,&rdquo Han says. That affects room rates and retail spending.

 

Nonetheless, structural tailwinds across the region are expected to further support long-term demand for tourism and retail in Singapore. The combined population of China, India and Southeast Asia is projected to reach 3.7 billion by 2030. Within Southeast Asia, the middle class is expected to make up 65% of the population by then, driven by rising incomes and urbanisation. As more consumers across the region gain spending power, demand for quality travel, hospitality and retail experiences will grow, and OUE REIT is well-positioned to benefit from this attractive growth potential.

 

Is the office sector more resilient?

 

Is office space more resilient? The answer is that office income appears steadier, with occupancy and capital values more stable than other asset classes.

 

From a net lettable area and rental income perspective, OUE REIT&rsquo s portfolio is balanced between stability and growth. Office accounts for 52.0% of its revenue, followed by hospitality with 31.1% and retail with the remaining 16.9%. OUE REIT&rsquo s office portfolio accounts for more than half of its total valuation.

 

Singapore&rsquo s CBD has a limited supply of office space. According to CBRE, the office supply in the CBD will be limited beyond 2027. There are no new Government Land Sales (GLS) sites with a significant office component in the CBD under the 2H2024 and 1H2025 GLS Programme, CBRE says.

 

Island-wide, projected supply is substantially lower than the five-year historical average annual supply (2020&ndash 2024). From 2025 to 2027, the projected island-wide office supply is 1.7 million sq ft. The average annual office supply from 2025 to 2027 is approximately 0.6 million sq ft, lower than the five-year historical average annual supply (2020&ndash 2024) of 1.1 million sq ft.

 

The supply-demand outlook is favourable to OUE REIT. As Han tells it, &ldquo the office component anchors the REIT and provides income resilience. What we&rsquo re offering the investor is access to prime, core assets.&rdquo

 

Han has anecdotes from 2022 when the global office was out of fashion as an investment. When the management team went to see the Thai investors back in 2023, &ldquo they found it hard to believe that Singapore&rsquo s office occupancy and rents remained high and didn&rsquo t show keen interest in investing in offices. Similarly, in Korea, we were told no office REITs exposure. Now all these Thai investors want to talk to us. In Korea, too, they think the Singapore office sector is a great sector to invest in,&rdquo Han recounts.

 

In 2Q2025, OUE REIT&rsquo s office committed occupancy was 95.5%, above core CBD (Grade A) occupancy of 94.7%. Average passing rent was $10.86 psf per month, up 0.8% q-o-q. Rental reversions were 9.1% in 2Q, following 12 consecutive quarters of positive rent reversion.

 

&ldquo Even through that period when investors questioned the sustainability of continued office rental growth, we were able to grow. We had consistent rental reversion at every single one of our office buildings in Singapore,&rdquo he adds.

 

Robust capital management

 

Han was appointed CEO of OUE REIT Management in February 2022. One of the first things he worked on was getting an investment-grade credit rating by October 2023, which helped lower the cost of debt.

 

In September last year, OUE REIT&rsquo s seven-year green notes were priced at 3.9% compared with the REIT&rsquo s May 2022 5-year bond, which cost 4.2%. Subsequently, OUE REIT followed up with a re-tap at a tighter reoffer yield of 3.78% in November, the lowest achieved by OUE REIT for a bond issuance.

 

&ldquo Getting the investment-grade credit rating helped to strengthen the base of the REIT,&rdquo Han says. &ldquo In 1H2025, we saw finance costs decline 17.3% YoY in 1H 2025, thanks to our effective capital management approach. Being 100% Singapore-dollar funded has also worked to our advantage, allowing us to benefit from the significant decline in SORA while avoiding the currency volatility and higher interest rates seen in other markets.&rdquo

 

The advantage of OUE REIT as an investment is that its entire portfolio is in Singapore, at a time when Singapore assets are proving attractive to global and regional investors because of their stable capital values and income.

 

&ldquo We&rsquo ve de-risked the portfolio you have Singapore as a safe haven the Singapore dollar remains strong supply, demand dynamics for office are positive and we believe in the long-term secular trend of hospitality and tourism,&rdquo Han concludes.