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OCBC, DBS, CGSI maintain positive views on OUE REIT
Analysts continue to like OUE REIT after it reported 1QFY2026 numbers with net property income and revenue up by 8.4% y-o-y and 6.7% respectively, thanks to a strong rebound in its hospitality segment and resilient performance from the commercial portfolio.
While OUE REIT has recently expanded into Sydney with the partial acquisition of Salesforce Tower, its portfolio remains anchored here in Singapore with 95% of the $6.1 billion portfolio value. Growth was broad-based with both hospitality and commercial assets recording higher net property income, albeit at different rates.
In the quarter, the REIT&rsquo s revenue per available room (RevPAR) surged 11.7% y-o-y to $277, thanks to events such as the biennial Singapore Airshow and maiden voyage of the Disney Cruise. This helped drive NPI for the hospitality segment by 16.8% y-o-y.
The commercial segment, on the other hand, saw its NPI up by 3% with office renal reversions up by 6%, even though committed occupancy edged lower.
OUE REIT was earlier in the news for acquiring a 19.9% interest in 180 George Street, also known as Salesforce Tower in Sydney for A$357.2 million, or $319.8 million, which is at an initial passing yield of 5.8%. The property&rsquo s committed occupancy, as at March 31, was 99.2%, above the market average of 90.6% for premium grade assets.
OUEREIT has a right of first refusal (ROFR) to further increase its stake in 180 George Street, and management appears keen to exercise this should the opportunity arise, says Ada Lim of OCBC Group Research, adding that rental growth for the Sydney Central Business District (CBD) market is expected to remain supported by flight-to-quality trends and limited new supply beyond 2027.
On the other side of the capital reallocation coin, OUEREIT is exploring the divestment of One Raffles Place, ahead of potentially muted reversions in 2028-2029 as new supply comes to market.
Meanwhile, the REIT expects to lower its financing costs further. Aggregate leverage, as at March 31, was 41.5%, 3 percentage points higher as compared to the end of FY2025 following the drawdown of debt to fund the acquisition of 180 George Street.
Cost of debt, however, improved a further 20 basis points over the quarter to 3.7%, with 73.6% of debt on fixed rates and is seen to lower to the mid-3% handle. Assuming a 25bps decline in interest rate, DPU would increase by 0.03 Singapore cents.
The REIT&rsquo s management, according to Lim, has not seen a &ldquo noticeable impact&rdquo on its hotels from the Middle East war. &ldquo We are cautious that this may take some time to filter through,&rdquo warns Lim.
&ldquo That being said, we expect margins to remain stable, underpinned by long-term utilities contracts,&rdquo says Lim, who has revised her FY2026 and FY2027 DPU projections by 0.4% and 0.7%, respectively, leading to a new fair value of 41 cents, from 40 cents.
In her separate note, Tabitha Foo of DBS Group Research is even more bullish on the REIT, with her &ldquo buy&rdquo call and target price of 45 cents.
To her, the REIT &ldquo remains one of the key beneficiaries of a declining interest rate environment in Singapore within the mid-cap REIT space, with steady q-o-q interest savings that are likely to continue,&rdquo says Foo.
For her, &ldquo meaningful&rdquo catalysts for the REIT would be a focus on capital recycling, including a potential divestment of One Raffles Place, or Crowne Plaza Changi Airport. Valuations, for Foo, are attractive at 0.65x price to book and more than 6.5% FY2026 yield.
Li Jialin and Lock Mun Yee of CGS International, meanwhile, have turned more bullish on this counter, as they raised their target price from 41 cents to 44 cents.
They note that the REIT will be adding one level of office space at OUE Bayfront by converting the existing chiller system space on Level 17. " We see potential upside from this upon completion in 1HFYFY2027."
For them, re-rating catalysts include accretive divestments and timely capital deployment, while downside risks include interest cost hike and disruptions to global travel.
OUE REIT units closed at 37 cents on April 24, down 1.35%.
Very strong set of results. Every part of the business growing fast, and interest costs also falling. The next DPU should look very good based on this.
OUE REIT&rsquo s NPI rose by 8.4% y-o-y in 1QFY2026
OUE REIT&rsquo s (SGX:TS0U) net property income (NPI) rose by 8.4% y-o-y to $57.6 million in 1QFY2026 ended March 31. Meanwhile, revenue increased by 6.7% y-o-y to $70.5 million in the same period.
The higher revenue and NPI were mainly driven by strong y-o-y growth in the hospitality segment, which saw double-digit increase in the quarter, coupled with resilient operating performance from the commercial portfolio.
Share of results of joint venture and associate jumped by 57.2% y-o-y, mainly driven by higher contribution from OUE Bayfront arising from significant interest cost savings following its refinancing completed last August and the acquisition of 180 George Street on March 16.
The commercial segment, which comprises of both office and retail, achieved higher revenue and NPI of $43.6 million (+2.2% y-o-y) and S$33.3 million (+3.0% y-o-y) respectively.
The higher numbers were derived from the higher average passing rents from consecutive quarters of positive rent reversion across the commercial portfolio.
As at March 31, OUE REIT&rsquo s Singapore office portfolio committed occupancy stood at 95.2% and recorded a positive rental reversion of 6.0% for office lease renewals, while average passing rent rose by 0.2% q-o-q to $11.00 per square foot (psf) per month.
For the hospitality segment, revenue and NPI saw a faster growth rate of 15.1% and 16.8% y-o-y to $26.8 million and $24.3 million respectively, driven by improved MICE pipeline which includes the return of the biennial Singapore Airshow and the maiden voyage of Disney Cruise.
OUE REIT&rsquo s hospitality segment&rsquo s revenue per available room (RevPAR) was up by 11.7% y-o-y to $277. Hilton Singapore Orchard&rsquo s RevPAR in 1QFY2026 increased by 11.2% y-o-y to S$277 on higher occupancy rate driven by increased transient demand and stable corporate bookings.
Crowne Plaza Changi Airport recorded RevPAR of $276 in 1QFY2026, translating to an 11.7% y-o-y growth.
On the capital management front, OUE REIT&rsquo s weighted average cost of debt improved by 20 basis points q-o-q to 3.7% per annum, driven by lower interest rate environment.
Weighted average term of debt stood at 3.0 years as at March 31 and aggregate leverage was at 41.5%, following the acquisition of a 19.9% interest in 180 George Street and drawdowns for payment of distributions to Unitholders in 1QFY2026.
Interest coverage ratio improved slightly to 2.6 times as at March 31, compared against the figure of 2.4 times as at December 31.
&ldquo Looking ahead, our portfolio fundamentals remain resilient, underpinned by the continued attractiveness of Singapore and Sydney as safe haven markets amid heightened global uncertainty. Building on these strengths, we will continue to advance our Phase 3 Value Creation Journey with a focus on disciplined capital allocation, active asset management and long-term value creation for Unitholders,&rdquo says Han Khim Siew, CEO of the manager.
0.40 not difficult this time round though gradually.
https://links.sgx.com/1.0.0/corporate-announcements/B1WHIVS9207AEFT4/a04d49752b1bed504d3a513095f83d7bdba91d5e6fb8b8cb03c589a3dabce081
https://links.sgx.com/1.0.0/corporate-announcements/B1WHIVS9207AEFT4/a04d49752b1bed504d3a513095f83d7bdba91d5e6fb8b8cb03c589a3dabce081
CBD Grade A office rents climb 1.4% in Q1 as tight supply squeezes tenants
https://sbr.com.sg/commercial-property/in-focus/cbd-grade-office-rents-climb-14-in-q1-tight-supply-squeezes-tenants
OUE REIT&rsquo s business updates for the first quarter ended 31 March 2026, will be released after trading hours on Tuesday, 21 April 2026.
Fed still set to cut US rates late this year, say economists, rejecting market pricing: Reuters poll
https://www.reuters.com/business/fed-still-set-cut-us-rates-late-this-year-say-economists-rejecting-market-2026-03-26/
OUE Reit looks to unlock value in mature assets, eyes Sydney for higher-yield growth
Proceeds from a potential One Raffles Place sale could fund its further expansion in Sydney&rsquo s Salesforce Tower
[SINGAPORE] OUE Real Estate Investment Trust ( OUE Reit : TS0U 0%) is stepping up capital-recycling efforts, as it looks to redeploy proceeds from potential sales of mature Singapore assets into higher-yielding investments such as in Australia.
&ldquo We are trying to build a high-performance, capital velocity engine,&rdquo said Han Khim Siew, chief executive officer of the manager. &ldquo We are not here to collect and run legacy assets into the ground.&rdquo
A legacy asset in focus is One Raffles Place, a substantial office property in the Central Business District (CBD), which the Reit is exploring for a potential sale.
All the owners of One Raffles Place are understood to have come together, and have appointed CBRE and JLL as joint marketing agents to find a buyer for the asset. The indicative pricing (for 100 per cent interest) is projected to be in the S$2.3 billion to S$2.4 billion range, The Business Times reported earlier.
OUE Reit holds an 83.33 per cent interest in OUB Centre Ltd, whose 81.54 per cent beneficial interest in One Raffles Place is valued at S$1.9 billion as at end-December 2025.
One Raffles Place comprises two office towers &ndash of 62 storeys and 38 storeys &ndash and a six-level retail podium. The first tower was completed in 1986, while the second was completed in 2012. The retail podium received a makeover and reopened in 2014.
One Raffles Place comprises two office towers and a six-level retail podium. PHOTO: BT FILE
Referring to One Raffles Place as an &ldquo older, vintage, legacy asset&rdquo , Han said the property would require significant investment to modernise and faces increasing competition from newer offices, including Singapore Land Group&rsquo s premium Grade A tower The Clifford expected to launch in 2028.
A divestment of One Raffles Place would remove roughly 30 per cent of the Reit&rsquo s income, significantly affecting distribution per unit (DPU).
Capital redeployment
Despite the near-term income hit, a sale would allow the Reit to pare down debt &ndash which carries a current cost of 3.9 per cent per annum as at Dec 31, 2025. The freed-up capital can also be redeployed into higher-yielding investments.
&ldquo Trapping capital in such mature assets just to maintain a headline asset under management number is not the correct thing to do. That is how you generate mediocrity,&rdquo he added, noting that disciplined capital recycling and portfolio optimisation could drive its stock price and DPU growth.
For financial year 2025, the Reit&rsquo s DPU rose 8.3 per cent to S$0.0223 from S$0.0206 in FY2024. The amount available for distribution grew 13.9 per cent on the year to S$123.8 million. The distribution yield was 6.2 per cent, based on the closing price of S$0.36 as at the last trading day of FY2025.
In March, the Reit completed its acquisition of a 19.9 per cent stake in the 55-storey commercial freehold Salesforce Tower for A$357.2 million (S$319.8 million). The acquisition is expected to be DPU accretive, generating an initial passing yield of about 5.8 per cent. This is compared with prime CBD offices in Singapore that trade at 3 to 3.5 per cent, said Han.
&ldquo Salesforce Tower was a strategic acquisition because it allows us to build a proprietary pipeline in Sydney,&rdquo he noted.
&ldquo We currently own 19.9 per cent, with the remaining 80.1 per cent held by other partners, some of whom plan to exit over the next one to five years. This gives us a natural moat, allowing us to increase our stake anywhere from 20 per cent to full ownership.&rdquo
The purchase is driven by potential upside in Sydney&rsquo s premium office segment, where supply in the core CBD remains limited, alongside the opportunity to diversify income streams and reduce concentration risk.
With a wave of new office supply set to come on stream in Singapore over the next few years, Han expects positive rental reversions to moderate, though it is still too early to say if this will lead to rental declines, which are likely to affect older, non-core assets more.
&ldquo We believe Singapore will increasingly experience the same bifurcation seen across other gateway cities, with demand concentrating in prime, high-quality assets.&rdquo
Expanding into Sydney, where new prime supply remains constrained, thus provides a hedge against such downside risks, he said.
Singapore still core
Following the Salesforce Tower purchase, OUE Reit&rsquo s portfolio value rose from S$5.8 billion to S$6.1 billion, with Singapore accounting for 94.9 per cent and Australia 5.1 per cent of total exposure.
If the Reit were to acquire up to 50 per cent of the building, its Australian exposure would rise to around 15 per cent, he added.
Still, Singapore remains OUE Reit&rsquo s &ldquo fortress&rdquo , with local office assets contributing about 50 per cent of income.
After selling Lippo Plaza Shanghai in 2024, the Reit&rsquo s portfolio comprises OUE Bayfront, OUE Downtown Office, One Raffles Place, retail mall Mandarin Gallery, and the Hilton Singapore Orchard and Crowne Plaza Changi Airport hotels in Singapore as well as Salesforce Tower in Australia.
For its hospitality assets, Han expects revenue per available room to continue growing amid a steady line-up of events and a lack of new hotel openings along Orchard Road.
New hotel supply is expected to grow at a measured pace of 1.7 per cent per annum between 2025 and 2027, below the pre-pandemic historical average of 4.4 per cent.
He also expects retail rents to remain elevated and leasing activity to remain resilient. For FY2025, Mandarin Gallery recorded a positive rental reversion of 12.4 per cent and average passing rent was S$22.45 per square foot per month.
Further divestments of mature assets are on the cards for OUE Reit, as part of its ongoing capital-recycling strategy.
&ldquo We take an agnostic view of all our assets. If we feel we have reached peak valuation and it is time to crystallise gains, and the market provides the liquidity to do that, we will do it.&rdquo
On the potential sale of Crowne Plaza Changi Airport, whose first term of master lease is expiring in May 2028, Han said the Reit&rsquo s portfolio of prime core assets has generated interest over the years.
He added that the Reit occasionally receives expressions of interests for its assets and such opportunities are evaluated as part of its ongoing asset management and capital-allocation strategy.
&ldquo If investors are looking for a manager that will hold legacy assets indefinitely, they should look elsewhere,&rdquo he said. &ldquo What we are here to do is drive returns, and we will do so through disciplined capital allocation.&rdquo
Also if this maths is correct they should frame it like that. Their IR could do with some improvement.
Alignment ( Date: 28-Mar-2026 14:40) Posted:
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11% return on $43m investment that is like $4.5m a year on distributable income is it not? So like 4% DPU accretion? That would be pretty impressive, like an early year end bonus.
Good idea !
Joelton ( Date: 26-Mar-2026 09:24) Posted:
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OUE REIT to convert over 2,100 sqm of chiller system space at OUE Bayfront into office space
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 &ldquo significantly&rdquo reduce energy consumption, improve cooling efficiency and lower greenhouse gas emissions, says the REIT manager.
This will contribute to OUE Bayfront&rsquo s net-zero transition plan and OUE REIT&rsquo 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.
Han Khim Siew, CEO and executive director of the manager, says: &ldquo 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.&rdquo
The conversion of the in-building chiller system area into new prime office space follows OUE Bayfront&rsquo s upgrade to the BCA Green Mark Platinum certification last year.
&ldquo 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,&rdquo says Han.
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&rsquo 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.
OUE REIT Elevates Asset Value and Sustainability at OUE Bayfront Unlocking over 2,100 sq m prime office space
https://links.sgx.com/FileOpen/OUE_REIT_Press_Release_OUE_Bayfront.ashx?App=Announcement& FileID=880220
Yes. Hope they " wake up" else it will be another Sabana lesson.
The share price clearly does not reflect OUE REIT' s underlying value. A good REIT manager should consider oneself responsible for how the share price of the REIT performs, and in this case one hopes that a sale of 1 Raffles Place is a big step towards solving the valuation concern.
The replacement of the external REIT manager at Sabana is a lesson for REIT managers that shareholders now have more powerful options open to them if they are unhappy with their management over the longer term.
The replacement of the external REIT manager at Sabana is a lesson for REIT managers that shareholders now have more powerful options open to them if they are unhappy with their management over the longer term.
Reits that don' t trade well should be privatised, or sell assets and be liquidated
https://www.businesstimes.com.sg/opinion-features/reits-dont-trade-well-should-be-privatised-or-sell-assets-and-be-liquidated
" Rooted in Singapore: Defensive by Design. Resilient through Cycles." (p10)
https://investor.ouereit.com/newsroom/20260304_174350_TS0U_MTE5YCP3K37CWRXW.1.pdf
https://investor.ouereit.com/newsroom/20260304_174350_TS0U_MTE5YCP3K37CWRXW.1.pdf
Yea man. :)
All the way. This is for the one with long term view.
I like the dividend payout.
All the way. This is for the one with long term view.
I like the dividend payout.
seanpent ( Date: 27-Feb-2026 09:38) Posted:
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Them selling 1 Raffles Place is not something I saw coming. If they do so that would be very positive to the share price.
Still vested?
Delvyss ( Date: 04-Aug-2025 16:18) Posted:
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