Report Summary

• OUE REIT delivered a resilient 3Q25 with stable operations, showing 2% same-store NPI growth and a 19.7% drop in finance expenses due to lower borrowing costs.
• Despite lower reported revenue and NPI from the divestment of Lippo Plaza, the Singapore-centric portfolio remained strong, maintaining occupancy and showing positive rent reversions, with hotel RevPARs expected to grow 2-5% in FY26.
• Gearing remains stable at 40.9% and the cost of debt continues to fall, with management guiding for further reductions and ongoing focus on prime assets in Singapore, Sydney, and Tokyo.
• The report upgrades OUE REIT to BUY, raising its FY25/FY26 DPU forecasts and target price to SGD0.38 (from SGD0.30), citing lower costs, improved margins, and increased tourist arrivals as key drivers.
• Main risks highlighted include potential non-renewal of office leases, hybrid work trends, and uncertainties from asset divestments or dilutive transactions.
• OUE REIT remains one of the largest and most diversified Singapore REITs, with a strong focus on sustainability and ESG improvements, including a high proportion of green financing and properties.