OUE REIT Announces S\$45 Million Unsecured Facility Agreement with Ownership-Linked Covenants

Key Highlights

• OUE REIT secures a S\$45 million unsecured facility via a Facility Agreement dated 14 January 2026.
• Purpose of the Facility: To finance capital expenditure, working capital, general corporate funding, refinancing unsecured loan facilities, and payment of related fees and expenses.
• Ownership-Linked Covenants: The Facility Agreement contains several provisions that are directly tied to the ownership interests and control of OUE Limited (“Sponsor”) in OUE REIT and its management entity.
• Potential Price Sensitivity: Breach of certain covenants could trigger mandatory loan prepayment or constitute events of default, potentially affecting up to S\$2,210.8 million in borrowings.

Details of the Facility Agreement

DBS Trustee Limited, acting as trustee of OUE REIT (“the Borrower”), has entered into a facility agreement for a S\$45 million unsecured loan. The funds may be used for a variety of corporate purposes, including capital expenditures, working capital, refinancing, and payment of facility-related costs. Actual utilisation remains subject to conditions specified in the Facility Agreement.

Ownership and Control Provisions

The Facility Agreement contains strict covenants related to the Sponsor’s (OUE Limited’s) ownership and control over OUE REIT and its Manager. These provisions are of particular importance to shareholders, as they may trigger significant financial consequences and could impact the REIT’s stability and share price:

• Mandatory Prepayment Trigger: If OUE Limited ceases to own (directly or indirectly) at least 51% of the ordinary shares in OUE REIT Management Pte. Ltd., or ceases to have “Effective Control” (as defined in the agreement), the lender may require mandatory prepayment of all outstanding amounts under the Facility, including accrued interest.
• Event of Default:
  • If the Sponsor ceases to hold (directly or indirectly) at least 20% of the Trust Units, it constitutes an event of default under the Facility Agreement.
  • If the Manager of OUE REIT resigns or is removed without lender consent, and a suitable replacement (either an affiliate of the Sponsor or a manager of reputable standing) is not appointed, this too constitutes an event of default.
• Aggregate Exposure: As of the announcement date, total borrowings that may be affected by these covenants (including cross-defaults with other facilities or debt securities) amount to approximately S\$2,210.8 million, excluding interest and fees.

Current Status

As of the announcement date, none of the default events or ownership-related triggers have occurred. OUE Limited continues to maintain the necessary ownership and control levels required by the Facility Agreement.

Important Considerations for Shareholders

• Potential Share Price Impact: Any future change in Sponsor ownership or control could trigger mandatory prepayment or default, with possible negative implications on OUE REIT’s liquidity, debt profile, and investor confidence.
• Risk Disclosure: Investors should note that OUE REIT Units are subject to market risks, and neither the Manager nor the Trustee guarantees returns or the principal invested. The value of Units may fluctuate and past performance is not indicative of future results.
• Trading and Redemption: Investors cannot request redemption or purchase of Units from the Manager while listed on SGX-ST; trading is only possible through the exchange, and listing does not guarantee liquidity.

Forward-Looking Statements

The announcement contains forward-looking statements subject to various risks and uncertainties, including market conditions, interest rates, capital availability, competition, rental income levels, operating and property expenses, and changes in public policy. Investors are cautioned not to place undue reliance on these projections.

Conclusion

The S\$45 million facility and its linked covenants represent a material development for OUE REIT, with significant implications in the event of changes to Sponsor ownership or control. Investors should monitor these triggers closely, as any breach could impact the REIT’s debt obligations and financial stability, potentially moving the share price.

Disclaimer: This article is for informational purposes only and does not constitute financial advice, investment solicitation, or an offer to buy or sell securities. Investors should conduct their own due diligence and consult professional advisors before making investment decisions. The information provided is based on the report dated 14 January 2026, and conditions may change without notice. Past performance is not indicative of future results.

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