Broker: CGS International
Date of Report: July 23, 2026
Excerpt from CGS International report.
Report Summary
Stock: OUE REIT (OUEREIT SP)
Action: ADD (Buy)
Target Price: S$0.44
Current Price: S$0.365
Upside: 20.5%
Yield: 5.7% (annualised 1H26 DPU)
- Key Idea: OUE REIT’s 1H26 distributable profit (DP) of S\$69.8m was slightly ahead of estimates, benefiting from lower interest costs and higher joint venture/associate contributions. The 1H26 DPU rose 29% YoY, driven by hospitality NPI growth (higher occupancy/room rates), reduced interest expense, and contributions from its Sydney Salesforce Tower investment.
- Portfolio Activity: The proposed S\$500m divestment of Crowne Plaza Changi Airport (CPCA) is expected by year-end 2026 and could enhance DPU by 5.8% (to 2.36 Scts) and reduce leverage (from 41.5% to 36.6%). OUE REIT is also evaluating a potential sale of One Raffles Place (ORP), with capital likely redeployed to Salesforce Tower Sydney (OUE REIT has right of first refusal for Ping An’s 50% stake).
- Key Catalysts:
- Tightening office supply in Singapore CBD could support further positive rental reversions.
- Special events (Formula 1, K-pop concerts) may boost hospitality performance.
- OUE Bayfront’s GFA to increase by 4.4% by 1H27 from conversion of chiller area.
- Aggregate leverage reduction post-disposals enhances financial flexibility.
- Risks: Potential interest rate hikes and delays in capital redeployment to Salesforce Tower Sydney.
- ESG: OUE REIT has committed to a 40% reduction in Scope 1 and 2 GHG emissions by 2030 and aims for 90% green financing by 2030. Recent emissions reduction was attributed mainly to asset divestments, not pure operational efficiency.
Call to Action: ADD OUE REIT for 20.5% upside to S$0.44, underpinned by capital recycling, strong DPU growth, and improving financial metrics.
above is an excerpt from a report by CGS International. Clients of CGS International can be the first to access the full report from the CGS International website : https://www.cgs-cimb.com
