Broker: CGS International
Date of Report: July 23, 2026
Excerpt from CGS International report.
Report Summary
Stock Focus: OUE REIT (OUEREIT SP)
Call to Action: ADD (Buy)
Target Price: S$0.44 (20.5% upside from current price of S$0.365)
Key Ideas & Actionable Insights:
- Buy call reaffirmed: CGS International maintains an ADD (Buy) rating on OUE REIT with a DDM-based target price of S\$0.44, representing 20.5% potential upside.
- 1H26 Distributable Profit: OUE REIT delivered S\$69.8m in 1H26 distributable profit, slightly above estimates, driven by interest cost savings.
- DPU Growth: 1H26 DPU of 1.26 Scts, up 29% year-on-year, annualised yield of 5.7%.
- Portfolio Moves: The REIT is in the process of selling Crowne Plaza Changi Airport (CPCA) for S\$500m, with expected completion by end-2026. This disposal is projected to enhance proforma FY25 DPU by 5.8%, reduce leverage from 41.5% to 36.6%, and allow for a special distribution of S\$10m per year for two years.
- Potential Sale of One Raffles Place (ORP): OUE REIT is evaluating ORP divestment for which bids have closed, potentially narrowing the discount to its NAV per unit and enabling redeployment of capital to other assets such as Salesforce Tower in Sydney, where the REIT has a right of first refusal on an additional 50% stake.
- Key Catalysts: Tightening office supply in Singapore CBD, hotel segment uplift from major events (F1, K-pop concerts), and asset enhancement initiatives (OUE Bayfront GFA expansion, district cooling).
- Risks: Interest rate hikes or delays in capital redeployment.
Financial Highlights:
- FY26F Distributable Profit: S\$135.7m
- FY26F DPU: 2.44 Scts (6.7% yield); projected to rise to 2.70 Scts (7.42% yield) by FY28F
- Asset Leverage: Expected to drop to 36.6% post-disposals
Implications: OUE REIT offers an attractive yield and potential for capital gains via asset disposals and redeployment, especially as Singapore office fundamentals and hospitality recover. The divestment strategy and special distributions improve both the balance sheet and unitholder returns, while the right of first refusal on Salesforce Tower Sydney provides additional growth optionality.
Above is an excerpt from a report by CGS International. Clients of CGS International can access the full research report from the broker’s website.
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