Broker Name: OCBC Group Research
Date of Report: 23 July 2026
Excerpt from OCBC Group Research report.
Report Summary
Stock: OUE REIT (OUEREIT SP EQUITY)
Action/Call: BUY
Target/Fair Value: SGD 0.410
Last Close: SGD 0.365
- Key Investment Thesis: OUE REIT is a diversified Singapore REIT with a strong focus on high-quality assets in prime Singapore locations (~95% of portfolio). The REIT is now transitioning from capital structure strengthening to disciplined capital reallocation aimed at driving distribution per unit (DPU) growth.
- 1H26 Results: DPU rose 28.6% year-on-year to 1.26 Singapore cents, beating expectations, supported by higher hotel performance, lower borrowing costs, and new contributions from Salesforce Tower. 1H26 DPU already forms 53.6% of the OCBC full-year forecast.
- Strong Outlook: Management is constructive for 2H26, expects Singapore office assets to maintain robust leasing and positive rental reversions, and sees potential value creation in redeploying capital from mature assets to higher-yielding ones.
- Capital Management: Aggregate leverage held steady at 41.5% with a weighted average cost of debt at 3.6%. Further debt cost savings are expected, especially after refinancing and if the Crowne Plaza Changi Airport divestment proceeds are used for debt repayment.
- Risks: Key risks include macroeconomic uncertainty, slower-than-expected rate cuts, and possible supply increases in relevant property segments.
- Valuation & Peer Comparison: OUE REIT trades at 0.7x P/NAV with an estimated 7.0% DPU yield for FY26, higher than several peers.
Actionable Insight: OCBC maintains a BUY rating with a fair value target of SGD 0.410, citing strong DPU growth, attractive yield, and further upside from capital redeployment and portfolio optimization. The REIT is suitable for investors seeking income and growth from Singapore-focused commercial and hospitality real estate.
Above is an excerpt from a report by OCBC Group Research. Clients of OCBC Group Research can access the full research report from the broker’s website.
