Company Update: 14 November 2025
Steady Core, Cheaper Debt
- CBD office strength holds. OUE REIT’s office portfolio remained robust with committed occupancy at 95.3% as of 30 September 2025. Average passing rent rose 0.5% QoQ to S$10.91 psf/month, while rental reversion for 3Q25 rose 9.3%, continuing to outpace Core CBD Grade A rent growth of 0.8% QoQ according to CBRE. Positive tenant retention and flight-to-quality demand remain key contributors to stability.
Strong Financial Footing
Aggregate leverage stood at 40.9%, slightly up from 40.3% in 2Q25, while the weighted average cost of debt fell 10bps QoQ to 4.1%. Finance costs declined 19.7% YoY on the back of proactive refinancing and lower SORA. Interest coverage improved to 2.3x, and 66.7% of debt remains hedged. Following the issuance of S$150mn 7-year Green Notes at 2.75%, debt maturity has been extended to 3.3 years on a pro forma basis.
Management Fee Structure
OUE REIT continues to pay 50% of base management fees in cash and 50% in units, aligning management interests with unitholders while conserving cash for reinvestment and capital flexibility.
Valuation & Action
We maintain OUTPERFORM with a target price of S$0.36, based on a Dividend Discount Model (DDM) assuming an 8.1% cost of equity and 2.0% terminal growth. OUE REIT’s fully Singapore-centric, prime-weighted portfolio with improving funding costs and optionality from capital recycling supports stable yield and total return upside.
Risks
Macroeconomic uncertainties, asset concentration, interest rate reversal and slower-than-expected recovery in discretionary travel demand.
