$OUEREIT(TS0U.SG)

OUE REIT: Is the 28.6% DPU Surge the Start of a Sustainable Re-rating?

OUE REIT delivered a standout 1H FY2026, with DPU climbing 28.6% YoY to 1.26 Singapore cents, supported by stronger hospitality earnings, lower financing costs and the earnings contribution from its 19.9% stake in Salesforce Tower, Sydney. Gross revenue rose 3.8% to S$136.1 million, while NPI increased 4.8% to S$110.3 million. Commercial occupancy remained resilient at 91.5%, complemented by double-digit hospitality growth.

The proposed divestment of Crowne Plaza Changi Airport strengthens capital recycling, while management’s proactive refinancing has lowered finance costs by 16.6%. With an interest coverage ratio around 3x and a well-laddered debt maturity profile of about 3.3 years, balance-sheet risks appear manageable despite gearing near 40%.

Trading at roughly 0.64x P/B, OUE REIT remains one of the more deeply discounted Singapore REITs despite improving fundamentals. Compared with peers, the valuation gap appears excessive given its strengthening income profile, quality commercial assets and disciplined capital recycling. If execution on Salesforce Tower and redeployment of divestment proceeds continues, the discount could narrow, making OUE REIT an attractive value opportunity for income-focused investors seeking both yield and potential capital appreciation.