OUE Reit’s H1 DPU jumps 28.6% to S$0.0126

[SINGAPORE] OUE Real Estate Investment Trust’s (Reit) distribution per unit rose 28.6 per cent year on year to S$0.0126, from S$0.0098, for the first half ended Jun 30, 2026.

The improvement was driven by stronger hospitality performance, the income contribution from the acquisition of Salesforce Tower, and significantly lower interest expenses resulting from effective capital management, its manager said on Wednesday (Jul 22).

Gross revenue was up 3.8 per cent at S$136.1 million for the half-year period, from H1 2025’s S$131.1 million. Net property income (NPI) grew 4.8 per cent on the year to S$110.3 million, from S$105.3 million.

The Reit’s manager attributed the increases to stronger hospitality performance and stable contributions from Singapore’s commercial portfolio.

It also noted that the share of results of joint venture and associate companies increased to S$10.4 million in H1 FY2026. This was on the back of the acquisition of a 19.9 per cent interest in Salesforce Tower, as well as interest cost savings achieved at OUE Bayfront after its refinancing was completed in August 2025.

The Reit also proposed to divest Crowne Plaza Changi Airport in June 2026. Han Khim Siew, CEO of the manager, said that this would allow it to unlock value from a mature asset ahead of its contractual expiry, materially strengthen its balance sheet, and enhance its flexibility to recycle capital into assets with superior risk-adjusted returns.

Together with the Salesforce acquisition, this underscores its “commitment to narrowing the 0.64 times price-to-book gap through proactive value creation and sustainable growth”, he added.

Amid a low interest rate environment, finance costs fell 16.6 per cent year on year.

The amount available for distribution rose to S$69.8 million, up 28.6 per cent from the year-ago period’s S$54.3 million.

OUE Reit pays distributions semi-annually. The H1 distribution will be paid out on Sep 3, after books closure on Jul 30.

In H1, the Reit’s commercial segment revenue decreased by a marginal 0.1 per cent year on year to S$86 million. Its NPI edged up 0.1 per cent to S$65.3 million.

Its manager said the resilient performance was because of sustained positive rental reversions and higher average passing rents achieved across the Singapore commercial portfolio. Committed occupancy stood at 91.5 per cent.

The hospitality segment, meanwhile, reported a 11.2 per cent growth in revenue to S$50.1 million and a 12.3 per cent rise in NPI to S$45.1 million.

The strong performance was driven by effective revenue management initiatives, enhanced guest offerings and targeted marketing campaigns, alongside a strong pipeline of meetings, incentives, conferences and exhibitions in the first quarter of 2026, noted the manager. The segment’s revenue per available room increased 10.7 per cent year on year to S$258.

Looking ahead

Noting the complex macroeconomic backdrop, Han said that OUE Reit remains well-placed to navigate near-term volatility and capitalise on emerging asset-repricing opportunities.

The manager noted that Singapore’s office market is expected to remain supportive, with resilient occupier demand and a constrained supply pipeline pointing to favourable landlord dynamics.

“As tenants increasingly secure space further in advance to meet future requirements, leasing momentum is expected to remain healthy.”

It also flagged that tightening office supply in the Central Business District would provide a favourable window for the Reit to rejuvenate its tenant portfolio.

OUE Downtown is undergoing a planned repositioning to capture the market tailwind, ahead of the broader office market’s anticipated supply influx in 2028.

In Singapore retail, the manager expects that resilient domestic consumer spending and the Republic’s enduring safe-haven status will continue to support demand for prime retail space. Retail rents are also projected to rise.

It added that it continues to curate a diverse tenant mix for sustained footfall and to deepen shopper engagement.

As for its hotels in the city-state, events and new and refreshed attractions should support demand, said the manager.

It also sees supply conditions continuing to be supportive, with new hotel supply expected to grow at a measured pace of 1.6 per cent per annum between 2026 and 2028. This is well below the pre-pandemic five-year historical average of 4.4 per cent.

Over in Sydney, the outlook remains favourable, with no new office completions scheduled in 2026 and leasing interest for upcoming developments remaining healthy, it said.

It added that, with Salesforce Tower at full occupancy, the Reit will focus on tenant retention and proactive occupier engagement to address evolving workspace requirements.

The counter closed flat at S$0.365 on Wednesday, before the announcement.