Is OUE REIT A Good Buy In 2025? [Fundamental Analysis]

In this article, we'll conduct a fundamental analysis and review of OUE REIT and its suitability to achieve the following investment objective: To deliver a stable dividend yield of 5% to 6% per year while having high capital preservation ability.

Information Is Accurate Up To April 2025

Business Description

OUE REIT is a diversified REIT that was listed in 2014 and owns properties in Singapore comprising offices, hotels and retail space.

What I Like About :

• Underlying properties are 100% in Singapore and are located in decent areas. This should ensure rental stability in the future as it did in the past. (Figure 11) However, the management did express that they are exploring opportunities in key gateway cities within developed markets.

What I Do Not Like About

• The management does not have a track record of preserving the value of the REIT with a maximum drawdown of around 68% from the peak to the trough since their listing.

  
  

• Given the diversified nature and size of REIT, I am not as confident in the management’s abilities to perform as well as compared to other REITs whose management specializes in a specific market and type of property.

  
  

• While I am fond of their office assets, the inclusion of their hospitality exposure exposes the REIT’s DPU to higher economic sensitivity which is not desirable from a portfolio management perspective.

Updates From Recent Performance (FY 2024)

General Comments:

• Gross revenue increased by 3.70% largely due to higher contributions from the hospitality sector, driven by higher RevPar. Despite that, DPU from operations decreased by 4.77% due to higher bottom-line costs. On the other hand, the reported DPU only decreased by 1.44% as it was supported by non-operating items such as capital distributions from divestments and management fees paid in units. (Figure 8)

  
  

• Divested Lippo Plaza Shanghai on 27 December 2024 to focus their portfolio solely in Singapore. That said, the management seems to be open to offshore properties should an “opportunity” arise.

  
  

• The gearing ratio increased by 1.7% to 39.90% while the cost of borrowing increased by 0.40% to 4.70%. Given their debt maturity profile, it is likely that the cost of borrowing has peaked. (Figure 6)

Positive Headwinds:

• -

Negative Headwinds:

• The hospitality sector may be faced with headwinds stemming from the heightened global uncertainties which may see a decrease in tourism (both leisure and business). Furthermore, the absence of mega concerts and large-scale MICE events in FY2025 compared to FY2024 might result in lower occupancy rates.

  
  

• FY2025 performances will be negatively impacted by the loss of contribution from the divestment of Lippo Plaza.

  
  

Download Full Report On Telegram

and continue reading my independent analyst report which will provide you with a detailed look at the fundamentals of the stock and a range of price targets to help you out with your investment decision for :

*Join the channel → click on the channel name → under files → download the report you want!

If you would like to learn about REIT investing, you can find my entire methodology in my eBook: Retire With REITs here:

If you are looking for personalized financial advice, I offer a 1-to-1, fee-only consultation where you will receive personalized strategies to design, implement and manage a profitable REIT portfolio. You can find out more about it here:

Connect with me on social media platforms to receive updates on future content! You can also slide into my DMs if you have any questions :)

---

Disclaimer:

This article is meant to be the opinion of the author

This article is for information purposes only

This article should not be seen as financial advice

This advertisement has not been reviewed by the Monetary Authority of Singapore