OUE REIT Third-Quarter NPI Rises 4.6% As Hotel Revenue Climbs 12.6%

OUE Real Estate Investment Trust (OUE REIT) posted a 4.6% year-on-year rise in net property income (NPI) to S$59.6 million for the third quarter of 2026, its manager announced on Wednesday (21 October), as a stronger hotel business and lower borrowing costs offset softer commercial earnings.

Revenue for the three months to 30 September rose 3.1% to S$72.6 million, according to the business update from OUE REIT Management, while finance costs fell 12.4% from a year earlier.

OUE REIT – Hospitality leads the gains

The hospitality segment did most of the heavy lifting. Revenue there grew 12.6% to S$30.3 million and segment NPI rose by the same margin to S$27.6 million. Revenue per available room (RevPAR) across the segment climbed 8.2% to S$302, the manager said, with Hilton Singapore Orchard recording a 7.5% RevPAR gain on the back of higher occupancy, corporate demand and transient travel.

The commercial segment, which covers offices and retail, was weaker. Revenue slipped 2.8% to S$42.4 million and NPI eased 1.5% to S$32.0 million, which the manager attributed to tenant transition at OUE Downtown Office. Deloitte has extended its lease of more than 49,000 sq ft there to the fourth quarter of 2027.

Committed occupancy in the Singapore office portfolio stood at 91.2% at end-September, with average passing rent of S$11.06 per sq ft per month and rental reversion of 4.6% on renewals. At Mandarin Gallery, reversion was 5.9% and committed occupancy rose 2.0 percentage points.

OUE REIT also booked S$3.6 million in distribution income from its 50% stake in OUE Bayfront and S$1.6 million from its 19.9% interest in 180 George Street, acquired on 16 March 2026.

Balance sheet

Aggregate leverage was 42.1% as at 30 September. The manager said this would fall to 37.1% on a pro forma basis once proceeds from the sale of Crowne Plaza Changi Airport are used to pay down loans. The weighted average cost of debt held at 3.6% a year, and the interest coverage ratio improved to 2.9 times.

In July, the REIT secured an unsecured revolving credit facility of up to S$300 million to refinance medium-term notes maturing in mid-2027.

Chief executive Han Khim Siew said the results showed the strength of the trust’s diversified portfolio, adding that “effective capital management contributed to a substantial reduction in finance costs.”

What’s next

The Crowne Plaza Changi Airport divestment is due to complete on 30 October, releasing about S$498.5 million of capital. The manager expects to pay a S$20 million special distribution starting from FY2027. Separately, the conversion of more than 22,600 sq ft of office space at OUE Bayfront remains on track for completion in the first quarter of 2027.