OUE Real Estate Investment Trust & United Overseas Bank
February 2026 | Singapore Commercial Real Estate
- Executive Summary
On February 20, 2026, the manager of OUE Real Estate Investment Trust (OUE Reit) confirmed via a Singapore Exchange (SGX) filing that OUB Centre (OUBC), an indirect subsidiary of OUE Reit, is jointly gauging market interest for One Raffles Place alongside co-owner United Overseas Bank (UOB). The asset is expected to be offered at S$2.3 billion to S$2.4 billion, constituting one of the largest potential commercial real estate transactions in Singapore in recent years.
This case study examines the transaction background, ownership structure, strategic rationale, market outlook, and multi-stakeholder impact of the proposed divestment. - Asset Profile: One Raffles Place
2.1 Property Overview
One Raffles Place is a landmark integrated office and retail development located directly above Raffles Place MRT interchange station in Singapore’s central business district (CBD). The asset comprises two office towers with a retail podium, amounting to approximately 1.3 million square feet of gross floor area. The property commands a prominent position within Singapore’s premier Grade A office precinct and benefits from unmatched public transport connectivity.
Attribute Detail
Asset Type Integrated Office & Retail (Grade A CBD)
Location Raffles Place, Singapore CBD
Gross Floor Area ~1.3 million sq ft (~17x site area)
NLA-Based Valuation ~S$2,745 per sq ft (Dec 2025)
MRT Connectivity Raffles Place MRT Interchange (EWL/NSL)
URA Zoning Commercial
Permitted GPR (MP2025) 15.0
Current GPR ~17x (non-conforming)
Dec 2025 Valuation (81.54% stake) S$1.93 billion
Implied 100% Valuation ~S$2.37 billion
2.2 Ownership Structure
The ownership of One Raffles Place involves a multi-tiered structure. OUE Reit holds an indirect 83.33% interest in OUBC via wholly owned subsidiaries, translating to an effective 67.95% stake in the property. UOB holds the remaining 18.46% direct interest in One Raffles Place.
Entity Stake in OUBC Effective Stake in One Raffles Place
OUE Reit (via wholly owned subsidiaries) 83.33% 67.95%
UOB (direct in OUBC) 16.67% —
OUBC total stake in One Raffles Place — 81.54%
UOB direct stake in One Raffles Place — 18.46%
Note: Any transaction would require co-ordination between OUBC (and by extension OUE Reit) and UOB as co-vendors, given their respective direct and indirect interests.
- Strategic Rationale for Potential Divestment
3.1 Proactive Asset Management
The manager of OUE Reit has framed the market interest exercise as part of its proactive asset management strategy. REITs typically pursue divestments to unlock embedded value, recycle capital into higher-yielding or higher-growth assets, reduce leverage, and optimise portfolio composition. With One Raffles Place valued in the S$2.3-2.4 billion range, a successful transaction would represent a substantial capital event.
3.2 Valuation Unlock Opportunity
The OUBC stake in One Raffles Place was carried at S$1.93 billion as at December 31, 2025. The proposed pricing implies a potential premium to book value, which would deliver a capital gain to both OUE Reit and UOB. Net proceeds could fund enhanced distributions, debt reduction, or reinvestment in assets with greater operational upside or development potential.
3.3 Non-Conforming GPR as a Strategic Constraint
One Raffles Place currently exceeds the 15.0 gross plot ratio stipulated under URA’s Master Plan 2025 for the commercial-zoned site, with the existing built-up area equivalent to approximately 17x the site area. This non-conforming status materially limits the ability to undertake redevelopment or major asset enhancement initiatives that would increase gross floor area, constraining medium-term value creation under continued ownership. Divestment at prevailing valuations may therefore represent an optimal exit window prior to any future downward re-rating of non-conforming assets.
3.4 Interest Rate Environment
OUE Reit’s H2 FY2025 results attributed a 10.6% year-on-year DPU improvement partly to a more favourable interest rate environment. Lower rates simultaneously compress risk-free returns and widen the yield spread on commercial real estate, attracting institutional capital and supporting achievable transaction prices on the buy side — improving market conditions for a divestment at the upper end of the pricing range. - Market Outlook
4.1 Singapore Grade A Office Market
Singapore’s Grade A CBD office market has demonstrated sustained resilience, supported by demand from financial services, professional services, and technology occupiers. Raffles Place remains among the most sought-after micro-locations given its MRT connectivity, established tenant base, and status as Singapore’s financial hub. Vacancy in the core CBD submarket has remained contained, providing a supportive backdrop for rental stability and investor confidence.
4.2 Institutional Appetite for Trophy Assets
Institutional demand for large-format, core CBD assets in Singapore has been underpinned by sovereign wealth funds, global REITs, and insurance companies seeking stable, long-duration income. The S$2.3-2.4 billion price range targets capital typically associated with sovereign or near-sovereign buyers, or structured joint venture consortia. Regional capital flows from Korea, Japan, and the Gulf Cooperation Council countries have been increasingly active in Singapore commercial real estate, broadening the potential buyer universe.
4.3 REIT Portfolio Rationalisation Trend
The transaction occurs amid a period of active portfolio rationalisation among Singapore-listed REITs. Contemporaneous transactions include CapitaLand Integrated Commercial Trust’s divestment of Bukit Panjang Plaza for S$428 million and the acquisition of the Suntec Reit manager by Gordon Tang. These developments reflect a broader re-rating and restructuring dynamic within the sector, signalling increased liquidity and investor appetite for strategic portfolio recomposition.
4.4 Key Risks
The manager has explicitly stated there is no assurance that any binding agreement or transaction will materialise. Principal risks include:
Bid-ask spread: Achieving S$2.3-2.4 billion requires buyers to underwrite rental growth and occupancy stability at current implied yields relative to cost of capital.
Non-conforming GPR: The asset’s excess built-up area relative to Master Plan 2025 reduces the buyer universe to income-focused investors, excluding those seeking redevelopment optionality.
Co-vendor coordination: Both OUBC and UOB must align on timing, pricing, and deal structure, introducing material execution complexity.
Interest rate sensitivity: Any reversal in the rate environment could reprice buyer cost of capital and compress achievable sale prices.
Regulatory considerations: Transactions of this scale may involve engagement with the SGX, MAS, or URA depending on deal structure and buyer profile. - Impact Analysis
5.1 Impact on OUE Reit
A completed divestment at or above book value would be materially positive for OUE Reit across multiple dimensions:
Dimension Expected Impact
Net Asset Value (NAV) Crystallises embedded gains above Dec 2025 book value of S$1.93bn (OUBC stake) if sold at premium
Gearing / Leverage Proceeds enable aggregate leverage reduction, improving credit metrics and cost of debt
Distribution per Unit (DPU) Potential for special distribution or enhanced recurring DPU if proceeds recycled at accretive yields
Portfolio Concentration Reduces single-asset concentration risk; supports portfolio diversification
Capital Recycling Frees capital for assets with greater AEI, repositioning, or development upside
Unit Price Response +4.2% intraday on Feb 20, 2026, reflecting market’s positive read-through on divestment news
5.2 Impact on UOB
For UOB, divestment of its 18.46% direct interest and indirect holding through OUBC would unlock real estate capital redeployable into core banking activities. The bank’s shares were marginally lower (-0.2%) on announcement day, consistent with a view that the transaction is broadly neutral-to-positive but not a primary earnings driver. Proceeds would strengthen capital adequacy ratios and reduce non-core asset exposure on the balance sheet, aligning with the bank’s strategic focus on its core financial services franchise.
5.3 Impact on the Prospective Buyer
The acquirer would gain ownership of a trophy, income-generating CBD asset with a strong tenant covenant profile and premier transport connectivity. At S$2.3-2.4 billion, the transaction yield on NLA basis will need to be assessed against prevailing Singapore 10-year government bond yields and comparable transaction evidence. The non-conforming GPR constrains value-add redevelopment strategies, favouring a core, income-focused buyer with a long investment horizon.
5.4 Broader Market Signalling
A transaction of this scale, if completed, would constitute a significant price discovery event for Singapore’s trophy office market. It would establish a credible pricing comparable for other large-format CBD assets and may catalyse a re-rating of listed REITs with similar exposure. It further signals continued deep institutional confidence in Singapore as a liquid, transparent, and internationally accessible commercial real estate market.
- Financial Snapshot
Metric Value Notes
Expected Transaction Value S$2.3B – S$2.4B 100% stake in One Raffles Place
OUBC Stake Valuation (Dec 2025) S$1.93B 81.54% interest as per latest results
Implied Price (NLA basis) ~S$2,745 psf Based on Dec 2025 book value
OUE Reit Effective Stake 67.95% Via 83.33% indirect ownership of OUBC
UOB Direct Stake 18.46% Direct holding in One Raffles Place
OUE Reit H2 FY2025 DPU 1.25 cents +10.6% year-on-year
OUE Reit Unit Price (Feb 20, 2026) S$0.37 +4.2% on announcement day
UOB Share Price (Feb 20, 2026) S$38.60 -0.2% on announcement day
Property GFA ~1.3 million sq ft ~17x site area; exceeds MP2025 GPR of 15x
- Conclusion
The potential divestment of One Raffles Place represents a strategically considered capital management exercise for both OUE Reit and UOB. The asset’s iconic status, prime CBD location, and strong occupancy profile render it compelling to institutional buyers, while the non-conforming gross plot ratio and multi-party vendor coordination requirements introduce meaningful execution risk. For OUE Reit unitholders, a transaction at the indicated price range would crystallise significant value above book, providing the trust with material flexibility to deleverage, fund distributions, or reposition the portfolio toward assets offering greater value-add potential.
The broader Singapore commercial real estate market stands to benefit from the price discovery that such a transaction would generate, reinforcing the city-state’s standing as Asia’s premier institutional real estate market. Stakeholders and analysts should monitor for formal requests for proposals, appointment of transaction advisers, and subsequent SGX filings as indicative milestones of deal progression.