DBS Says BUY on OUE REIT's 8% Yield. Our Forensic Screen Found a 2.34x Problem. π¦
DBS Says BUY on OUE REIT's 8% Yield. Our Forensic Screen Found a 2.34x Problem. π¦
π The Angle
The number that bothered me on OUE REIT was not the 8% headline yield, it was the 2.34x interest coverage ratio sitting quietly behind it. When a big-name analyst tells you there is upside because rents might jump after Deloitte leaves, it is easy to forget that every extra dollar of interest expense now bites straight into your distributions. The tension for me is simple, the BUY case is built on future leasing hope, while the balance sheet is already running close to my comfort line.
π° What It Means For You
If you are using CPF or SRS to lock in income, an 8% yield looks like a win until you realise how little room a 2.34x coverage ratio leaves if vacancy drags or refinancing costs climb. At that level, any 10% wobble in net property income can force cash to stay inside the REIT to service debt, instead of landing in your wallet. That is why this sits in Iggy's Forensic Zone: Zone 4, Caution, not because the assets are bad, but because the safety margin for retirement capital is thin.
πΊ YouTube: https://youtu.be/7y6EccuVNPQ
π© Substack: https://investingiguana.com/p/dbs-says-buy-on-oue-reits-8-yield
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