OUE Commercial REIT (OUE C-REIT) has reported a 15.8% y-o-y drop in distributable income of $31.2 million for the 1QFY2022 ended March.
During the quarter, revenue fell 20.3% y-o-y to $59.5 million, while net property income (NPI) fell 21.5% y-o-y to $48.0 million.
The lower revenue and NPI were due to the deconsolidation of OUE Bayfront’s performance post the divestment of a 50% interest in the property on March 31, 2021.
This was partly offset by lower rental rebates and lower property expenses.
As at March 31, the REIT’s commercial segment reported occupancy of 91.2%, down 0.3 percentage points q-o-q.
In Singapore, committed office occupancy eased 0.4 percentage points q-o-q to 90.8%. Nevertheless, the average passing rents of all Singapore office properties remained stable as of March 2022.
See also: Trump wins Republican nomination, setting up rematch with Biden
Mandarin Gallery’s committed occupancy increased 2.0 percentage points y-o-y to 88.7%, with committed occupancy including short-term leases at 95.4%. Both shopper traffic and tenant sales s had improved to approximately 80% of pre-Covid levels.
Lippo Plaza’s committed office occupancy was stable at 91.6% and continued to outperform the overall Shanghai Central Business District (CBD) Grade A office occupancy of 90.0%. Average office passing rent at Lippo Plaza edged down 0.6% y-o-y to RMB8.95 ($1.85) per square metre (psm) per day however, due to leasing competition arising from significant new supply in the market.
According to the REIT, its hospitality segment is positioned to ride the recovery in Singapore. The overall hospitality segment revenue per available room (RevPAR) for 1QFY2022 was stable at $113.
As at end-March, the REIT’s aggregate leverage stood at 39.4%.
Han Khim Siew, CEO of the manager says, “We are pleased to have completed the re-branding of one of OUE C-REIT’s landmark assets into the Hilton Singapore Orchard during the quarter, in time to ride on the recovery in Singapore’s hospitality sector. As the Hilton brand’s flagship hotel in Singapore and its largest in Asia Pacific, we are confident the property is in a strong position to cater to corporate and leisure demand for rooms and MICE events. Mandarin Gallery’s shopper traffic and sales have also received a boost from the relaunch of Orchard Road’s latest lifestyle destination, rebounding to approximately 80% of pre-pandemic levels.”
“Post quarter, OUE C-REIT issued $100 million 4.20% fixed rate notes due 2027 with a coupon step-down of 25 basis points upon re-rating to investment grade, a first in Singapore. This is in line with our proactive capital management approach to ensure OUE C-REIT has access to diversified funding sources while managing refinancing requirements and optimising the cost of debt. We are confident of being assigned an investment grade rating for OUE C-REIT within the next 18 months,” he adds.
Units in OUE C-REIT closed 1.5 cents lower or 3.66% down at 39.5 cents on May 12.
