SINGAPORE (May 9): The manager of OUE Commercial REIT (OUE C-REIT) has declared a 1Q19 distribution per unit (DPU) of 0.9 cent, rising 47.5% from its 1Q18 restated DPU of 0.61 cent after booking a full quarter’s contribution from OUE Downtown Office, which was acquired in Nov 2018.
The latest quarter’s DPU translates into a distribution yield of 6.9% based on the REIT’s closing price of 52 cents as at 29 March, the last trading day of 1Q.
Revenue and NPI grew 25.5% and 23.5% to $55.3 million and $43.6 million, respectively, upon registering a full quarter’s contribution from OUE Downtown Office. Revenue and NPI growth for the quarter were further bolstered by one-off income from OUE Bayfront and One Raffles Place.
Other income for the current quarter notably rose to $5 million from just $1 million in 1Q18 with the inclusion of income support related to OUE Downtown Office from OUE C-REIT’s sponsor group.
Net finance costs grew 22.2% to $14 million from $11.5 million due to higher interest costs resulting from a higher level of borrowings for the acquisition of OUE Downtown Office.
After factoring in the above, amount available for distribution for the quarter was $26.0 million, 49.5% higher y-o-y.
As at end March, committed office occupancy at both OUE Bayfront and One Raffles Place stands at 97.1% and 96.5%, respectively, ahead of Singapore’s core CBD occupancy of 95.2%.
OUE Downtown Office’s committed office occupancy was 93.9%, 0.4 ppt higher q-o-q against 31 Dec 2018.
At the portfolio level, 14.9% of OUE C-REIT’s gross rental income is due for renewal in 2019, with a further 25.9% of gross rental income due in 2020.
The REIT manager continues to expect a positive 2019 operational performance for Singapore’s office market, although it is anticipating subdued rental growth in China for the near term due to new office supply entering the Shanghai market, coupled with softer demand from a slower economy.
“The manager will continue to focus its efforts on proactive asset management, as well as maintain a prudent and disciplined stance towards capital management, so as to deliver stable and sustainable returns for OUE C-REIT unitholders,” says Tan Shu Lin, CEO of the manager.
Units in OUE C-REIT closed 1.01% higher at 50 cents on Thursday.
