OUE REIT

SINGAPORE: Formerly known as OUE Commercial REIT, OUE REIT undergoes rebranding while maintaining DPU for the second half of 2023. Last month, it changed its name from OUE Commercial REIT to OUE REIT to reflect its current focus on the hospitality, retail, and office sectors.

The Smart Investor reported that among the 22 Singapore REITs that disclosed their distribution figures, OUE REIT stands out, maintaining its distribution per unit (DPU) for the second half of 2023.

This consistency is noteworthy, especially considering that only four REITs managed to increase their DPU while 17 experienced a decline.

Some highlights for OUE REIT earnings in 2023 include:

Strong financial performance

In the second half of 2023, OUE REIT’s revenue increased by 16.4% to S$146.3 million. This was mainly because its properties in Singapore performed well, and Hilton Singapore Orchard had more rooms available after some upgrades.

The net property income (NPI) improved by 15.9% to S$119.7 million. However, the costs of finances increased by 24.4%, reaching S$58.7 million. Despite this, the distribution per unit (DPU) stayed the same as the previous year at S$0.0104.

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For 2023, revenue and NPI increased by 18% and 19.3%, respectively, to S$285.1 million and S$235 million. However, the DPU for the year went down by 1.4% to S$0.209.

Wisely managing debts

OUE REIT has been handling its debts carefully. They don’t need to refinance any loans until 2025. They’re also looking into refinancing options early to manage debts better over a longer time.

The amount of debt compared to the value of their assets went down from 39.4% in September 2023 to 38.2% in December 2023. Most of their loans have fixed interest rates. If interest rates go up by 0.25%, the DPU might decrease by around 1.9%.

Gaining more asset value

OUE REIT’s properties gained more value, reaching S$5.61 billion, a 1.7% increase from the previous year. This was mainly because their hotels did well, and their Singapore office spaces remained stable.

Most of their properties are in Singapore, with One Raffles Place and Hilton Singapore Orchard being the most valuable ones. These two properties also brought in almost half of the REIT’s total income for 2023.

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OUE REIT has a mix of tenants, with the biggest one, OUE Limited, contributing 17.2% of the rental income. The top 10 tenants brought in 43.3% of the income. On average, leases last for about 2.4 years.

Mixed performance in commercial business

The commercial part of OUE REIT had mixed results in 2023. While the revenue and NPI increased by 8.5% and 7.4%, respectively, their office space in Shanghai didn’t do as well, with occupancy decreasing. However, places like the Mandarin Gallery did great, with high occupancy and increased rents.

Achieving hospitality success

The hotels owned by OUE REIT had a fantastic year. Revenue and NPI went up by 42.2% and 44.4%, respectively, mainly because Hilton Singapore Orchard was fully opened and more tourists were visiting.

The revenue per available room (RevPAR) also improved by 4.2% to S$250. /TISG

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