SINGAPORE (Feb 1): OUE Commercial REIT (OUE C-REIT) on Wednesday announced that its DPU for 4Q17 has dropped 3.4% to 1.14 cents, compared to 1.18 cents in 4Q16, as a result of an enlarged unit base from the equity placement done in March 2017, bringing FY17 DPU to 4.67 cents.
The REIT recorded $17.7 million available for distribution during the quarter, 14.6% higher than $15.4 million last year.
Revenue came in at $44.0 million, 2.3% lower than $45 million in the previous year, due to lower one-off income.
Net property income decreased 0.3% to $34.7 million from $34.8 million a year ago.
See: OUE Commercial REIT posts 3.4% drop in 4Q DPU to 1.14 cents
Following the results announcement, CIMB is maintaining its “hold” call on OUE C-REIT with a target price of 75 cents.
The REIT’s overall portfolio occupancy improved to 96.8% at end-4Q, with a higher take-up across all of its properties.
Meanwhile, occupancy for the REIT’s properties in Singapore has been rising with OUE Bayfront retaining high occupancy during the quarter of 98.2%. Although average passing rent trickled down slightly to $11.43psf/month at end-FY17, the downward momentum in negative rental reversion has slowed, thanks to improved demand.
Occupancy at One Raffles Place also remains high at 96.5%, with an average passing rent of $9.92psf/month.
In China, Lippo Plaza continues to do well on full occupancy and has 28.7% of its income expiring in FY18 and a further 29.2% in FY19.
In a Wednesday report, analyst Lock Mun Yee says, “We believe the property should continue to perform well, underpinned by robust demand.”
OCBC is also maintaining its “hold” call on OUT C-REIT with an estimate fair value of 69 cents.
In a Thursday report, analyst Joseph Ng says, “We note that management appears to be relatively upbeat about the possibility of commanding firmer rents moving forward, which is in-line with the general sentiment from the current earnings season amongst most of the Grade A CBD landlords.”
However, given that expiring leases were signed at elevated rate about three years ago, slight negative reversions may still be registered this year.
On Jan 2, 2018, the REIT redeemed $100 million of convertible perpetual preferred units (CPPUs), which on a pro forma basis, would have raised aggregate leverage from 37.3% to 40.3% as at Dec 31, 2017, thereby elevating financing costs.
See: OUE Commercial REIT kept at 'hold' with further perp redemptions afoot
As at 12.40pm, units in OUE C-REIT are trading at 75 cents or 0.60 times FY18 book with a dividend yield of 5.97%.