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OUE C-REIT reports 2.7% higher distributable income of $37.1 mil in 1Q21

Felicia Tan
Felicia Tan5/4/2021 09:39 PM GMT+08  • 3 min read
OUE C-REIT reports 2.7% higher distributable income of $37.1 mil in 1Q21
The REIT reported 1.6% lower NPI of $61.1 million mainly due to the provision of rental rebates to selected tenants.
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The manager of OUE Commercial Real Estate Investment Trust (OUE C-REIT) has reported net property income (NPI) of $61.1 million for the 1QFY2021 ended March, 1.6% lower than NPI of $62.1 million a year ago.

The lower NPI was mainly due to the provision of rental rebates to selected tenants and partly offset by lower property operating expenses.

Revenue for the quarter fell 3.9% y-o-y to $74.7 million.

Due to the lower interest expense, distributable income stood 2.7% higher y-o-y to $37.1 million.

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“For 1QFY2021, we are pleased to report a higher amount available for distribution due to proactive cost containment measures and lower interest expense,” says Tan Shu Lin, CEO of the manager.

“OUE C-REIT’s portfolio remains resilient, with income stability underpinned by the Singapore office properties which have continued to achieve positive rental reversions during the quarter,” she adds. “While we provided rental rebates to selected retail tenants who continued to face challenges due to restrictions on short-term visitors and operating capacity, the quantum for the first half of 2021 is expected to be lower compared to the prior half-year”.

The REIT completed the divestment of its 50% interest in the OUE Bayfront property, and have achieved an agreed value of 7.3% and 26.1% above the book value and purchase consideration of the property as at Dec 31, 2020.

According to Tan, the manager will use $155 million of the $262.6 million in net divestment proceeds to redeem convertible perpetual preferred units to “optimise OUE C-REIT’s capital structure”.

The manager will also set aside $15.0 million to share divestment gains for its unitholders.

“The balance will be applied towards other value-enhancing options to drive returns for unitholders,” says Tan.

OUE C-REIT’s commercial segment reported revenue and NPI of $57.8 million and $45.7 million, down 5% and 3% y-o-y.

Some $2.6 million of rental rebates were extended to selected tenants during the quarter.

As at March 31, its commercial segment reported committed occupancy of 91.7%, 0.8 percentage points lower q-o-q.

Its Singapore office properties, however, continued to achieve positive rental reversions of 0.8% to 7.2% during the quarter.

In Shanghai, Lippo Plaza’s committed office occupancy fell 3.3 percentage points q-o-q to 83.2%.

SEE:'Hold' OUE Commercial REIT on mixed performance, divestment: analysts

The committed occupancy rate in Mandarin Gallery improved 0.5 percentage points q-o-q to 91.6%, and an occupancy rate of 91.7%, including short-term leases.

“In view of continued headwinds facing the prime retail segment, the manager continues to adopt flexible leasing strategies to sustain occupancy,” says the REIT in a May 4 statement.

The REIT’s hospitality segment reported revenue of $16.9 million, which is the minimum rent under the master lease arrangements of the hotel properties in its portfolio.

The segment’s NPI stood 3% higher y-o-y at $15.4 million due to lower property operating expenses.

OUE C-REIT’s aggregate leverage as at March 31 was 40.4% on total debt of some $2.34 billion.

Units in OUE C-REIT closed flat at 40 cents on May 4.

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