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OUE Hospitality Trust posts 3% decline in 1Q DPS to 1.26 cents on absence of CPCA income support

Stanislaus Jude Chan
Stanislaus Jude Chan5/2/2018 07:17 PM GMT+08  • 2 min read
OUE Hospitality Trust posts 3% decline in 1Q DPS to 1.26 cents on absence of CPCA income support
SINGAPORE (May 2): The manager of OUE Hospitality Trust (OUE H-Trust) has announced distribution per stapled security (DPS) of 1.26 cents for the 1Q ended March, some 3% lower than DPS of 1.30 cents a year ago.
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SINGAPORE (May 2): The manager of OUE Hospitality Trust (OUE H-Trust) has announced distribution per stapled security (DPS) of 1.26 cents for the 1Q ended March, some 3% lower than DPS of 1.30 cents a year ago.

This was mainly due to the absence of income support for Crowne Plaza Changi Airport (CPCA), which had been fully drawn down in 3Q2017.

A stapled group comprising OUE Hospitality Real Estate Investment Trust (OUE H-REIT) and OUE Hospitality Business Trust (OUE H-BT), OUE H-Trust saw its gross revenue grow 1.9% in 1Q18 to $32.7 million, from $32.1 million a year ago.

This was attributable to higher gross revenue from the hospitality segment, partially offset by lower revenue from the retail segment.

Hospitality revenue was 3.8% higher at $24.3 million, due to higher master lease income from the Mandarin Orchard Singapore (MOS) hotel. Master lease income from CPCA remained flat year-on-year.

While occupancy rate improved by 1.3-percentage-points to 96.0% in 1Q18, OUE H-Trust saw it retail revenue slip by $0.3 million, or down 3.3%, due to lower effective rent per square foot per month as a result of negative rental reversion in the preceding quarters.

Correspondingly, net property income (NPI) rose 3.1% to $28.3 million in 1Q18, from $27.4 million a year ago.

As at end March, cash and cash equivalents stood at $26.0 million.

“OUE H-Trust’s hotel portfolio revenue per available room (RevPAR) rose 8.6% to $215 in 1Q2018,” says Chong Kee Hiong, CEO of the manager. “Mandarin Orchard Singapore (MOS) has done well to achieve its fourth consecutive quarter of RevPAR increase as compared to previous corresponding quarters.

“Overall 1Q2018 revenue and NPI from hospitality segment were respectively 3.8% and 5.0% higher than 1Q2017,” he adds.

“OUE H-Trust continues to deliver stable distribution to stapled securityholders with higher contribution from MOS and lower interest expense which partially mitigated lower income from CPCA and Mandarin Gallery,” says Lee Yi Shyan, chairman of the manager.

“We will continue to focus on active management of OUE H-Trust’s properties to optimise performance and seek yield accretive acquisitions from our sponsor and third parties,” he adds.

While challenges in Singapore’s retail scene remain, the manager of OUE H-Trust says it will continue to explore leasing opportunities to optimise the occupancy of Mandarin Gallery, and remains committed to curating the right tenant mix to retain the mall’s positioning as a destination mall.

Units of OUE H-Trust closed 2 cents lower at 82 cents on Wednesday.

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