SINGAPORE (Aug 1): The manager of OUE Hospitality Trust (OUE HT), a stapled group comprising OUE Hospitality REIT and OUE Hospitality Business Trust, has announced a distribution per stapled security (DPS) of 1.21 cents for the second quarter ended June – up 31.5% from DPS of 0.92 cents in the same period a year ago.
This brings the trust’s DPS for the first half of 2017 to 2.51 cents, 24.3% higher as compared to 2.02 cents DPS for 1H16.
Gross revenue grew by 16% to $31.2 million over the quarter, from $26.9 million in 2Q16.
Revenue from the trust’s hospitality segment was $3 million higher due to higher master lease income from Mandarin Orchard Singapore (MOS) and Crowne Plaza Changi Airport (CPCA).
Revenue from its retail segment was $1.3 million higher, mainly due to higher average occupancy rate at Mandarin Gallery shopping mall. Average occupancy rate grew to 93.9%, compared to 79.1% a year ago, as landlord works were taking place in 2Q16 to amalgamate units for the handover to new tenants.
The higher revenue was however partially offset by a 22.2% rise in property expenses to $4.5 million from $3.7 million in the previous year, which were due mainly to higher land rent payable to Changi Airport Group as well as steeper property tax for the Crowne Plaza Changi Airport extension (CPEX), due to an enlarged CPCA.
Nonetheless, net property income (NPI) for the quarter grew 15% to $26.6 million from $23.2 million in 2Q16, while NPI for 1H17 stood 9.2% higher at $54 million compared to $49.5 million a year ago.
OUE Hospitality REIT Management says that while the economic outlook has improved as of late, there are still risks to achieving sustained recovery as the tourism industry continues to face headwinds in the near-term.
CPCA continues to ramp up its operations in challenging market, says the manager, which resulted in a drawdown of $5.9 million of income support – while a remaining $1.6 million of income support is expected to be fully drawn down by 3Q.
The manager adds that given how tenants are more cautious and taking a longer time to renew or commit to leases in light of challenges which remain in Singapore’s retail scene, it is continuously exploring leasing opportunities with current and potential tenants, and will remain committed to “curating the right tenant mix” to retain Mandarin Gallery’s positioning as a destination mall.
“We will continue to actively seek growth opportunities and yield accretive acquisitions from our sponsor and third parties,” says OUE Hospitality REIT Management.
Units of OUE HT closed 0.7% higher at 76 cents on Tuesday.