OUE C-Reit Q3 DPU buoyed by One Raffles Place stake

SINGAPORE - Office landlord OUE Commercial Reit (OUE C-Reit) posted a 29.4 per cent year-on-year jump in distribution per unit (DPU) to 1.32 Singapore cents for the third quarter ended Sept 30, buoyed mainly by the contribution from its majority stake in One Raffles Place.

Net property income and gross revenue more than doubled from a year ago - from S$15.56 million to S$35.33 million, and from S$20.61 million to S$44.18 million respectively.

Higher property operating expenses were incurred due to the inclusion of One Raffles Place's expenses, which were partially offset by lower property tax at OUE Bayfront and lower leasing commissions at Lippo Plaza.

OUE C-Reit has an effective interest of 67.95 per cent in One Raffles Place, after it completed in October 2015 the acquisition of an 83.33 per cent indirect interest in OUB Centre, which owns 81.54 per cent of One Raffles Place.

"Notwithstanding the challenging operating environment, the Manager will continue its proactive efforts to attract new tenants as well as retain existing tenants, said Tan Shu Lin, CEO of the Reit manager.

Only 1.2 per cent of OUE C-Reit's gross rental income is due for renewal for the rest of this year, pared down from 15.1 per cent at the start of the year.

The appointment of new chief financial officer (CFO) Wong Chin Ping with effect from Tuesday was also announced, following the resignation of previous CFO Tan Bee Lian in May.

Ms Wong was head of treasury at Mapletree Logistics Trust before joining OUE C-Reit.

The committed occupancy of the portfolio - comprising One Raffles Place and OUE Bayfront in Singapore and Lippo Plaza in Shanghai - remained stable at 94.4 per cent as at Sept 30, from 94.5 per cent a quarter ago, Ms Tan said.

Average passing rents at all three properties were higher compared to a year ago, bucking the market trend of declining rents.

"Year-to-date, rental reversions remained positive at 1.2 per cent and 0.9 per cent at OUE Bayfront and One Raffles Place, respectively," Ms Tan added.

"At Lippo Plaza, renewed rents continued to see a 10.3 per cent uplift over preceding rents over the same period."

During the third quarter, however, rental reversions at OUE Bayfront and One Raffles Place were a negative 2.2 per cent and 3.1 per cent respectively.

While committed office occupancy at OUE Bayfront rose 1.2 percentage points over the quarter to 99.4 per cent, both One Raffles Place and Lippo Plaza saw a dip in committed occupancies to 91.7 per cent (from 91.8 per cent as of June 30) and to 91.3 per cent (from 93.4 per cent as of June 30) respectively.

Lippo Plaza in Shanghai achieved strong positive rental reversions of 13.2 per cent during the quarter, OUE C-Reit said.

As at Sept 30, OUE C-Reit's aggregate leverage was 40.8 per cent, with a weighted average cost of debt of 3.4 per cent per annum.

About 78.3 per cent of borrowings are on a fixed rate basis with an average term of 2.7 years for fixed-rate debt.

The Reit has no refinancing requirements this year. Its manager has opted to receive 20 per cent of its base management fees in cash, with the balance in units, for this year.

Units of OUE C-Reit closed 0.5 Singapore cent lower at 69 cents on Tuesday.

This article was first published on November 02, 2016.
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