OUE Reit : TS0U 0% posted net property income (NPI) of S$60.5 million for its first quarter ended Mar 31, 2024, up 6.9 per cent from S$56.6 million a year ago.

Gross revenue rose 9.5 per cent to S$74.9 million for the quarter, from S$68.4 million a year ago.

The growth in NPI and revenue were mainly driven by higher contributions from Hilton Singapore Orchard – which reopened earlier in 2023 after a rebranding exercise – and the “resilient performance” of Singapore commercial properties, said the Reit’s manager in a bourse filing on Wednesday (Apr 24).

However, higher financing costs from the elevated interest rate environment will continue to weigh on upcoming distributions in the interim, the manager said.

It added that 100 per cent of base management fees will be paid in cash from the first quarter of 2024, an increase from 65 per cent previously.

The Reit’s commercial segment – which comprises office and retail properties – recorded a 3.3 per cent jump in revenue to S$48 million for Q1 FY2024, compared with the same period a year ago. Likewise, its NPI rose 1.7 per cent on the year to S$36.7 million for the quarter.

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The Reit’s Singapore office portfolio had a committed occupancy rate of 95.1 per cent as at Mar 31, 2024. It recorded a positive rental reversion of 12.6 per cent for office lease renewals for Q1 FY2024, while average passing rent for the portfolio rose by 1 per cent quarter on quarter to S$10.50 per square foot per month in March 2024.

As for the Reit’s hospitality segment, revenue for the quarter rose 22.7 per cent year on year to S$26.9 million, while NPI rose 15.9 per cent to S$23.8 million.

Hospitality segment revenue per available room rose 23.3 per cent to S$280 for the quarter, underpinned by robust demand from the tourism, business travel, and meetings, incentives, conferences and exhibitions (Mice) sectors in Singapore, said the manager.

Han Khim Siew, the manager’s chief executive officer, said the timely asset enhancements at Hilton Singapore Orchard and Crowne Plaza Changi Airport enabled the Reit “to capitalise on the strong concerts and Mice pipelines” in the first quarter of 2024.

The Reit’s aggregate leverage stood at 38.8 per cent as at Mar 31, 2024, with no refinancing needs until the second half of 2025. Its weighted average cost of debt stood at 4.5 per cent per annum, while the weighted average term of debt was 2.2 years.

With 60 per cent of the Reit’s total debt hedged, the Reit can mitigate the impact of an elevated interest rate environment while maintaining financial flexibility, said the manager.

The Reit also obtained an unsecured sustainability-linked loan of S$600 million on Apr 23, 2024. This will allow it to refinance existing secured borrowings due in 2025 earlier on, on top of using the loan for general corporate purposes, said Han.

Units of the Reit closed flat at S$0.27 on Wednesday, before the results were released.