OUE C-Reit H2 DPU falls 24.1% to S$0.0104 despite higher revenue
THE manager of OUE Commercial Real Estate Investment Trust (OUE C-Reit) reported on Monday (Jan 30) a 24.1 per cent year-on-year decline in distribution per unit (DPU) for the second half ended December 2022.
DPU for the six-month period fell to S$0.0104 from S$0.0137 in the year-ago period, even though the revenue for the second half grew 8 per cent on year to S$125.7 million.
Net property income (NPI) also climbed 8.6 per cent on year in the second half to S$103.3 million.
The improved revenue and NPI were largely driven by lower rental rebates, partially offset by higher property expenses, the manager said.
However, OUE C-Reit’s amount available for distribution fell 19.1 per cent on-year to S$52.1 million, which was due to “lower income support for OUE Downtown Office and higher interest expense driven by macroeconomic factors”.
For the full-year ended Dec 31, 2022, OUE C-Reit’s amount available for distribution also fell 15.2 per cent to S$111.6 million.
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DPU for the full year was 18.5 per cent lower, slipping to S$0.0212 in FY22 from S$0.026 in FY21. Based on OUE C-Reit’s unit closing price of S$0.335 as at the last trading day of 2022, FY 2022 distribution yield would be 6.3 per cent.
The manager noted that OUE C-Reit’s commercial segment, comprising office and retail, recorded higher revenue and net property income in the second half due to lower rental rebates and property expenses.
“Positive rental reversions ranging from 3.2 per cent to 8.3 per cent were recorded across all Singapore office properties in Q4 2022, with average passing rents remaining stable as of end December,” the manager said.
“OUE C-Reit’s Singapore portfolio of core Grade-A offices with high occupancies and a well-diversified tenant base is expected to underpin a stable performance in 2023,” it added.
Han Khim Siew, chief executive officer of the manager, said the second half of 2022 was characterised by “continued operating challenges posed by geopolitical tensions, inflationary pressures, interest rate hikes and macroeconomic headwinds”.
He noted that the manager has been focused on strengthening the Reit’s capital structure and improving asset performance.
As at Dec 31, 2022, OUE C-Reit’s aggregate leverage fell 1.5 percentage points from the previous quarter to 38.8 per cent. Its weighted average cost of debt remained stable at 3.4 per cent per annum. Around 71.5 per cent of its total debt of S$2.3 billion is on a fixed-rate basis.
“While we will surely face macroeconomic headwinds in the year ahead, we remain confident in our ability to navigate market uncertainties and deliver positive results for FY 2023, with the support of our stakeholders,” Han added.
OUE C-Reits units closed unchanged at S$0.37 on Monday, before the earnings announcement.
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