MAINBOARD-LISTED OUE Commercial Real Estate Investment Trust : TS0U 0% (Reit) on Monday (Oct 30) reported a 29.8 per cent increase in its net property income (NPI) to S$62.7 million for the third quarter ended Sep 30, from S$48.3 million in the year-ago period.

Revenue rose 27.5 per cent year on year to S$75.8 million, from S$59.5 million.

The growth was driven by overall improvements in the Reit’s portfolio, especially in the hospitality sector as Singapore’s tourism industry recovers post-pandemic, the manager said in a business update. 

In the hospitality segment, NPI rose 73.2 per cent year on year to S$27 million. Revenue grew 67.6 per cent year on year to S$28.3 million. 

Revenue per available room was up 12.8 per cent year on year to S$295. 

The manager attributed part of the better performance to the five-star Hilton Singapore Orchard hotel, which was operating a total inventory of 1,080 rooms in Q3, from 634 rooms a year ago. 

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It added that asset enhancement is ongoing for the four-star Crowne Plaza Changi Airport hotel.

This includes the addition of 12 guest rooms, an “extensive” revamp of its dining restaurant, and the creation of new meeting facilities. 

The works are expected to be completed by December 2023 to “capture the rebound in both business travellers and tourist arrivals” in the following year, said the manager. “(This) is expected to be DPU-accretive (distribution per unit) with an estimated capital expenditure of approximately S$14 million and an expected stabilised return on investment of approximately 10 per cent.” 

Meanwhile, the Reit’s commercial segment, which includes both office and retail sectors, posted a 9.1 per cent year-on-year increase in NPI to S$35.6 million in Q3. Revenue climbed 11.6 per cent year on year to S$47.5 million. 

This was mainly due to better performance in its Singapore portfolio, said the Reit’s manager. 

Committed occupancy of the city-state’s office properties remained “healthy” at 95.7 per cent. Average passing rent inched up 1.3 per cent quarter on quarter to S$10.35 per square foot in Q3 per cent due to positive rental reversions from past consecutive quarters. 

The Reit also recorded a high rental reversion of 31.1 per cent in its retail properties on the back of recovery in tourist arrivals and improving retail sales, it said.

As at end-September, aggregate leverage remained stable at 39.4 per cent, with the weighted average cost of debt at 4.2 per cent per annum, said the manager. It added that the Reit has no refinancing needs until 2025, with the weighted average term of debt at 2.7 years. 

Han Khim Siew, chief executive officer of the manager, noted that finance costs will continue to present headwinds due to elevated borrowing costs. “(But) we remain cautiously optimistic that the impact on distribution will be mitigated by the portfolio’s healthy revenue and NPI growth, coupled with our prudent capital management approach.” 

Units of OUE Commercial Reit closed at S$0.225 on Monday, down 2.2 per cent or S$0.005, before the business update.