OUE Commercial Reit H1 2022 DPU falls 12.2 per cent on lower net property income

Benjamin Cher

Published Mon, Jul 25, 2022 · 07:30 PM

MAINBOARD-LISTED OUE Commercial real estate investment trust : TS0U 0% (Reit) on Monday (Jul 25) reported a 12.2 per cent fall in H1 2022 distribution per unit (DPU) to S$0.0108 from S$0.0123 in the year prior.

The fall in DPU was driven by lower H1 2022 net property income which fell 14.2 per cent to S$93.6 million from S$109 million in H1 2021. The fall was attributed to the divestment of 50 per cent interest in OUE Bayfront on Mar 31, and was partially offset by lower rental rebates and other support measures compared to H1 2021.

This led to a 13.3 per cent drop in H1 2022 revenue to S$115.8 million from S$133.5 million a year ago. The amount available for distribution in H1 2022 also shrank 11.4 per cent to S$59.5 million from S$67.2 million in H1 2021.

“Amidst improving market conditions and supported by the manager’s focus on proactive asset management, the Singapore properties have seen increases in committed occupancy with average passing rents remaining stable,” said Han Khim Siew, chief executive officer of OUE Commercial Reit Management.

The manager believes that it is poised to ride the positive leasing momentum in Singapore, as well as rising tourist numbers. While the hospitality segment faces staffing challenges and inflationary pressures, there is a minimum rent component of S$67.5 million embedded in the master lease arrangements.

The Shanghai office market has been impacted by the lockdowns in Q2 2022, which have weakened demand and slowed leasing activity. Occupancy and rental growth are expected to come under pressure in view of a significant new supply of office space, according to the manager. The priority currently is to retain tenants and maintain strong occupancy at Lippo Plaza.