OUE H-Trust's Q3 DPS higher than forecast

Singapore

OUE Hospitality Trust (OUE H-Trust) on Monday reported distribution per share of 1.64 Singapore cents in the third quarter, up 2.5 per cent from its forecast, on higher distributable income. Income available for distribution was stronger than expected for the three months ended September, as a result of higher net property income of S$25.4 million, which rose 1.6 per cent.

Mandarin Orchard Singapore recorded better revenue per available room (RevPAR) of S$252 for the third quarter, as compared to the forecast RevPAR of S$248. This was boosted by higher sales from the corporate business segment. With higher patronage, the hotel's food and beverage segment also saw a lift in sales that was stronger than expected. Its retail segment through Mandarin Gallery contributed to the higher-than-forecast sales due to higher income earned from "casual leasing activities". The mall charged an effective rent per square foot per month of S$23.90 in the third quarter.

OUE H-Trust reported higher distributable income compared to a year ago at S$21.7 million, but the 34 per cent increase is not representative because a shorter period - July 25, 2013 to Sept 30, 2013 - was captured for the third quarter of last year. OUE H-Trust was listed on July 25 last year. Adjusting for the shorter period, hospitality revenue was, in fact, marginally lower as the hotel recorded RevPAR of S$261 in the third quarter of last year, compared to S$252 in the same period this year. The higher RevPAR last year built upon the increase in demand for hotel rooms due to higher visitor arrivals.

OUE H-Trust pointed to faltering tourism arrival numbers, with the number of visitors dropping 6 per cent from a year ago to 3.6 million in the second quarter. Receipts also dipped 3 per cent to S$5.6 billion. "There are tentative signs of the decline in visitor arrivals levelling off and possible recovery in the second half of 2014," said OUE H-Trust in a statement. "We will continue to actively seek growth opportunities and yield accretive acquisitions from our sponsor and third parties."

Shares of OUE H-Trust gained half a cent to finish at S$0.915 on Monday.