OUE Reit’s Q3 NPI rises 4.6% to S$59.6 million on hospitality strength

OUE Real Estate Investment Trust (Reit) posted a 4.6 per cent year-on-year increase in net property income (NPI) to S$59.6 million for the third quarter ended Sep 30, as stronger hospitality performance offset weaker contributions from its commercial portfolio.

Revenue rose 3.1 per cent to S$72.6 million, from S$70.5 million the year before, the Reit manager said in a business update on Wednesday (Oct 21).

The Reit’s financing costs fell 12.4 per cent year on year to S$18.9 million, supported by the manager’s capital management initiatives.

The hospitality segment’s revenue and NPI each grew 12.6 per cent to S$30.3 million and S$27.6 million, respectively.  Revenue per available room (RevPAR) rose 8.2 per cent to S$302, driven by leisure demand, growth in corporate accounts and refreshed guest offerings.

Hilton Singapore Orchard’s RevPAR rose 7.5 per cent on the back of higher occupancy and stronger corporate demand.

In contrast, revenue from the commercial segment, comprising office and retail properties, fell 2.8 per cent to S$42.4 million; NPI declined 1.5 per cent to S$32 million on the back of ongoing tenant transitions at OUE Downtown Office.

The manager noted that Singapore office leasing fundamentals remained healthy, with rental reversions of 4.6 per cent for office lease renewals in the quarter.

Committed occupancy and average passing rent in its Singapore office portfolio stood at 91.2 per cent and S$11.06 per square foot per month, respectively, as at Sep 30.

OUE Reit’s aggregate leverage stood at 42.1 per cent at the end of the quarter, up from 41.5 per cent as at Jun 30, while its weighted average cost of debt remained unchanged at 3.6 per cent per annum.

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The Reit said aggregate leverage would fall to 37.1 per cent if net proceeds from the planned divestment of Crowne Plaza Changi Airport were used to repay existing loans. The divestment of the airport hotel is expected to be completed on Oct 30, unlocking S$498.5 million in net cash proceeds.

A S$20 million special distribution is expected to commence from the 2027 financial year, with payments spread evenly over the first two years following completion of the divestment.

Han Khim Siew, CEO of the manager, said: “OUE Reit delivered a robust performance in Q3 2026, reflecting the strength of our barbell strategy in the commercial and hospitality segments.”

Units of OUE Reit shed S$0.01 or 2.9 per cent to S$0.33 on Wednesday.