OUE COMMERCIAL REIT
TS0U.SI
OUE Commercial REIT: Positioned for a muted office outlook
- OUECT reported that its 3Q15 NPI and distribution increased by 4.7% and 7.1% to S$15.6m and S$13.1m, respectively.
- This was driven by improved portfolio performances; portfolio committed occupancy increased QoQ from 95.3% to 97.1% as at end Sep 15 while management also saw positive rental reversions.
- The amount for distribution available for the quarter is 10.0% ahead of the IPO forecast and we judge 3Q15 numbers to be within our expectations.
- Management expects the significant office supply in 2H16 to impact vacancy and rent levels negatively and has proactively positioned OUE Bayfront’s lease expiry profile such that close to 60% of the asset’s gross rental income is due for renewal only in 2019 and beyond.
- The trust also recently completed the acquisition of its indirect interest in One Raffles Place which is expected to contribute in the next quarter. Upon completion of the asset, the trust’s pro-forma aggregate leverage as at 8 Oct 2015 was 40.9% with an average cost of debt of 3.46%.
- We adjust our model for the dilution from the last rights and CPPU issue and also incorporate softer office assumptions, and our fair value estimate is adjusted to S$0.70 versus S$0.84 previously.
- Maintain HOLD.
Eli Lee
OCBC Securities
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http://www.ocbcresearch.com/
2015-11-12
OCBC Securities
SGX Stock
Analyst Report
0.70
Down
0.84
