OUE Commercial REIT - OCBC Investment 2020-05-11: Hospitality Segment Took A Hit From COVID-19

OUE COMMERCIAL REIT (SGX:TS0U) | SGinvestors.io OUE COMMERCIAL REIT (SGX:TS0U)

OUE Commercial REIT - Hospitality Segment Took A Hit From COVID-19

  • Commercial portfolio remained healthy.
  • Rebranding of Mandarin Orchard Singapore to Hilton Singapore Orchard.
  • Hospitality revenue fell to minimum rent.



OUECT's 1Q20 NPI rose 42.5% y-o-y post-merger

  • OUE Commercial REIT (SGX:TS0U)’s 1Q20 revenue and NPI rose 40.5% and 42.5% y-o-y to S$77.7m and S$62.1m respectively, mainly attributable to the inclusion of Mandarin Gallery and the Hospitality segment upon the completion of merger.
  • As at 31 Mar 2020, OUE Commercial REIT’s gearing stood at 40.2% with debt headroom of ~S$570m and S$1.3b before reaching the gearing levels of 45% and 50%, respectively.


Positive rental reversions for Singapore offices

  • OUE Commercial REIT’s commercial portfolio (four offices + one retail)’s occupancy remained stable at 94.3% in 1Q20 as compared to 94.0% in 1Q19 with slight improvement in occupancy rate at OUE Bayfront and OUE Downtown Office.
  • As for rental reversions, OUE Commercial REIT’s Singapore offices recorded strong positive rental reversions in the range of 7.9% to 16.7% in 1Q20 while leasing momentum of Lippo Plaza was weak in 1Q, weighed by COVID-19 in China.
  • Despite the uncertainty caused by COVID-19, management expects to see positive rental reversions (at more moderated rate) this year, with ~14% of OUE Commercial REIT’s commercial portfolio by GRI due for renewal in 2020, and ~28.5% due in 2021. OUE Commercial REIT has extended ~S$18.8m in support to tenants, including full pass-through of property tax rebates and full rental waiver for Apr to eligible tenants.


Minimum rent for hospitality segment






Chu Peng OCBC Investment Research | https://www.iocbc.com/ 2020-05-11
SGX Stock Analyst Report HOLD MAINTAIN HOLD 0.40 DOWN 0.550



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