OUE Commercial REIT - OCBC Investment 2021-02-02: Divestment Of 50% Of Interest In Oue Bayfront Property

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

OUE Commercial REIT - Divestment Of 50% Of Interest In Oue Bayfront Property

  • OUE Commercial REIT's 2H20/ FY20 DPU fell 12.3%/ 26.6% y-o-y.
  • S$5.8m of retained distribution was released.
  • Hospitality segment collected minimum rents for FY20.



OUE Commercial REIT’s (OUECT) FY20 results came in within our expectations.

  • OUE Commercial REIT (SGX:TS0U)'s 2H20 revenue was relatively flat at S$150m (-0.1% y-o-y), while NPI dropped marginally by 1% y-o-y to S$119.4m, mainly attributable to rental rebates (S$4.8m) granted to retail tenants, but partially offset by contribution from OUE Hospitality Trust (OUEHT) upon the completion of merger.
  • OUE Commercial REIT released S$5.8m of distribution retained in 1H20. As such, 2H20 DPU was down 12.3% y-o-y to S$0.0143.
  • For FY20, OUE Commercial REIT retained S$11m of capital distribution, of which S$6m relates to ongoing working capital requirements for the hospitality segment. On a full-year basis, OUE Commercial REIT's FY20 DPU fell 26.6% y-o-y to S$0.0243, which forms 102% of our full-year forecast.


FY20 rental reversions of 5.3%-20.1% for Singapore office

  • As at 31 Dec 2020, committed occupancy of OUE Commercial REIT's commercial portfolio stood at 92.5% (-2.7 ppt y-o-y, +0.2 ppt q-o-q), weighed by lower occupancy rate at Mandarin Gallery (-7.2 ppt y-o-y, -2.8 ppt q-o-q) and office properties (-1.9 ppt y-o-y, +0.4 ppt q-o-q).
  • Average passing rents for Singapore office properties remained largely stable while average passing rents for Lippo Plaza declined q-o-q. Occupancy improvement would remain the priority for Lippo Plaza. Shopper traffic and sales at Mandarin Gallery stabilised at ~80%/70% of pre-COVID-19 levels but leasing momentum is likely to remain weak with 36.2% of leases expiring in FY21.
  • Management adopted flexible leasing strategies including shorter leasers and a higher gross turnover rent (GTO) component to some tenants to help them tide over the difficult period amid COVID-19.
  • OUE Commercial REIT’s hospitality portfolio collected minimum rent of S$67.5m under the master lease arrangements in FY20. Full-year RevPAR was down 57.2% y-o-y but 4Q20 RevPAR improved 8% q-o-q due to better performance at Crowne Plaza Changi Airport.

Divestment of 50% of interest in OUE Bayfront, OUE Tower and OUE Link






OCBC Research Team OCBC Investment Research | https://www.iocbc.com/ 2021-02-02
SGX Stock Analyst Report HOLD MAINTAIN HOLD 0.400 UP 0.390



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