OUE COMMERCIAL REIT (SGX:TS0U)
OUE Commercial REIT - Waiting For Recovery
- OUE Commercial REIT's 1H22 DPU declined 12.2% y-o-y to S$0.0108.
- Tenants’ sales at Mandarin Gallery improved to 85% of pre-pandemic levels.
- ~S$5m of rental rebates extended to tenants at Lippo Plaza in Shanghai.
OUECT's 1H22 DPU missed expectations
- OUE Commercial REIT (SGX:TS0U)’s 1H22 revenue and NPI fell 13.3% and 14.2% y-o-y to S$115.8m and S$93.6m respectively, mainly attributable to the divestment of a 50% interest in OUE Bayfront, but partially offset by lower rental rebates and property expenses.
- 1H22 DPU came in at S$0.0108 which was 12.2% lower compared to 1H21, below our expectations.
Rental reversions for Singapore office properties range from -3.7% to 4%
- As at 30 Jun 2022, the occupancy rates held up well for OUE Commercial REIT’s Singapore office (92.9%, +2.1 percentage points (ppt) q-o-q) and Mandarin Gallery (90.3%, +1.6 ppt q-o-q), thanks to improving leasing momentum.
- Average passing rents remained stable for OUE Commercial REIT’s commercial portfolio. Rental reversions for Singapore office properties range from -3.7% to 4% vs –5.9% to 2.5% in 1Q22. OUE Commercial REIT expects flattish rental reversion for Singapore office properties this year.
- Conversely, Lippo Plaza’s committed office occupancy fell by 3.9 ppt q-o-q to 87.7%, largely due to the non-renewal of a large tenant and weak market conditions in 2Q22. ~S$5.0m of rental rebates were provided to the tenants at Lippo Plaza due to the lockdown in 2Q22.
Hospitality segment’s 2Q22 RevPAR doubled y-o-y
- For OUE Commercial REIT’s hospitality segment, it continued to receive minimum rent refurbishment, which is expected to complete in late 2022 or Jan 2023.
- See
- After adjusting our DPU forecasts and increasing our risk-free rate from 2.5% to 3.25%, our fair value estimate for OUE Commercial REIT decreases from S$0.44 to S$0.40.
Chu Peng
OCBC Investment Research
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https://www.iocbc.com/
2022-07-27
SGX Stock
Analyst Report
0.40
DOWN
0.440
