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OUE Commercial Real Estate Investment Trust also announced the amount available for distribution increased 2.7% year-on-year (YoY) to $37.1 million in Q1 2021.
OUE Commercial Real Estate Investment Trust (OUE C-REIT) saw its net property income decline 1.6% to $61.1 million in the first quarter of 2021, from $62 million over the same period last year.
OUE Commercial REIT Management Pte. Ltd attributed the decline mainly “to provision for rental rebates to selected retail tenants, partially mitigated by lower property operating expenses”.
The amount available for distribution increased 2.7% year-on-year (YoY) to $37.1 million in Q1 2021, due to the lower interest rate environment which resulted in lower interest expense.
However, it did not announce its distribution per unit for the period under review.
Nonetheless, OUE C-REIT’s commercial (office and retail) segment registered a revenue of $57.8 million (-5.0% YoY) and net property income of $45.7 million (-3.0% YoY);
It noted that the REIT’s committed occupancy for its commercial segment was at 91.7% as at 31 March 2021.
In Singapore, the REIT’s office properties continued to register positive rental reversions of between 0.8% and 7.2% in Q1 2021, while committed occupancy was at 93.7% as at 31 March 2021.
In Shanghai, the committed office occupancy of Lippo Plaza decreased 3.3 percentage points quarter-on-quarter (QoQ) to 83.2% due to intense leasing competition amidst increasing supply.
At Mandarin Gallery in Singapore, the committed occupancy increased 0.5 percentage points QoQ to 91.6%.
“Including short-term leases to support tenants’ space requirements, the committed occupancy is 97.1%,” said the manager.
On the other hand, its hospitality segment registered a revenue of $16.9 million, “which is the minimum rent under the master lease arrangements of the hotel properties in OUE C-REIT’s portfolio”, said the manager. Net property income increased 3% YoY to $15.4 million, due to lower property operating expenses.
“During the quarter, we announced the divestment of a 50% interest in the OUE Bayfront property, which was completed on 31 March 2021, said Tan Shu Lin, CEO of the manager.
“We are pleased to have achieved an agreed value which was 7.3% and 26.1% above the 31 December 2020 book value and purchase consideration for the property at listing, respectively.”
In determining the optimal use of the $262.6 million net divestment proceeds, the manager will consider “the impact on OUE C-REIT’s capital structure, funding requirements, as well as opportunities available for growth on the horizon”, said Tan.
“Approximately $155.0 million will be used to redeem convertible perpetual preferred units to optimise OUE C-REIT’s capital structure. In addition, we will set aside $15.0 million to share divestment gains with Unitholders. The balance will be applied towards other value-enhancing options to drive returns for Unitholders,” she added.
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Cheryl Chiew, Digital Content Specialist at PropertyGuru, edited this story. To contact her about this story, email: cheryl@propertyguru.com.sg
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