SINGAPORE (July 29): The manager of OUE Hospitality Trust (OUE HT) has declared a 2Q distribution per stapled security (DPS) of 1.17 cents, down 3.3% from its 2Q17 DPU of 1.21 cents on lower revenue from both its hospitality and retail segments.
OUE HT is a stapled group comprising OUE Hospitality REIT and OUE Hospitality Business Trust. The former’s asset portfolio comprises two hotels, Mandarin Orchard Singapore (MOS) and Crowne Plaza Changi Airport (CPCA), while the latter trust is dormant.
Gross revenue for the quarter fell 1.4% on-year to $30.7 million from $31.2 million previously as income from MOS registered a decline in wholesale segment and lower food and beverage (F&B) sales.
At the same time, CPCA received minimum rent as its master lease income was below the minimum rent despite improved revenue per available room (RevPAR) compared to a year ago.
Retail revenue for 2Q, too, fell $0.4 million due to lower effective rent per sq ft per month as a result of negative rental reversion in the last two financial years. Occupancy was nonetheless higher at 97.4% compared to 93.9% in 2Q17.
As such, net property income (NPI) registered a 0.5% decline to $26.5 million in the latest quarter compared to $26.6 million a year ago.
Going forward, OUE HT’s manager says CPCA could potentially benefit from higher visitor arrivals with the opening of Jewel Changi Airport in 1H19, as Changi Airport’s Terminal 3 will be linked to Jewel via a pedestrian bridge.
On the supply front, it expects future supply to taper off with market occupancy strengthening in light of healthy tourist arrivals.
With Singapore’s retail scene expected to remain challenging, the manager says it continues to explore leasing opportunities to optimise the occupancy of Mandarin Gallery, and remains committed to curating the right tenant mix to retain the mall’s positioning as a destination mall.
Overall, the manager says it will continue to actively seek organic growth and inorganic growth through yield accretive acquisitions from its sponsor and third parties.
Units in OUE HT closed flat at 82 cents on Friday.
