OUE Hospitality Trust 1Q2017 Results – Signs of Recovery?

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Recently, I noticed the share price of OUE Hospitality Trust has gone up slight by a bit. It even broke above $0.70 on 5th April 2017. While research reports published by analyst says that hospitality sector is improving and the worst may be over for 2017, I still have doubts. Since OUE Hospitality Trust makes up 5% of my current stock portfolio, I decided to take a brief look at its 1Q2017 financial results.

Below are some notes I took from the OUE Hospitality Trust 1Q2017 financial results presentation.

  • Master lease income from Mandarin Orchard Singapore decreased by $0.6 million but it was offset by $1.6 million higher master lease income from CPCA (“Crowne Plaza Changi Airport”).
  • RevPAR for MOS (“Mandarin Orchard Singapore”) was lower at $217 in 1Q2017 as compared to $222 in 1Q2016.
  • Retail revenue at Mandarin Gallery was $1.0 million higher than 1Q2016 due to higher average occupancy rate of 94.7% for 1Q2017 as compared to 82.9% in 1Q2016.
  • Mandarin Gallery record a lower effective rent of $23.7 per square foot per month for 1Q2017 as compared to $24.4 per square foot per month in 1Q2016.

Summary

From the lower RevPAR and lower effective rent, I think that the hospitality sector outlook remains bleak. Although DPS (“Distribution Per Share”) was higher at 1.30  cents in 1Q2017 as compared to 1.10 cents in 1Q2016, this was because of the income support received for CPCA (“Crowne Plaza Changi Airport”) and lower interest expense.

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