OUE Hospitality Trust – Building On Trust

Just last week, I received the hard copy of OUE Hospitality Trust 2017 annual report in my letter box. The cover page was eye catching. It says “Building On Trust“.

For my own tracking of OUE Hospitality Trust’s performance, I summarize the important points and categorize them into two categories: The Positives and The Negatives. Among the positives, I personally like OUE HTrust for having no loan due until December 2020.

Personally, I think whether OUE Hospitality Trust can earn your trust will really depend if it can continue to grow its Distribution Per Unit (“DPU”) in FY18. Getting more distribution per unit is why we invest in REITs, isn’t it?

The Positives

  • Distributable income increased 12.7% from $82.5m in FY16 to $92.9m in FY17. This is as a result of higher revenue contribution from the hospitality segment and retail segment.
  • Revenue from the hospitality segment increased by 7.1% from $89.9m to $96.3m.
  • Revenue from the retail segment increased 6.6% from $32.6m to $34.7m.
  • Distribution per stapled security increased 11.5% from 4.61 cents in FY16 to 5.14 cents in FY17.
  • Mandarin Orchard Singapore (MOS) achieved an increase of 3% in RevPAR as compared to 2016.
  • OUE H-Trust completed the refinancing of its total debts and thus has no loan due until December 2020.
  • New hotel rooms supply in 2018 is expected to be lower but market is still absorbing the surplus or rooms from 2017.

The Negatives (Risks)

  • OUE H-REIT has fully drawn down the income support of $7.5 million. With the lack of income support, OUE H-REIT is on its own.

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