OUE Hospitality Trust announces its results for 4Q2015 on 25th January 2016. DPU fell 4.5% to 1.70 cents as compared to 1.78 cents in 4Q2014. Distribution income was $8 million lower than 4Q2014 due to lower contribution from Mandarin Orchard Singapore and Mandarin Gallery.
OUE Hospitality Trust focuses on Hospitality and Retail sector. Its hotel properties consists of Mandarin Orchard Singapore and Crown Plaza Changi Airport. Its retail properties consists of Mandarin Gallery.
From the above figures, we can see that gross revenue is $2.6 million higher than 4Q2014. Hospitality segment posted higher revenue which offset the lower revenue from the retail segment.
The master lease income contribution from Crown Plaza Changi Airport added $4.0 million of hospitality revenue. Master lease income from Mandarin Orchard Singapore was $1.1 million lower than 4Q2014 mainly as a result of lower room sales and lower Gross Operating Profit (“GOP”).
Retail revenue was $0.3 million lower than 4Q2014 mainly due to lower occupancy and fit-out periods for tenants arising from lease renewals.
Debt Maturity Profile
OUE Hospitality Trust has a high gearing ratio of 42.0%. The average cost of debt is 2.7%.
Weighted Average Lease Expiry
The weighted average lease expiry by gross rent is 4.5 years. The weighted average lease expiry by Net Lettable Area (“NLA”) is 3 years. From the statistics below, we can see that majority of the leases are expiring between the current period 2016 to 2018.
Things to Note
Discount to Net Asset Value (NAV)
OUE Hospitality Trust is currently trading at S$0.77 (As at 31st December 2015) 14% discount to NAV of S$0.90.
Major Biennial Events
Singapore will again host major biennial events such as The Singapore Airshow and Food & Hotel Asia in the first half of the year. It will also be the first year that the country will host the World Rugby Sevens Series in April 2016. These events are expected to increase hospitality demand.
New Leases for Retail
Two international brands Michael Kors and Victoria’s Secret have signed a seven years and ten years lease with Mandarin Gallery respectively.