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OUE Hospitality Trust 2Q2018 Financial Results – Still Awaiting The Jewel

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OUE Hospitality Trust released its 2Q2018 financial results on 27th July 2018. The results are extremely poor. In short, gross revenue, net property income and distribution per unit (“DPU”) are in a sea of red. Gross revenue for 2Q2018 was $0.4 million lower than 2Q2017. Both hospitality segment and retail segment posted lower revenue for the current period. NPI for 2Q2018 was $0.1 million lower than 2Q2017 due to lower gross revenue from the properties, partially mitigated by lower property expenses. The distribution per unit (“DPU”) for 2Q2018 was 1.17 cents, 3.3% lower as compared to 1.21 cents for 2Q2017.

RevPAR for Mandarin Orchard Singapore (MOS) fell 0.5% from S$210 to S$209. RevPAR for Crowne Plaza Changi Airport (CPCA) increased 10.5% from S$152 to S$168, however the master lease income from CPCA had remained the same as 2Q2017 at minimum rent and thus has no positive impact on OUE Hospitality Trust’s financial performance.

With regards to the retail segment, even though occupancy was higher in 2Q2018 at 97.4% as compared to 93.9% in 2Q2017, the effective rent per square foot per month was lower at S$22.3 as compared to S$23.8 in 2Q2017.

2Q2018 Results

Gross Revenue
Hospitality 22,277 22,324 (0.2)%
Retail 8,456 8,836 (4.8)%
Total 30,733 31,160 (4.8)%
Net Property Income
Hospitality 20,135 20,142 (0.0)%
Retail 6,355 6,481 (1.9)%
Total 26,490 26,623 (0.5)%
Distributable Income 21,261 21,814 (2.5)%
Distribution Per Unit (“DPU”) (cents) 1.17 1.21 (3.3)%


Despite the weak performance of OUE Hospitality Trust, I am holding on to it for the below valid reasons:-

  • Singapore Tourism Board (“STB”) reported a 6.9% year-on-year increase in international visitor arrivals in the first five months of 2018. The number of visitor days had also increased by 5.0%.
  • Jewel Changi Airport (“Jewel”) is set to open in first half of 2019. Changi Airport Group estimates that Jewel will see about 40 million to 50 million domestic and international visitors a year, of which 40% will be overseas visitors. CPCA could potentially benefit from the increase in visitor arrivals as Terminal 3 will be linked to Jewel via pedestrian bridge.

I await the opening of Jewel Changi Airport.

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