OUE Hospitality Trust announces its 1Q2016 financial results on 6th May 2016. Gross revenue increases by 2.8%. The total gross revenue can be broken down into the hospitality segment and retail segment. Gross revenue for the hospitality segment increases by 11.5% while gross revenue for the retail segment fell as much as 16.3%.
Retail revenue for 1Q2016 was $1.5 million lower than 1Q2015 mainly due to landlord fit out periods for incoming tenants and lower average occupancy rate.
Distribution Per Unit (“DPU”) fell by as much as 31.7% from 1.61 cents to 1.10 cents. The issuance of rights have been factored in.
| 1Q FY16 (S$’000) | 1Q FY15 (S$’000) | YoY(%) | |
| Gross Revenue (Hospitality) | 22,395 | 20,077 | 11.5 |
| Gross Revenue (Retail) | 7,753 | 9,260 | (16.3) |
| Gross Revenue (Total) | 30,148 | 29,337 | 2.8 |
| Net Property Income | 26,293 | 25,715 | 2.2 |
| Distributable Amount | 19,700 | 21,386 | (7.9) |
| Distribution Per Unit (“DPU”) (cents) | 1.10 | 1.61 | (31.7) |
Debt
Gearing ratio stood at 42.2% which is extremely high. With the completion of the rights issue, the gearing ratio now stood at 37.9%. Weighted average debt maturity stood at 2.8 years. From the chart below, we can see S$293 million loan maturing in 2016. This is a bit worrying as I wonder how it will refinance the loan?
Net Asset Value
Net asset value is S$0.89.
Lease Expiry Profile
The Weighted Average Lease Expiry (“WALE”) by gross rent stood at 4.5 years while by Net Lettable Area (“NLA”) stood at 3 years. In Mandarin Gallery, occupancy is approximately 88% committed. Michael Kors is expected to open in 3Q2016 and Victoria’s Secret is expected to open in 4Q2016.
Things to Note
Tourism Boost
STB has forecasted a growth of 0% to 3% for visitor arrivals and 0% to 2% for tourism receipts in 2016. Singapore government has also set aside $700 million in a Tourism Development Fund to be invested from 2016 to 2020.
Crowne Plaza Changi Airport Extension (CPEX)
OUE H-Trust expects to acquire the 243-room CPEX in 2H2016 following the completion of the construction of the extension and upon receipt of the temporary occupation permit.
Reputable Brands Opening in Mandarin Gallery
Michael Kors and Victoria’s Secret are expected to open in 3Q2016 and 4Q2016 respectively, and both tenants account for approximately 15% of the mall’s net lettable area. Mandarin Gallery is expected to record lower average occupancy in FY2016 due to slower renewal of leases.