OUE Hospitality Trust payout rises on stronger hotel business

At the Crowne Plaza Changi Airport - which is part of OUE Hospitality Trust's asset portfolio - master lease income was 10.7 per cent higher at $5.6 million owing to the additional inventory of 243 rooms
At the Crowne Plaza Changi Airport - which is part of OUE Hospitality Trust's asset portfolio - master lease income was 10.7 per cent higher at $5.6 million owing to the additional inventory of 243 rooms. PHOTO: CROWNE PLAZA CHANGI AIRPORT

OUE Hospitality Trust posts 10.6% increase in Q3 distribution per stapled security to 1.36 cents

Stronger contributions from its hotel segment helped OUE Hospitality Trust (OUEHT) chalk up a 10.6 per cent year-on-year rise in distribution per stapled security (DPS) to 1.36 cents for the third quarter ended Sept 30.

OUEHT - a stapled group comprising OUE Hospitality Real Estate Investment Trust (OUE H-Reit) and OUE Hospitality Business Trust (OUE H-BT) - has an asset portfolio consisting of the 1,077-room Mandarin Orchard Singapore, the 563-room Crowne Plaza Changi Airport (CPCA), and Mandarin Gallery retail mall.

Gross revenue rose 5.4 per cent year on year to $34 million on the back of its hospitality segment, where revenue climbed $1.7 million due to higher master lease income from its two hotels.

Net property income (NPI) edged up 3.8 per cent to $29.46 million owing to higher NPI from the hospitality segment, while income available for distribution for the quarter increased 10.9 per cent to $24.68 million.

For the quarter under review, master lease income was 6.7 per cent higher for Mandarin Orchard at $19.8 million as it racked up a higher revenue per available room (RevPAR) of $242, versus $224 a year ago. Banquet sales and food & beverage outlets also contributed to the higher master lease income, OUEHT said.

Over at the expanded CPCA, master lease income was 10.7 per cent higher at $5.6 million owing to the additional inventory of 243 rooms added in August 2016. RevPAR for CPCA for August and September clocked $180, up from $147 for the corresponding two months in 2016.

  • AT A GLANCE

    GROSS REVENUE: $34 million (+5.4%)

    NET PROPERTY INCOME: $29.46 million (+3.8%)

    DISTRIBUTION PER STAPLED SECURITY: 1.36 cents (+10.6%)

"In 3Q2017, CPCA has fully drawn down its income support," said OUEHT. "OUE H-Reit continues to benefit from the downside protection accorded by the minimum rent of $22.5 million per annum as part of the CPCA master lease agreement as it builds on its efforts to ramp up its operations amidst a competitive hotel market."

On the retail front, Mandarin Gallery's occupancy rate increased to 96.4 per cent, up from 89 per cent a year ago, while rent per square foot per month fell from $24.60 to $22.90 due to negative rental reversion in the preceding quarters. As a result, its retail income edged up 0.8 per cent to $8.58 million in the third quarter.

OUEHT highlighted that the market environment for the hotel industry will remain competitive with new supply coming on stream, even as 2018 brings back biennial events such as the Singapore Airshow.

Meanwhile, it warned that headwinds remain in the retail scene. "Tenants are more cautious and are taking a longer time to renew or commit to leases," said OUEHT.

"We are continuously exploring leasing opportunities with current and potential tenants, and remain committed to curating the right tenant mix to retain the mall's positioning as a destination mall."

The DPS will be paid out on Dec 1.

Units in OUEHT closed at $0.81 yesterday, up half a cent.

A version of this article appeared in the print edition of The Straits Times on November 02, 2017, with the headline 'OUEHT payout rises on stronger hotel business'. Print Edition | Subscribe