OUE Hospitality Trust Q1 net property income up 3.1% to $28.29m

Its hospitality segment’s NPI jumped 5%.

OUE Hospitality Trust (OUEHT) romped to victory in Q1 as its net property income jumped 3.1% YoY from $27.43m to $28.29m.

RHB Research noted that the higher NPI was driven by a healthy 5% YoY NPI increase from the hospitality segment. However, its retail NPI declined 3.1% YoY despite the higher occupancy rate, due to a decrease in rental leases signed last year.

Its finance expenses also dropped 2.3% YoY to $5.74m as borrowing costs decreased.

“Despite the higher NPI, distribution per unit (DPU) declined 3.1%YoY, mainly due to the absence of income support – which was fully utilised by 3Q2017,” explained RHB Research analyst Vijay Natarajan.

RHB research that its hospitality segment recorded strong revenue per available room (RevPAR) growth. “Backed by improving market fundamentals, both its hotels showed a healthy improvement in underlying performance,” the analyst added.

The RevPAR for Mandarin Orchard Singapore (MOS) rose 6.9% YoY (3.1% QoQ), whilst that of Crowne Plaza Changi Airport (CPCA) grew 13.6% YoY (4.5% QoQ) to $184. “The higher RevPAR for MOS was driven predominantly by room rates, and for CPCA, RevPAR growth came mainly from a higher occupancy rate, which it is still ramping up,” Natajaran said.

OCBC Investment Research analyst Deborah Ong commented on CPCA, “We believe the asset will continue receiving minimum rent for the most of FY2018F.”

For Mandarin Gallery, Ong noted that the asset clocked a positive rental reversion of +2.2% for leases signed during the quarter, which in turn made up around 3% of its NLA.

Moreover, a potential acquisition target is the recently-completed Oakwood Premier OUE Singapore (serviced residences), where occupancy is slowly ramping up. “Management is also on the lookout for other suitable hospitality assets across key gateway cities,” Natajaran revealed.