Singapore mainboard-listed office REIT OUE Commercial REIT (OUE C-REIT) (SGX:TS0U) has announced a distribution per unit (DPU) of 1.43 Singapore cents for its financial period ended 30 June 2014 (2Q 2014).

The figure beats the DPU forecast made in its prospectus prior to listing by 5.1%.

The DPU was revealed on the back of a better-than-expected amount available for distribution of SGD12.5 million for the financial period, representing an increase of 5.5% over the forecast for the same period. Correspondingly net property income (NPI) in 2Q 2014 was 4.6% ahead of the forecast.

The REIT has attributed the figures primarily to lower utilities and maintenance expenses incurred and higher rents at both its properties - OUE Bayfront and Lippo Plaza. The amount available for distribution was also augmented by lower trust expenses and finance costs, management for the REIT said in a statement issued on 30 July.

“2Q 2014 rental reversions at both properties were positive, with OUE Bayfront and Lippo Plaza achieving renewal rents that were respectively 6.1% and 4.3% higher than preceding rents for their office renewals”, said Tan Shu Lin, CEO for the REIT’s manager.

OUE Bayfront continued to maintain full occupancy as at 30 June 2014, comparing favourably to Singapore’s core CBD occupancy of 95.8%.

However the REIT saw a slight decline in the occupancy of Lippo Plaza from 95.9% to 92.9% as at 30 June 2014 due to non-renewal of some tenants. OUE C-REIT maintains that Lippo Plaza’s office occupancy is in line with the overall Shanghai CBD Grade A occupancy

For the quarter, OUE C-REIT’s aggregate leverage stands at 39.5%.

Based on OUE C-REIT’s closing price on 30 June 2014 of SGD0.80, the DPU announced translates to an annualised distribution yield of 7.2%. Units of the REIT closed the trading day slightly higher on the date of the announcement at SGD0.83.

OUE Commercial REIT OUE Bayfront maintains its 100% occupancy status for 2Q 2014.
OUE Commercial REIT OUE Bayfront maintains its 100% occupancy status for 2Q 2014.

By Ridzwan Rahmat

Ridzwan has been analysing REITs and business trusts since 2008, and personally manages a portfolio comprising mainly of SGX-listed REITs. He founded REITsWeek in 2013.