OUE Commercial REIT’s Income Lifted By Better Performance Of Office Assets
SINGAPORE – OUE Commercial REIT’s (OUE C-REIT) net property income (NPI) increased by 18 percent year-on-year to S$56.6 million thanks to higher contributions from its local commercial properties as well as the relaunch of its flagship hotel Hilton Singapore Orchard, reported Mingtiandi on Tuesday (9 May, SGT).
“We are pleased to report another quarter of stronger operating performance. In particular, our high-quality CBD Grade A office assets in Singapore continued to record high occupancy and positive rental reversion which provides resilient returns,” said Han Khim Siew, CEO of OUE Commercial REIT’s manager in the trust’s latest filing with the local bourse.
In fact, revenue from its commercial properties, consisting of office building and retail space, climbed by 9 percent to S$46.5 million on an annual basis, while NPI from these assets rose 11.9 percent year-on-year to S$36.0 million.
Moreover, the committed occupancy rate of OUE C-REIT’s Singapore office portfolio rose to 96.7 percent during the first quarter of the year from 95.5 percent in Q4 2022.
The Singapore-listed real estate investment trust (S-REIT) also recorded a positive rental reversion of 6.7 percent for its local office properties during the period under review, with the average passing rent of its office assets edging up by 1.6 percent quarter-on-quarter to S$10.26 psf.
“Looking ahead, the elevated interest rate environment continues to be challenging on interest costs for REITs including OUE C-REIT, and we expect higher interim interest expense to impact upcoming distributions in 2023,” Khim added.
Mingtiandi noted that OUE C-REIT is the latest REIT to show the strength of Singapore’s resilient office market. This is after CapitaLand Integrated Commercial Trust (CICT) reported in April that it saw double-digit growth in net property income for Q1 2023.
Furthermore, Savills forecasted on Monday that Singapore will likely record continued growth in leasing rates for Grade A office space at least until the end of 2024.