OUE Commercial REIT - OCBC Investment 2022-11-08: Improving Rental Reversions For Singapore Office

• OUE Commercial REIT (SGX:TS0U) reported strong recovery in the hospitality segment.
• All Singapore office properties reported positive rental reversions.
• ~S$0.9m of rental rebates were extended to Lippo Plaza in 3Q22.

OUECT's 3Q22 business update

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• As of 30 Sep 2022, 69.2% of OUE Commercial REIT’s debt was hedged on fixed rate which is slightly below its target range or 70-75%. OUE Commercial REIT has no further refinancing requirements until Sep 2023.

Singapore office properties reported positive rental reversions ranging from 1.6%-9.2%

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• Approximately S$0.9m of rental rebates were extended to Lippo Plaza’s retail tenants as retail business remained challenging in Shanghai post the lockdown.
• As of 30 Sep 2022, committed occupancy of Singapore office rose 2.5 ppt q-o-q to 95.4%. OUE Commercial REIT’s Singapore office properties reported positive rental reversions ranging from 1.6% to 9.2%. Core CBD Grade A office rental growth is expected to remain positive for the rest of 2022 and 2023 due to the limited supply pipeline, barring a sustained recession.
• Conversely, Lippo Plaza’s committed office occupancy declined 2.1 ppt to 85.6% which is below the average occupancy rate of 90.4% for Shanghai CBD Grade A office. Rental reversion for Lippo Plaza weakened from -1.7% in 2Q22 to -5.4% in 3Q22.
• Separately, Mandarin Gallery’s occupancy dipped slightly by 1.1 ppt to 89.2% while rental reversion came in at 9.2% in 3Q22 as management continued to focus on optimising rents while sustaining occupancy.

Hospitality RevPAR rose 15.5% q-o-q to S$262

• Read more at SGinvestors.io.

Chu Peng OCBC Investment Research | https://www.iocbc.com/ 2022-11-08 SGinvestors.io

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