OUE Commercial REIT - DBS Research 2023-02-01: Hospitality Recovery Is The Wild Card

• OUE Commercial REIT (SGX:TS0U)'s 4Q22 results supported by capital distributions; HSO 4Q22 revenue surpassed minimum rent, driving hospitality recovery going into 2023; lower gearing to 38.8% but ICR ratio declined to below 2.4x. See OUE Commercial REIT's announcement dated 30 Jan 2023.
• - Read this at SGinvestors.io -
• - Read this at SGinvestors.io -
• Hilton Singapore Orchard’s (HSO) revenue has surpassed its minimum rent of S$45m in FY22, even though the Orchard Wing (446 rooms) has yet to open. As such, 4Q22 hospitality revenue surpassed the minimum rent by ~5% (~S$0.9m) while that of FY22 surpassed minimum rent by 1.3%. The Orchard Wing has been opened since 1 Jan 23 with the full inventory of 1,080 rooms.
• OUE Commercial REIT's gearing trended lower to 38.8% vs 40.3%, while average cost of debt inched up by 0.2ppt q-o-q to 3.4% from 3.2% in 3Q22.
• As at Dec 22, OUE Commercial REIT's adjusted ICR (including a write-off of upfront fees from early refinancing) was 2.4x vs 2.7x as at Sep 22. While the ICR ratio has declined to below 2.5x, gearing is well below 45% currently and could likely improve with the recovery of the hospitality sector.
• Aside from the remaining S$273m in loans maturing in Sep 23 (11.8% of total debt), there are no refinancing needs until 2025.

Strong operational recovery, especially from the rebranded HSO, partially offset by weaker performance from Lippo Plaza

• Read more at SGinvestors.io.

Rachel TAN DBS Group Research | Derek TAN DBS Research | https://www.dbs.com/insightsdirect/ 2023-02-01 SGinvestors.io

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