OUE REIT - Maybank Research 2024-07-26: Growing Top Line; DPU Lower On Financing Cost

• OUE REIT (SGX:TS0U) reported 1H DPU of 0.93 cents, -10.6% h-o-h/-11.4% y-o-y. Low single-digit top-line growth and capital top-ups were offset by higher financing cost, higher level of retained income and payment of management fees in cash.
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• Gearing was stable but borrowing cost rose q-o-q. OUE REIT's management is focussed on active asset and capital management. while waiting for right growth opportunities.

Singapore offsets weakness in Shanghai office

• OUE REIT's 1H24 revenue and NPI grew 5.7% and 1.6% y-o-y, respectively. Revenue from commercial properties rose 2.2% y-o-y. However, higher property taxes and utility costs resulted in 0.9% y-o-y NPI decline.
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• Retail is steady, though rent reversion will normalize. Lippo Plaza Shanghai remains challenging due to high supply. Focus in on occupancy (Office 76.2%). Passing rent inched down.
• Hospitality segment saw revenue and NPI growth of 12.9% and 5.9% y-o-y, respectively. This was led by RevPAR growth of 15.8% y-o-y to S$269. RevPAR was flat h-o-h and down from prior quarter. Hilton Singapore Orchard saw a decline in RevPAR whereas Crowne Plaza Changi was stable.

Prudent capital management

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Krishna Guha Maybank Research | https://www.maybank-ke.com.sg/ 2024-07-26 SGinvestors.io

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