OUE Hospitality Trust’s (OUE H-Trust) net property income (NPI) increased to S$29.4 million in the third quarter of 2016 versus the S$28.8 million reported during the same period a year ago, while revenue climbed to S$33.3 million from S$32.7 million previously.
“Compared to Q3 2015, revenue and NPI were respectively 2.0 percent and 2.4 percent higher,” said Chong Kee Hiong, Chief Executive of trust manager, OUE Hospitality REIT Management.
The increase in NPI and revenue are attributable to the higher contributions from the enlarged Crowne Plaza Changi Airport (CPCA), which now has 563 rooms after the 243-room extension was acquired on 1 August 2016.
“Master lease income from the enlarged CPCA was S$2.1 million higher than Q3 2015 due to enlarged room inventory,” he noted.
However, revenue per available room (RevPAR) in Mandarin Orchard Singapore (MOS) declined to S$224 in the third quarter from S$243 previously. Despite this, the drop in room take-up was partially mitigated by an increase in food and beverage sales in the hotel. Consequently, the master lease income from MOS was S$0.6 million lower.
As for the Mandarin Gallery retail mall, “average occupancy increased from 79.1 percent in Q2 2016 to 89 percent in Q3 2016 but is lower than the 95.7 percent recorded in Q3 2015. Hence, retail revenue for the latest quarter was S$0.8 million lower on an annual basis mainly due to softer average occupancy rate, in light of the challenging retail environment,” Chong added.
According to Credit Suisse, contributions from MOS fell 1.7 percent year-on-year due to weaker RevPAR, while revenue from Mandarin Gallery slumped 13.4 percent. In addition, OUE H-Trust’s finance costs rose 16.5 percent on an annual basis given the higher debt taken to fund the CPCA acquisition.
Following the release of the latest financial results, the bank maintained its “neutral” rating on the trust.
Singapore-listed OUE Hospitality Trust is a stapled group consisting of OUE Hospitality Real Estate Investment Trust (OUE H-REIT) and OUE Hospitality Business Trust (OUE H-BT).
OUE H-BT is dormant, while OUE H-REIT’s S$2.25 billion portfolio comprises the Mandarin Gallery retail mall and two hotels, the 563-room Crowne Plaza Changi Airport and the 1,077-room Mandarin Orchard Singapore.
Image: Crowne Plaza Changi Airport.