Dear Mr Loke

We refer to your email of 25 June 2013.  

We are unable to advise you on the post-disposal Special Dividend amount at this moment as the completion of the disposal of the properties has yet to take place.

Pursuant to our Circular to Shareholders dated 7 June 2013, please note that the Shareholders will receive the Special Dividend in cash on such date after the Proposed Disposal is completed as the Directors shall decide.

The date of disposal and date of completion has yet to be determined.

As stated in the our Circular to Shareholders dated 7 June 2013, the amount of the Special Dividend shall be up to 50% of the remaining proceeds after deducting the payment of existing debt from the cash proceeds.

Thank you.

Kind regards,

Adelene Yeoh

Senior Corporate Secretarial Executive

50 Collyer Quay

#18-01/02 OUE Bayfront

Singapore 049321

DID: 6809 6015

Fax: 6809 6063 E-mail: [email protected]

Property developer Overseas Union Enterprise (OUE) said it closed the quarter ended 31 March 2013 (Q1 2013) with 91% fall in profit after tax to $2 million.

The group recorded total revenue of $105.4 million, an increase of $8.1 million over the same period last year mainly due to higher revenue from its Property Development division and offset partially by lower revenue in its Hospitality and Property Investment division.

Gross profit decreased by $3.5 million as a result of lower rental revenue from 6 Shenton Way Tower 1 due to the relocation of a major tenant.

However, in tandem with an increase of corporate development activities, administrative expenses increased from $8.6 million in previous year to $14 million in 1Q 2013. These administrative expenses include insurance, legal costs, professional fees and hotel corporate expenses.

Finance expenses also increased from $18.6 million to $33.5 million, due to higher interest cost resulting from more borrowings, exchange loss arising from translation of a USD loan and the mark-to-market fair value loss on the USD/SGD currency swap. The USD loan was taken up for the F& N acquisition transaction, which lapsed in January 2013.

The company said it entered into the USD/SGD currency swap to hedge the USD loan against the SGD. Arising from the hedge, the exchange losses for this quarter would be a one-off expense. The fair value loss on the USD/SGD currency swap was a non-cash item.

Shares of results of associates and jointly controlled entity improved to $4.6 million versus $2 million in the previous year, due mainly to better occupancy achieved by One Raffles Place Tower 2.

As a result, the net profit before tax decreased to $5.9 million as opposed to $27.8 million over the same period in 2012. However cash generated from operations for Q1 2013 remained the same as last year at $28.9 million.

The group is currently leasing out the remaining available office space at OUE Bayfront, 6 Shenton Way Tower 1 and One Raffles Place Tower 2. The uptake has been steady as the availability of prime space will be increasingly scarce over the next couple of years until the completion of the next phase of office development in the CBD.

In addition, exciting plans for the development of retail podium at 6 Shenton Way are underway. With over 150,000 sq ft of space, OUE is poised to be the first developer to complete a retail mall in the Shenton Way.

By the end of 2013, OUE is set to unveil the revamped retail mall of One Raffles Place which will provide a revitalised retail and dining hub for those working at Raffles Place.    ...Prev Close: $3.14...

OUE is up 3.3% at $3.10, tapping its highest levels since June 2011 on trade resumption after the company made an official statement that it is in preliminary talks with bankers for the potential listing of a REIT in Singapore, although it hasn't decided which properties to inject into the portfolio or the timing for the IPO.

" Obviously, this makes things more visible," says Donald Chua, an analyst at CIMB, noting management mooted a REIT plan a couple years ago, but the listing didn't materialise. " The market can expect this event to happen sooner rather than later."

He doesn't expect OUE to spin off its entire 100% interest in the REIT. " The excess capital will be used for growth and acquisitions," he says.

He notes management has said Singapore will remain the bulk of OUE's exposure, despite its recent purchase of a commercial property in the US.

  WRITTEN BY DOW JONES & CO, INC