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OUE C-Reit to join FTSE Russell' s Global Developed Index series
OUE Commercial Reit (OUE C-Reit) OUE Com Reit: TS0U +2.44% will be included in the FTSE EPRA Nareit Global Developed Index with effect from Sept 20 this year, announced its manager on Thursday morning.
Designed to track the performance of listed real estate companies and Reits worldwide, the index incorporates Reits as well as real estate holding and development companies.
The index series is a widely followed global benchmark which was jointly developed by FTSE Russell with the EPRA (European Public Real Estate Association) and the Nareit (National Association of Real Estate Investment Trusts).
According to the index' s factsheet as at July 30, 2021, there are 17 Singapore Reits and property trusts in the FTSE EPRA Nareit Global Index.
Tan Shu Lin, chief executive of the manager, said OUE C-Reit' s inclusion on the index represents a significant milestone which will further enhance the Reit' s visibility and investability among global investors.
" Our commitment to driving long-term sustainable growth for unitholders, including the transformational merger with OUE Hospitality Trust back in 2019 to create one of the largest diversified Singapore Reits, has enabled this achievement. We will continue to capitalise on value-enhancing opportunities as they arise for the benefit of unitholders," she said.
Units of OUE C-Reit ended flat on Wednesday at 41 Singapore cents.
OUE C-Reit bumps up H1 DPU to 1.23 Singapore cents after earlier retention
OUE Commercial Real Estate Investment Trust (OUE C-Reit) will make a first-half distribution per unit (DPU) of 1.23 Singapore cents, after having held back on a payout the year before.
Distributable income was up by 3 per cent year on year to S$67.2 million for the six months to June 30, the manager said on Thursday.
Meanwhile, the trust' s payouts will be ramped up from the previous DPU of one cent, as S$10.8 million had been retained in the year before " to preserve financial flexibility in view of uncertainties posed by the Covid-19 situation" .
Net property income dipped by 3.1 per cent to S$109.0 million on the divestment of a half-stake in OUE Bayfront, which is now recognised within the Reit' s share of joint-venture results.
Meanwhile, revenue fell by 6 per cent to S$133.5 million, as the OUE Bayfront divestment dragged down contributions from the commercial portfolio. Income from the hospitality segment was stable at the minimum rent under master lease arrangements.
OUE C-Reit holds the Mandarin Orchard Singapore and Crowne Plaza Changi Airport hotels, as well as a commercial building in Shanghai and four others in Singapore.
Committed occupancy for the commercial properties was 91.7 per cent as at end-June, with portfolio weighted average lease expiry of 3.6 years by gross rental income. The aggregate leverage stood at 38.0 per cent, with an average term of debt of 2.9 years.
The DPU of 1.23 cents will be paid out on Sept 10, with books closing on Aug 6.
OUE C-Reit bumps up H1 DPU to 1.23 Singapore cents after earlier retention
OUE Commercial Real Estate Investment Trust (OUE C-Reit) will make a first-half distribution per unit (DPU) of 1.23 Singapore cents, after having held back on a payout the year before.Distributable income was up by 3 per cent year on year to S$67.2 million for the six months to June 30, the manager said on Thursday.
Meanwhile, the trust' s payouts will be ramped up from the previous DPU of one cent, as S$10.8 million had been retained in the year before " to preserve financial flexibility in view of uncertainties posed by the Covid-19 situation" .
Net property income dipped by 3.1 per cent to S$109.0 million on the divestment of a half-stake in OUE Bayfront, which is now recognised within the Reit' s share of joint-venture results.
Meanwhile, revenue fell by 6 per cent to S$133.5 million, as the OUE Bayfront divestment dragged down contributions from the commercial portfolio. Income from the hospitality segment was stable at the minimum rent under master lease arrangements.
OUE C-Reit holds the Mandarin Orchard Singapore and Crowne Plaza Changi Airport hotels, as well as a commercial building in Shanghai and four others in Singapore.
Committed occupancy for the commercial properties was 91.7 per cent as at end-June, with portfolio weighted average lease expiry of 3.6 years by gross rental income. The aggregate leverage stood at 38.0 per cent, with an average term of debt of 2.9 years.
The DPU of 1.23 cents will be paid out on Sept 10, with books closing on Aug 6.
Units closed flat on Thursday at S$0.43, before the results were announced.
DBS - Ideas of the Day
Trending Sectors
Singapore Office REITs
Downtown office vacancies rise as rents stabilise
* We have observed a divergence in office fundamentals with offices in the downtown region seeing lower demand compared to those on the city fringes
- Data from Knight Frank revealed that vacancies at Raffles Place and Marina Bay had inched up in 1Q21
- Conversely, vacancies at Orchard, Shenton Way, and the general city fringes dropped during the same quarter
- Overall, net demand for Grade A CBD office space has turned positive in 1H21 at 68,000 sqft according to Cushman & Wakefield
* Positively, preliminary data from JLL has also shown that rents have stabilised with Grade A CBD office space seeing a 1.2% q-o-q rise in 2Q21
* REITs such as MCT with a larger exposure to offices outside the downtown region could benefit from the decentralisation trend
* Other Office REITs with a large portfolio located in the downtown region including KREIT, Suntec REIT and OUE Commercial REIT could see recoveries play out over a longer period
Trending Sectors
Singapore Office REITs
Downtown office vacancies rise as rents stabilise
* We have observed a divergence in office fundamentals with offices in the downtown region seeing lower demand compared to those on the city fringes
- Data from Knight Frank revealed that vacancies at Raffles Place and Marina Bay had inched up in 1Q21
- Conversely, vacancies at Orchard, Shenton Way, and the general city fringes dropped during the same quarter
- Overall, net demand for Grade A CBD office space has turned positive in 1H21 at 68,000 sqft according to Cushman & Wakefield
* Positively, preliminary data from JLL has also shown that rents have stabilised with Grade A CBD office space seeing a 1.2% q-o-q rise in 2Q21
* REITs such as MCT with a larger exposure to offices outside the downtown region could benefit from the decentralisation trend
* Other Office REITs with a large portfolio located in the downtown region including KREIT, Suntec REIT and OUE Commercial REIT could see recoveries play out over a longer period
OUE C-Reit prices S$150 million offering of 3.95% notes due 2026
OUE Commercial Real Estate Investment Trust (OUE C-Reit) has priced an offering of S$150 million of 3.95 per cent notes due 2026, to be guaranteed by Reit trustee DBS Trustee.
Net proceeds from the issuance will be used to refinance existing borrowings and working capital requirements, the manager said in a bourse filing on Tuesday night.
CIMB Singapore, DBS, OCBC and Standard Chartered were named joint lead managers and bookrunners for the notes offering, which will be issued under OUE C-Reit' s S$2 billion multi-currency debt scheme, the manager added.
The notes will mature on June 2, 2026, with the interest to be paid semi-annually. The issuer can redeem all notes - at its option - on any interest payment date, among other redemption scenarios.
They constitute direct, unconditional, unsubordinated and unsecured obligations of the issuer and will rank pari passu with all of its other unsecured obligations, besides the subordinated obligations and priorities created by law.
OUE Commercial Reit' s Q1 net property income dips due to rental rebates
OUE Commercial Reit (OUE C-Reit) on Tuesday posted a 1.6 per cent drop in its first-quarter net property income to S$61.1 million, due to provision for rental rebates to some retail tenants, partially offset by lower property operating expenses.
Lower interest expense pushed up its amount available for distribution by 2.7 per cent to S$37.1 million. For the three months ended March 31, 2021, revenue fell 3.9 per cent to S$74.7 million. It did not announce its distribution per unit for the quarter.
Tan Shu Lin, chief executive of the manager, said: " While we provided rental rebates to selected retail tenants who continued to face challenges due to restrictions on short-term visitors and operating capacity, the quantum for the first half of 2021 is expected to be lower compared to the prior half-year.
" With more employees returning to the workplace recently due to the easing of Covid-19 safe-management measures, we are encouraged by the improvement in both traffic and tenant sales at One Raffles Place Shopping Mall and will continue to monitor the situation closely."
For Q1, the office and retail segment reported revenue and net property income of S$57.8 million (down 5 per cent), and S$45.7 million (down 3 per cent), respectively. In all, S$2.6 million of rental rebates were extended to retail tenants in the quarter, as challenges remain for businesses dependent on short-term visitors and office-based employees.
In its business update, the Reit manager also noted that its Singapore office properties continued to achieve positive rental reversions between 0.8 per cent and 7.2 per cent in Q1, and a committed occupancy of 93.7 per cent as at end-March 2021.
However, in Shanghai, Lippo Plaza' s committed office occupancy fell 3.3 percentage points from the previous quarter to 83.2 per cent due to intense leasing competition amid increasing supply.
At Mandarin Gallery in Singapore, the committed occupancy improved 0.5 percentage points from Q4 last year to 91.6 per cent including short-term leases, the committed occupancy was 97.1 per cent. In view of headwinds facing the prime retail segment, the manager plans to continue adopting flexible leasing strategies to sustain its occupancy.
Its hospitality segment generated a revenue of S$16.9 million in Q1 - which is also the minimum rent under the master lease arrangements of the hotel properties in its portfolio. Net property income was 3 per cent higher year on year at S$15.4 million, due to lower property operating expenses.
The Reit had announced the divestment of a 50-per-cent interest in OUE Bayfront in Q1, achieving an agreed value which was 7.3 per cent and 26.1 per cent above its end-2020 book value and purchase consideration for the property at listing, respectively.
Of the net divestment proceeds of about S$262.6 million, S$155 million will be used to redeem convertible perpetual preferred units to optimise OUE C-Reit' s capital structure another S$15 million will be set aside to share divestment gains with unitholders, it said.
The balance will be applied towards other " value-enhancing options" to drive returns for unitholders," it added.
OUE C-Reit' s aggregate leverage as at March 31, 2021 was 40.4 per cent, on total debt of about S$2.34 billion.
As part of the divestment of 50 per cent of OUE Bayfront, the loan attributable to the property, due in 2022, was refinanced ahead of expiry with a new five-year facility. As a result, OUE C-Reit' s term of debt increased to 2.8 years as at end-March 2021, from 2.3 years in the previous quarter.
OUE C-Reit to redeem S$155m in convertible units
OUE Commercial Real Estate Investment Trust (OUE C-Reit) will redeem some S$155 million of convertible perpetual preferred units (CPPUs) on June 1, the manager has said.
It released an irrevocable redemption notice on Monday for the convertible securities, which had been issued as part of the payment for a stake in downtown office building One Raffles Place.
The decision comes as part of the manager' s capital management strategy " to continually review and optimise OUE C-Reit' s capital structure for sustainability over the longer term" , the board said in a bourse filing.
Some 220 million CPPUs will remain outstanding after the redemption, which is being made in cash and funded by proceeds from the partial divestment of OUE Bayfront.
The reduction in outstanding units will let the manager mitigate dilution in distribution per unit, should any of the CPPUs be converted into OUE C-Reit, it said.
There will also be a special preferred distribution of one per cent a year to the CPPU holder, pro-rated for the January-to-March quarter.
The manager added that its audit and risk committee took the interests of the trust and its minority unitholders into account, and approved the redemption.
OUE C-Reit bought an effective 67.95 per cent stake in One Raffles Place from its sponsor OUE Ltd in 2015, for about S$1.1 billion.
As part of the acquisition, it issued the CPPUs to Clifford Development Pte Ltd. Both the Reit' s manager and Clifford Development are wholly owned by mainboard-listed OUE, which also has a 48 per cent interest in OUE C-Reit.
Any news on the incoming dividend payout ?
Happy Lunar New Year to everyone here.. May Niu year brings good health not forgetting HUAT all the way to the banks..😁
Today $0.365. Hopes it does not go downstream like its pals Lippo and 1st reit.
OUE C-Reit seals S$1.27b deal with Allianz entity to divest 50% of OUE Bayfront
THE manager of OUE Commercial Real Estate Investment Trust (OUE C-Reit) has agreed to divest a 50 per cent stake in the Reit' s OUE Bayfront property based on an agreed value of S$1.27 billion, or S$3,170 per square foot, to a special purpose vehicle (SPV) managed by Allianz Real Estate.
This comes after The Business Times in November 2020 reported both parties were in exclusive due diligence with a view to buying a partial stake in the building, which OUE C-Reit' s manager later on confirmed but said there was no certainty any transaction would materialise at the time.
OUE Bayfront comprises an 18-storey Grade A office asset, a conserved tower building and an overhead pedestrian link bridge with retail units. It was independently valued at S$1.18 billion by Cushman & Wakefield as at end-2020.
The S$1.27 billion value commands a 7.6 per cent premium over this valuation and exceeds the property' s purchase consideration of S$1 billion by 26.1 per cent.
After taking into account the estimated divestment fee and other divestment-related expenses, OUE C-Reit is expecting to net about S$262.6 million of proceeds.
In a late night filing on Monday, OUE C-Reit' s manager said this will provide it the financial flexibility to pare down debt, undertake accretive acquisitions of higher-yielding assets or asset enhancement initiatives, and redeem outstanding convertible perpetual preferred units. It may also use the net proceeds to commence a distribution per unit accretive unit buy-back programme to enhance long-term returns to unitholders, or to distribute as capital gains.
Assuming the estimated net proceeds from the divestment are used to repay loans, the Reit' s aggregate leverage is expected to improve from 40.3 per cent as at end-September 2020 to 33.6 per cent on a pro forma basis.
A limited liability partnership known as BPH Propco has been formed between the Reit and Allianz' s SPV Acre Angsana, with DBS Trustee as trustee of the Reit. The OUE Bayfront property' s sale will be conducted through BPH Propco, which OUE C-Reit and Allianz will each hold a 50 per cent interest in.
The Reit manager and OUE Commercial Property Management will be respectively appointed as asset manager and property manager to BPH Propco.
DBS Trustee has also agreed to guarantee a minimum net property income (NPI) of S$50 million and S$52.5 million for the first and second year, respectively, following completion of the divestment and subject to an aggregate cap of S$6 million.
Based on the OUE Bayfront property' s annualised NPI of S$45.8 million for the nine months ended Sept 30, 2020 and the agreed value, the estimated net property yield is 3.6 per cent per annum.
Post completion of the divestment, the manager says OUE C-Reit will continue to be underpinned by the resilient office segment, which contributes 57.8 per cent to the Reit' s total portfolio rental revenue on a pro forma basis. Singapore properties continue to anchor the portfolio, comprising about 90.4 per cent of total assets, it added.
" This acquisition presents us with a unique opportunity to add a marquee prime office asset into our portfolio. We are confident that the OUE Bayfront property, with its high-quality offering and strategic location, will continue to enjoy strong demand from occupiers seeking prime office space in Singapore," said Danny Phuan, Asia Pacific head of acquisitions for Allianz.
Allianz has separately announced the agreed transaction value for the 50 per cent interest in OUE Bayfront is S$634 million subject to closing, which is expected to happen at end-February 2021.
The real estate company issued a press statement on Tuesday confirming previous market speculations that the acquisition is on behalf of the National Pension Service of Korea, in addition to the Allianz group of companies.
JLL acted as adviser on the sale, said the real estate consultancy in a media statement on the same day. Its head of capital markets for Singapore, Lim Ting, sees the transaction as " indicative of deeper investor confidence in the long-term prospects for quality assets in the Singapore office market" .
Cannot move up ?
coco66 ( Date: 27-Nov-2020 21:14) Posted:
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OUE comm in talks to sell a stake of their best asset LOL
https://www.google.com.sg/amp/s/www.reitsweek.com/2020/11/oue-commercial-reit-in-talks-with-allianz-real-estate-entity-for-stake-in-bayfront-asset.html/amp
https://www.google.com.sg/amp/s/www.reitsweek.com/2020/11/oue-commercial-reit-in-talks-with-allianz-real-estate-entity-for-stake-in-bayfront-asset.html/amp
In case anyone is interested or will find useful --> I found an office designer (interior designer) youtube channel talking about the office scene or landscape in singapore and what type of trend is it moving towards:
https://www.youtube.com/watch?v=ravfkSxPn84
highlight, copy then paste the link in your browser. You cant click from Sharejunction directly.
Cheers!
https://www.youtube.com/watch?v=ravfkSxPn84
highlight, copy then paste the link in your browser. You cant click from Sharejunction directly.
Cheers!
https://sg.yahoo.com/finance/news/singapore-third-quarter-office-rents-041602231.html
Singapore third-quarter office rents see biggest fall in 11 years
drwealthz ( Date: 09-Oct-2020 09:59) Posted:
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Hey guys thought I' ll just share my analysis for OUE commercial:
Sell at 0.345 to cut loss and put the proceeds somewhere else to recoup through dividends or capital gain:
Why:
They don' t have any historical record of recovering their prices after each fall
They have falling dpu through the years plus a decrease in demand for offices down the road. Albeit just a slight decrease = still a decrease which they must face as an obstacle during their road to recovery
If covid persists, the hotels and mall in Orchard will be shit
The only thing tt can save OUE is a cure or vaccine but that' s like betting on a miracle compared to the normal / practical trajectory of things above
Their debt is quite high. When their hotels become shit and demand for office drop, likely they will issue more rights or sell a building.
If they sell, revenue and distribution will drop. And share price will also drop.
If they issue rights, price also drop
(Remarks: the longer WFH stays, the stronger the trend will form. At that time, even a single drop in demand for office space (by any company who sees that WFH works for them or not needing a big/prime CBD office) is still a drop which means a decrease in revenue (as an analogy). Lawrance has given hints that phase 3 will not be offices opening fully. It will likely be 50-50.
Finally, OUE managment is under the Riady family who also runs lippo
In any analysis, look at 1) business / business conditions, 2) management, 3) cashflow)
Sell at 0.345 to cut loss and put the proceeds somewhere else to recoup through dividends or capital gain:
Why:
They don' t have any historical record of recovering their prices after each fall
They have falling dpu through the years plus a decrease in demand for offices down the road. Albeit just a slight decrease = still a decrease which they must face as an obstacle during their road to recovery
If covid persists, the hotels and mall in Orchard will be shit
The only thing tt can save OUE is a cure or vaccine but that' s like betting on a miracle compared to the normal / practical trajectory of things above
Their debt is quite high. When their hotels become shit and demand for office drop, likely they will issue more rights or sell a building.
If they sell, revenue and distribution will drop. And share price will also drop.
If they issue rights, price also drop
(Remarks: the longer WFH stays, the stronger the trend will form. At that time, even a single drop in demand for office space (by any company who sees that WFH works for them or not needing a big/prime CBD office) is still a drop which means a decrease in revenue (as an analogy). Lawrance has given hints that phase 3 will not be offices opening fully. It will likely be 50-50.
Finally, OUE managment is under the Riady family who also runs lippo
In any analysis, look at 1) business / business conditions, 2) management, 3) cashflow)
No exclusivity arrangement to sell assets: OUE C-Reit
OUE C-Reit' s manager said late on Friday that it has not entered any exclusivity arrangement in relation to a sale of any of OUE C-Reit' s assets, nor is there any certainty that any such transaction will materialise.
This is in response to an article published on Friday in The Business Times titled " Will OUE Commercial Reit sell some of its assets?"
The Reit manager said that it explores potential acquisitions and divestment opportunities as part of its proactive asset management strategy with a view to maximising returns to unitholders.
In addition, the manager from time to time receives unsolicited expressions of interests in respect of the assets owned by OUE C-Reit, it said. It added that will evaluate all such proposals carefully taking into account the best interests of all unitholders.
While OUE Limited is the sponsor and controlling unitholder of OUE C-Reit and wholly owns the manager, OUE C-Reit is separately listed and is managed by the manager, it said in a bourse filing.
" The manager, led by its board of directors which comprises a majority of independent directors, is responsible for managing the assets of OUE C-Reit in the best interests of all unitholders including assessing and, if thought fit, approving any potential acquisition or divestment," it said.
Will OUE Commercial Reit sell some of its assets?
The Riady family behind sponsor OUE, it seems, is open to receiving offers for just about any of the Reit' s assets - before deciding just what to divest
OUE this week completed the sale of the landmark US Bank Tower in Los Angeles for US$430 million, or at two-thirds of its US$650 million valuation as at Dec 31, 2019.
Among other things, the disposal will allow the group to substantially boost its cash reserves and improve its net gearing ratio by paring down existing debts. What else could be on the cards for OUE?
Talk on the grapevine is that asset sales action may come from the group' s sponsored real estate investment trust OUE Commercial Reit - in which OUE Group has a 47.8 per cent stake (as at June 30, 2020).
The Riady family behind OUE, it seems, is open to receiving offers for just about any of the Reit' s assets - especially OUE Downtown Office in Shenton Way, which is on land with a relatively short balance leasehold tenure of 46 years - before it decides just what to divest.
BT understands the group is also willing to part with the 563-room hotel Crowne Plaza Changi Airport, which was valued at S$883,000 per key at end-2019.
Potential buyers with preferred profiles have also been approached discreetly for the Reit' s 67.95 per cent effective interest in One Raffles Place - an office and retail asset in the heart of Singapore' s traditional financial district.
Even the jewel in the crown - the OUE Bayfront office development - may be available for sale, at least for a partial stake of, say, 40 per cent. The trust fully owns this prime Grade A office asset standing between Raffles Place and the Marina Bay new downtown.
Talk of the potential divestments comes just a year after the Reit' s merger with OUE Hospitality Trust, resulting in combined assets of S$6.8 billion. The merged entity has seven assets - of which three are from the hospitality trust.
When the merger was announced, the managers of the two Reits had said that the enlarged entity will provide " enhanced portfolio diversification and resilience" .
Divesting assets would seem like a change in plans. Could this have been sparked by proactive agents
and/or unsolicited interest from potential buyers?
More likely, it reflects challenges from the Covid-19 pandemic, especially for hotel assets. Even demand for office space is not expected to be unscathed from corporate downsizing and work from home taking root during the pandemic.
Aggregate leverage
Other factors may also be at play.
OUE Commercial Reit' s aggregate leverage of 40.1 per cent as at end-June 2020 is higher than some S-Reits though still below the 50 per cent regulatory limit.
Its sponsor' s net gearing, however, is on the high side. According to an OCBC Investment Research report dated Aug 7 this year, OUE' s net gearing stood at 86.2 per cent as at Dec 31, 2019 but is projected to fall to 73.9 per cent by the end of FY2020.
If OUE Commercial Reit were to sell some assets, it could use the proceeds to repay some of its borrowings and reduce aggregate leverage.
Beyond that, there is the possibility of making capital distributions from divestment gains to all unit holders - including its sponsor, OUE.
OUE could use the monies to cut its own debt and build a stronger cushion against the vagaries of the economic slowdown.
One could extend the picture to the Riady family' s business empire in Indonesia, where Lippo Karawaci, the family' s listed property arm, is still in the process of restructuring - in the aftermath of the cash squeeze triggered by its ambitious US$18 billion Meikarta township development in Bekasi, West Java.
Furthermore, with the Covid-19 pandemic having devastated the Indonesian property market, Lippo Karawaci' s ability to repay loans has been significantly hampered.
Capital distributions that OUE could potentially receive from OUE Commercial Reit' s divestment gains may in turn be channelled to OUE' s shareholders, by way of, say, special dividends or even a capital reduction. The Riady family, as the ultimate controlling shareholders of OUE, will have the option to funnel the money to Lippo Karawaci.
Now let' s take a closer look at some of OUE Commercial Reit' s assets to see what' s on offer.
Its biggest asset is One Raffles Place, for which a global property consulting group is understood to have discreetly sussed out interest of potential buyers recently.
Market watchers believe the indicative pricing may be in the high-S$2,000-psf range.
The asset comprises two office towers - 62 storeys and 38 storeys - and a retail podium with a total net lettable area (NLA) of about 860,000 sq ft.
The development is on four land parcels with a mix of tenures - one plot with 841-year leasehold tenure (starting November 1985) and three plots with 99-year leasehold tenures (two starting from May 1983 and the third from November 1985).
OUE Commercial Reit has an indirect interest of 83.33 per cent in OUB Centre Limited (OUBC), which in turn has 81.54 per cent interest in One Raffles Place - resulting in the Reit having an effective 67.95 per cent interest in the property.
Assuming a guide price of S$2,950 psf, OUE Commercial Reit' s effective interest would amount to S$1.72 billion. OUBC' s interest in the property was valued at the end of last year at S$2,667 psf.
Talk in the market is that following an exercise conducted by the property consulting group to find a buyer for OUE Commercial Reit' s stake in One Raffles Place, some parties are being shortlisted. Potential buyers, however, have expressed interest to take the entire property, and not just the Reit' s stake.
The other owners of the development include United Overseas Bank, UOL Group and Khattar Holdings and efforts are probably underway to see if they would like to divest their interests in the asset alongside the Reit.
Yield play
Assuming a price of S$2,950 psf, full interest in the asset would amount to S$2.53 billion. The building' s current gross floor area (GFA) of about 1.29 million sq ft is already slightly over 17 times the site area. This exceeds the 15.0 gross plot ratio for the commercial-zoned site under the Urban Redevelopment Authority' s Master Plan 2019. This site also does not come under the URA' s CBD Incentive Scheme. In short, there is not much redevelopment potential for One Raffles Place.
Nevertheless, given its prime location next to Raffles Place MRT Station, the property may appeal to core investors looking at yield play, such as insurance companies, pension funds, sovereign wealth funds and core funds managed by private equity fund managers. The property is less likely to draw a buyer eyeing significant value-add potential by refurbishing the asset, or even redeveloping it.
Typical office floor-plates at One Raffles Place are relatively small at about 9,000 sq ft for Tower 1 (completed in 1988) and 11,000 sq ft at Tower 2 (completed in 2012). Major tenants in the development include flexible space operators Regus (in Tower 2) and Spaces and Virgin Active (both in the retail podium).
Potential buyers looking for a more modern office asset may prefer OUE Bayfront in Collyer Quay. It has larger floor plates of around 26,000-30,000 sq ft and stands on a site that still has a balance tenure of 86 years. Its committed office occupancy as at June 30 was 100 per cent.
The development' s NLA of 399,824 sq ft comprises predominantly offices and a 5 per cent retail component. Bank of America Merrill Lynch is an anchor tenant. OUE Bayfront was valued at S$2,954 psf or S$1.18 billion at the end of last year.
The trust' s asking price could be at least S$3,300 psf, suggest observers.
The other assets in the Reit' s portfolio include Lippo Plaza in Shanghai, Mandarin Gallery and the Mandarin Orchard Singapore hotel in Orchard Road. The hotel will be rebranded to Hilton after a revamp.
Beyond the impact on the Riady family, if OUE Commercial Reit does sell even a couple of its assets, it would help liven up the current moribund market for big-ticket property transactions in Singapore.
OUE C-Reit posts H1 DPU of 1 Singapore cent retains S$13.8m for ' financial flexibility'
OUE Commercial Real Estate Investment Trust (C-Reit) on Thursday posted a distribution per unit (DPU) of one Singapore cent for the half-year ended June 30, 40.5 per cent lower than a year ago.
It said it had retained S$13.8 million of distribution to " preserve financial flexibility" amid the Covid-19 pandemic.
OUE C-Reit has a semi-annual distribution policy unitholders can expect the distributions to be paid on Sept 11.
Revenue for the second quarter had risen 23.9 per cent on the year to S$64.3 million, resulting in a 32.4 per cent year-on-year (y-o-y) increase in H1 revenue to S$142 million.
Net property income for Q2 increased 23.7 per cent on the year to S$50.4 million, due to the contribution from the merger with OUE Hospitality Trust last year, although this was partially offset by rental rebates to tenants.
For H1, net property income thus rose 33.4 per cent y-o-y to S$112.5 million.
However, the Reit' s manager said that while the Covid-19 situation has largely stabilised in Singapore and China for now, it will continue to monitor the situation, and is prepared to introduce further initiatives to support OUE C-Reit&rsquo s tenants as required.
It also noted " protracted containment measures and weaker global conditions" . The manager has thus opted to retain S$13.8 million of distributions to " preserve financial flexibility" .
In Q2, OUE C-Reit' s hospitality segment - contributed by the merger with OUE Hospitality Trust - recorded S$16.9 million in revenue. Revenue per available room (RevPAR) for the segment was 71.7 per cent lower y-o-y in Q2 at S$55, due to travel restrictions arising from the pandemic.
In the commercial segment, revenue declined 8.6 per cent on the year to S$47.4 million. The Reit has committed about S$13.8 million of rental rebates to date, excluding an estimated S$19.9 million of support from the Singapore government, comprising property tax rebates and mandated share of relief for small and medium-sized enterprises.
Committed occupancy for the commercial segment declined 2.7 percentage points (ppt) quarter on quarter to 91.6 per cent as at June 30.
The Singapore portfolio' s committed office occupancy slid 2 ppt quarter on quarter to 93.7 per cent in Q2, as leasing momentum was dampened by the weak economic outlook and the suspension of leasing activities during the " circuit-breaker" period, the Reit said.
The Singapore office properties have continued to achieve positive office rental reversions of 6.8 per cent to 14.8 per cent during Q2, however.
OUE C-Reit manager CEO aims to inspire people to new heights
American poet Maya Angelou once famously said, " Make a mark on the world that can' t be erased" - and banking and finance veteran Tan Shu Lin aspires to do just that.
" I would like to be a successful leader who inspires people to reach their fullest potential," says the chief executive of the manager of OUE Commercial Real Estate Investment Trust (OUE C-Reit).
" At the end of the day, it' s not only about growing the Reit in terms of assets and cash flows, but also the intangibles, such as grooming talent in the team, and fostering a strong, positive corporate culture."
The Bachelor of Arts graduate with first-class honours in economics from the University of Portsmouth began her career in various financial institutions.
In 2001, she entered property via Ascendas Funds Management, the manager of Ascendas Real Estate Investment Trust (A-Reit) and the second Reit on Singapore Exchange when it listed in 2002.
" That brought me into a corporate environment where real estate, financial services and financial markets converged," recalled Ms Tan, who spent six years at A-Reit, rising to head of capital markets.
After a stint at UBS, she rejoined A-Reit in 2008 and became responsible for strategic direction, as well as operational and capital structure.
Fast forward to October 2013, and her appointment to helm the manager of OUE C-Reit meant Ms Tan, 47, had come full circle.
" Just like in any corporate set-up, it' s a marathon, not a sprint," she said. " We start with an idea, and develop it to fruition. In everything that you do, you keep the long-term perspective in mind."
Ms Tan says the past six years have been the most satisfying of her career. " That' s when I oversaw the fourfold expansion of OUE C-Reit' s assets, growing it from $1.6 billion to $6.8 billion, following several corporate actions, including a merger with OUE Hospitality Trust."
Completing the merger - spanning nine months - was a high point, but it proved to be a long, complicated journey.
LONG-TERM PERSPECTIVE
Just like in any corporate set-up, it' s a marathon, not a sprint. We start with an idea, and develop it to fruition. In everything that you do, you keep the long-term perspective in mind.
MS TAN SHU LIN, on how her appointment as chief executive of the manager of OUE C-Reit means she has come full circle.
The merger proposal was a bold, unprecedented move. " Because it involved two different asset classes, there were a myriad of questions over whether we could carry it off and how investors would react," Ms Tan notes.
" On many occasions, there were no prior examples for us to fall back on. It all boiled down to just soldiering on to try to make it happen."
That is all now in the rear-view mirror. " We' re really savouring the fruits of our labour, and the benefits are obvious.
" We have a much larger market capitalisation, increased trading liquidity, higher visibility on investors' radar, and more participation during our roadshows."
The Reit' s increased size makes it better able to access capital, allowing it to undertake larger transactions and renovations.
Following its merger with OUE Hospitality Trust, the Reit now owns seven properties across the commercial and hospitality segments in Singapore and Shanghai, comprising about 2.2 million sq ft of prime office and retail space, as well as 1,640 upscale hotel rooms.
Assets here include the Mandarin Gallery mall in Orchard Road, the Mandarin Orchard Singapore hotel, One Raffles Place, OUE Bayfront and OUE Downtown Office.
In Shanghai, it owns Lippo Plaza.
With the future of land use focusing on mixed-use projects, a portfolio that has exposure to more than one property segment offers an edge. " One sector can mitigate the downturn from another, as we have seen with Covid-19," Ms Tan notes.
While the supply of new Grade A office space remains limited in the medium term, both occupancy and office rents are expected to take a hit, given the economic climate.
The 43 per cent year-on-year slump in international visitor arrivals in the March quarter prompted OUE C-Reit to implement cost-containment measures and seek alternative sources of demand.
These include guests on self-isolation stays, the front-line healthcare workforce, as well as workers affected by border shutdowns.
The minimum rent component of $67.5 million a year under the master lease arrangements of its hotels, offers protection, while government assistance such as wage and tax reliefs provide an added buffer.
" Covid-19 has impacted everyone. But the question is how do you use the downtime, and (how) to future-proof yourself?" Ms Tan says.
OUE C-Reit plans to rebrand Mandarin Orchard Singapore as Hilton Singapore Orchard, with new income-generating spaces.
" The domestic hotel segment will likely remain weak until the first half of next year. This makes it ideal for us to undertake asset enhancement initiatives... so as to catch the return wave in 2022."
In China, the Reit will focus on retaining tenants and keeping occupancy rates stable.
" Since the end of April, after the Chinese economy and businesses restarted, occupancy levels have hovered above 80 per cent," Ms Tan adds.
While the trust is focused on managing the fallout from Covid-19 in the near term, it is also keeping an eye on medium-to longer-term growth targets.
Office assets will still be OUE C-Reit' s mainstay as this defensive segment of the real estate market offers more resilient cash flow than hospitality or retail.
But local opportunities remain limited, Ms Tan admits. " Most Grade A offices in Singapore are already owned by other Reits or in institutional hands - that' s why we need to spread our wings abroad."