OUE C-REIT's DPU down 15.4% to 1.2 cents

A $150m private placement diminished the company’s DPU.

Despite higher property occupancy, OUE Commercial REIT (OUE C-REIT)’s distribution per unit (DPU) dropped by 15.4% YoY to 1.15 cents.

In a report by DBS Equity Research, a recent $150m private placement diluted the company’s DPU. On an undiluted basis, the DPU would have remained flat YoY.

Company revenue dipped 3.2% to $44.2m despite flat rental income, no thanks to the absence of pre-termination compensation, a one-off income recognised last year.

Net property income (NPI) went down by 1.3% to $34.8m, because of savings from lower property tax expenses this quarter.

Borrowing cost also fell 18.2% to $11.3m, thanks to partial debt repayment after the private placement.

Meanwhile, portfolio occupancy increased for the fourth consecutive quarter, rising to 96.4% from 95.8% at the previous quarter.

OUE Bayfront saw a dip of 1.1ppt to 98.9%, One Raffles Place hiked 2.0 ppt to 95.0%, whilst Lippo Plaza rose to full occupancy by 4.2 ppt.

The increase at One Raffles Place and Lippo Plaza was driven from expansion of tenants mostly from the IT and finance industries that take up around 5,000 to 6,000 sqft.

DBS analyst Mervin Song said, “The improvement in occupancy is commendable as the broad office markets of Singapore and Shanghai still experienced occupancy decline over the quarter.”