OUE C-REIT NPI falls 20.3% YoY for H2 2021
The divestment of 50% of OUE Bayfront highly affected the result.
OUE Commercial REIT (OUE C-REIT) released its results for the second half of 2021, which revealed a net property income (NPI) of $95.2m for the second half of 2021, representing a decrease of 20.3% year-on-year (YoY).
This was mainly due to the deconsolidation of OUE Bayfront's performance after the divestment of a 50% interest in the property on 31 March 2021.
The NPI decrease was partially offset by lower rental rebates and property expenses. Including the drawdown of income support at OUE Downtown Office, share of joint venture results of OUE Bayfront and lower interest expense.
As of 31 December 2021, the valuation of OUE C-REIT’s properties was approximately $6.0b, representing a YoY decrease due to the OUE Bayfront divestment. The lower valuations for the hospitality and retail segments of the portfolio were mitigated by higher valuations for the Singapore office properties which saw fair value increases ranging from 0.2% to 7.5% YoY. Consequently, the net asset value per unit was $0.57.
OUE C-REIT Manager CEO Han Khim Siew said, "We are pleased to report a creditable set of results for FY 2021. Post the divestment of OUE Bayfront, the aggregate leverage has improved to 38.7%, with the weighted average cost of debt stable at 3.2% per annum, which places OUE C-REIT in a strong position to pursue value-adding opportunities for future growth. Even as business operations remained challenging, we continue to proactively manage our capital structure. In securing OUE C-REIT's maiden $540m sustainability-linked loans in October, we not only refinanced debt due ahead of maturity but also lengthened the average term of debt to three years, resulting in a well-spread out debt maturity profile with no more than 24% of the debt due in any financial year."
OUE C-REIT said the Singapore economy will remain on the recovery path in 2022 underpinned by the recovery in the global economy. However, significant uncertainties remain, including supply chain disruptions, rising business costs due to inflation, and the risk of emergence of new COVID-19 variants which may result in further business disruption.
The manager said it will continue to calibrate its leasing strategy to adapt to potential shifts in occupier demand so as to optimise the performance of OUE C-REIT's portfolio whilst maintaining a focus on prudent capital management to maintain financial flexibility.