Victoria's Secret to spice up OUE Hospitality Trust's earnings

It has signed a 10 year lease agreement with OUE.

Although OUE Hospitality Trust’s retail segment income is impacted in 2016 by the lower rental contributions due to longer fit-out periods by the landlord, the strategy to sign strong tenants like Victoria's Secret for longer lease periods will benefit the group through enhanced income stability in the long run.

According to CIMB Research, Victoria's Secret is to open in 4Q16. Given this and the refurbishment on 430 rooms of Mandarin Orchard Singapore, the group can expect boost in earnings. It could be further uplifted with the higher contributions from Crowne Plaza Changi Airport extension, which managed to post a 52.3% gain in gross revenue to $6.1m in 3Q16.

"We expect sequential quarterly DPU to improve heron, driven by inorganic contribution from Crowne Plaza Changi Airport Extension and completion of retail fit-outs. Michael Kors and Victoria's Secret have signed long lease periods of seven and 10 years, respectively," CIMB noted.

The brokerage firm added, "Chiefly, the opening of MK and Victoria's Secret in Mandarin Gallery should plug the income vacuum experienced in 1H16."

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