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OUE Commercial Trust Strengthens Its Portfolio Post-Meger

Updated: Nov 25, 2019

Key Highlights:

  • OUE Commercial Trust (SGX: TS0U)'s DPU 3Q19 grew 43.6%

  • The annualised yield and price to book ratio are 6% and 0.87 respectively

1. Dividends

Net property income grew 54.8% to $50.1m. This was mainly contributed by the merger with the OUE Hospitality Trust. Besides, the REIT also see an average of 8.1% to 14.1% rental reversion in the last quarter.

The annualised yield is 6%. Both the DPU and the price have been trending downwards, this is not a good sign for the REIT from the fundamental standpoint.

2. Portfolio

The portfolio leverage is currently at the healthy side of 40.5%. The interest cost is at 3.5%, with 73.4% of its loan under fixed rate.

It is currently trading at a price to book ratio of 0.87.

3. Growth Catalyst

Moving forward, potentially there are some growth catalysts:

  1. The Singapore commercial portfolio is expected to improve in 2020, while the Shanghai portfolio is to recover after 2021 after supply begins to ease

  2. The merger with OUE Hospitality Trust has made the REIT stronger. It owns seven high quality assets with an AUM of $6.8b. The larger capital base gives the REIT financial ability to acquire new assets as well as conducting asset enhancement initiatives

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