Staff Reporter
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The firm expects Crowne Plaza Changi Airport’s divestment by 30 October.
OUE Real Estate Investment Trust reported growth in the third quarter (Q3), with net property income (NPI) rising 4.6% year on year (YoY) to $59.6m and revenue rising 3.1% to $72.6m.
Under Phase 3 Value Creation Journey, the firm said its portfolio diversification drove stronger NPI and revenue, whilst capital reallocation reduced finance costs by 12.4% YoY.
Distribution income from OUE Bayfront, held via a joint venture, amounted to $3.6m,
whilst the 180 George Street is recycled to $1.6m in distribution income.
Crowne Plaza Changi Airport is expected to be divested by 30 October.
Under the commercial segment, revenue declined 2.8% YoY to $42.4m and NPI fell by 1.5% YoY to $42.4m, which the firm attributed to tenant transition at the OUE Downtown Office.
Still, the figures show a 4.6% rental reversion for office lease renewals, with committed occupancy and average passing rent at 91.2% and $11.06 per square foot (psf), respectively.
OUE Bayfront will convert more than 22,600 square feet of prime office space by Q1 2027, whilst downtown office is extending 49,000 sq ft of leased space by Q4 2027 to support tenant mix optimisation and phased backfilling strategy ahead of 2028 supply influx.
Mandarin Gallery saw 5.9% rental reversion as committed occupancy rose by 2% and average monthly rent remained at $22.94 psf.
The hospitality segment surged by 12.6% in revenue and NPI, amounting to $30.3m and $27.6m, respectively. Revenue per available room (RevPAR) also rose by 8.2% YoY to $302.
OUE attributes the strong performance to leisure demand, corporate account growth, and refreshed guest offerings.
The firm’s capital management led to a stabler average cost of debt at 3.6% per annum, with a debt maturity profile of 2.9 years.
Aggregate leverage is at 42.1%, but the firm estimates that if loans were paid through airport divestment proceeds, the figures would decline to 37.1%.
Market forecasts remain favourable for the firm.
The Singapore core CBD office market remained resilient in Q3, according to CBRE. Occupancy is at 97.4%, whilst rents are up 2% quarter on quarter (QoQ) to $12.75, for the seventh consecutive quarter.
Against this backdrop, OUE expects the office market to create favourable landlord dynamics through stable rental demand and a constrained supply pipeline.
Under retail, Orchard Road is stable despite softer consumer spending and tourism, with prime retail rents up 0.4% QoQ to $39.05 psf monthly.
Performance is driven by leasing demand from food & beverage and fashion brands and landlords’ asset optimisation, said OUE. CBRE forecasts a 1% to 2% prime retail rent increase by the end of the year.
Meanwhile, despite fewer international arrivals by 1.7%, OUE expects hospitality demand to remain stable, supported by a lineup of marquee events such as the Formula 1 Singapore Grand Prix and major concerts by The Weeknd and BTS.
New hotel supply is expected to grow at a measured pace of 1.6% per annum between 2026 and 2028.
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