OUE REIT provided 9M24 operational performance update, which was in line with our expectations.
Revenue and net property income were 75% and 73% of our FY24E estimates. 3Q24 revenue fell 1.3% year-on-year on lower contribution from the hotels. Net property income fell 3.7% due to upward revision of prior years’ property tax for the two hotels. Excluding this, NPI was 1.2% lower. Source: Company data, Beansprout research
Singapore office is the bright spot
Occupancy rate rose 0.2%-point quarter-on-quarter to 95.4%, compared with 1.7%-point decline to 92.2% for core CBD area. Rental reversions stayed elevated at 10.8% during 3Q24, through lower than 11.7% in 2Q24 and 12.6% in 1Q24. With more supply coming onstream, office rental growth is expected to slow. We expect a higher single-digit growth rate for OUE REIT as the expiring rent for 2004-2006 are still 14%-19% below current market rent of S$11.95 for Grade A office....