OUE Commercial Real Estate Investment Trust : C-REIT Announces 2H 2021 Distribution Of S$74.8 million, DPU Of 1.37 Cents

PRESS RELEASE

For Immediate Release

OUE C-REIT Announces 2H 2021 Distribution of

S$74.8 million, DPU of 1.37 cents

• FY 2021 distribution was S$142.0 million, translating to DPU of 2.60 cents and representing an increase of 7.0% year-on-year ("YoY")
• Average passing rents of Singapore office properties as of December 2021 were higher YoY, with OUE Bayfront hitting a high of S$12.49 psf
• Mandarin Gallery shopper traffic and sales improved to approximately 75% and 65% of pre-COVID levels respectively in December
• Overall hospitality segment RevPAR for 4Q 2021 increased 23.0% quarter-on- quarter ("QoQ") to S$113, supported by local staycation demand during the year-end holiday period and the gradual relaxation of border restrictions in Singapore
• Average term of debt lengthened to 3.0 years as at 31 December 2021 with only 7.6% of total debt due in December 2022; interest rate fluctuations mitigated by 72.4% of debt hedged into fixed rates

16 February 2022 - OUE Commercial REIT Management Pte. Ltd., in its capacity as manager (the "Manager") of OUE Commercial Real Estate Investment Trust ("OUE C-REIT"), announced net property income of S$95.2 million for the financial period 1 July 2021 to 31 December 2021 ("2H 2021"), representing a decrease of 20.3% YoY mainly due to the deconsolidation of OUE Bayfront's performance post the divestment of a 50% interest in the property on 31 March 2021 (the "Divestment").

The net property income 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, amount available for distribution was 11.2% lower YoY at S$64.2 million. With the

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release of S$5.0 million of distribution previously retained in FY 2020 to preserve financial flexibility, and partial distribution of divestment gain from OUE Bayfront of S$5.4 million, 2H 2021 amount to be distributed was S$74.8 million, translating to a DPU of 1.37 cents.

For the financial year ended 31 December 2021 ("FY 2021"), amount to be distributed was S$142.0 million with DPU of 2.60 cents. Based on OUE C-REIT's unit closing price of S$0.440 as at 31 December 2021, FY 2021 distribution yield was 5.9%.

OUE C-REIT pays out its distribution on a semi-annual basis. With the books closure date being Thursday, 24 February 2022, payment of 2H 2021 distribution can be expected on Wednesday, 30 March 2022.

Summary of OUE C-REIT's Group Results

(S$'000)	2H 2021	2H 2020	Change	FY 2021	FY 2020	Change
(%)	(%)
Revenue	116,338	149,998	(22.4)	249,884	292,007	(14.4)
Net Property	95,160	119,390	(20.3)	204,205	231,890	(11.9)
Income
Share of Joint	9,170	-	NM	13,236	-	NM
Venture Results
Amount Available	64,420	72,539	(11.2)	131,632	137,822	(4.5)
for Distribution(1)
Amount to be	74,820(2)	78,370(3)	(4.5)	142,032(2)	132,822(4)	6.9
Distributed
DPU (cents)	1.37	1.43	(4.2)	2.60	2.43	7.0

Notes:

NM: Not meaningful

1. Net of working capital requirements in relation to the hospitality segment
2. Release of S$5.0 million of distribution retained in FY 2020 and S$5.4 million capital gain distribution from divestment of OUE Bayfront
3. Release of approximately S$5.8 million from the S$10.8 million of distribution retained in 1H 2020
4. S$5.0 million of distribution was retained to preserve financial flexibility in view of uncertainties posed by the COVID-19 situation

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As at 31 December 2021, the valuation of OUE C-REIT's properties was approximately S$6.0 billion, representing a YoY decrease due to the Divestment. Excluding the Divestment, the valuation of OUE C-REIT's properties was stable YoY. 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, net asset value per Unit was S$0.57.

Mr Han Khim Siew, Chief Executive Officer of the Manager, 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 continued to proactively manage our capital structure. In securing OUE C-REIT's maiden S$540 million sustainability-linked loan in October, we not only refinanced debt due ahead of maturity but also lengthened the average term of debt to 3.0 years, resulting in a well-spread out debt maturity profile with no more than 24% of debt due in any financial year."

"With the authorities allowing 50% of employees to return to the office from January, we have seen an improvement in office leasing momentum. This bodes well for a continued recovery in Singapore office rents in 2022, which will underpin the performance of OUE C-REIT's high quality Grade A office properties," added Mr Han.

Commercial Segment - Resilient Portfolio

For 2H 2021, the commercial (office and retail) segment reported lower revenue and net property income of S$82.6 million (-29.0% YoY), and S$62.4 million (-29.8% YoY), respectively, due to the Divestment. Approximately S$2.3 million of rental rebates were provided in 2H 2021, a lower quantum than in 1H 2021 due to the gradual relaxation of safe management measures from 4Q 2021.

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In 4Q 2021, occupiers remained focused on space and cost efficiencies in their lease considerations, with the majority of activity comprising flight-to-quality and downsizing requirements due to hybrid working arrangements. Consequently, as at 31 December 2021, OUE C-REIT's Singapore office properties committed occupancy declined 1.4 ppt QoQ to 91.2%. Nevertheless, the average passing rents of all Singapore office properties were higher YoY as of December 2021, with OUE Bayfront's average passing rent hitting a high of S$12.49 per square foot ("psf") per month due to the successful renewal of an anchor tenant.

The continued cap on group sizes for dine-in and social gatherings in 4Q 2021 amidst the emergence of the Omicron variant weighed on retail leasing sentiment in Singapore. Consequently, Mandarin Gallery's committed occupancy declined 0.7 ppt QoQ to 86.7%, with committed occupancy including short-term leases at 94.3%. Nevertheless, supported by the year-end festive season, shopper traffic and tenant sales in December 2021 improved to approximately 75% and 65% of pre-COVID levels respectively.

On the back of strong leasing demand in Shanghai's Central Business District ("CBD") Grade A office market, Lippo Plaza registered a 2.7 ppt increase in committed occupancy to 91.8%. It was the second consecutive quarterly improvement, and outperformed the overall Shanghai Grade A office occupancy of 88.4%. Average office passing rent declined 0.8% QoQ to RMB9.00 per square metre ("psm") per day however, due to strong leasing competition arising from significant new supply in the market.

Hospitality Segment - Positioned to ride recovery

Hospitality segment revenue for 2H 2021 was S$33.8 million, which is the minimum rent under the master lease arrangements for OUE C-REIT's hotel properties. Net property income for the same period was S$32.7 million.

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Buoyed by local staycation demand during the year-end holiday period, Mandarin Orchard Singapore's revenue per available room ("RevPAR") in 4Q 2021 increased 43.9% QoQ to S$97. Crowne Plaza Changi Airport, which continued to serve the aviation segment in 4Q 2021, recorded a 13.0% QoQ increase to S$125 with the gradual relaxation of Singapore's borders during the quarter with its various Vaccinated Travel Lane ("VTL") arrangements. Consequently, the overall hospitality segment RevPAR for 4Q 2021 was 23.0% higher QoQ at S$113.

Despite manpower and cost challenges arising from the COVID-19 situation, the renovation works for Mandarin Orchard Singapore's re-branding has progressed largely on time, and within budget, with Hilton Singapore Orchard's relaunch opening scheduled for 1 March 2022. Throughout the ramping-up of operations, the minimum rent of S$45.0 million per annum under the hotel's master lease arrangement will provide income assurance to Unitholders of OUE C-REIT.

Prudent Capital Management

As at 31 December 2021, OUE C-REIT's total debt was stable at approximately S$2,257 million. Aggregate leverage was 38.7%, with the weighted average cost of debt remaining at 3.2% per annum. Approximately 72.4% of total debt is on a fixed rate basis, mitigating the potential impact of interest rate fluctuations.

In October, OUE C-REIT obtained its maiden S$540 million sustainability-linked loan for the refinancing of existing borrowings. Consequently, the average term of debt has lengthened to 3.0 years with only S$171 million or 7.6% of total debt due in December 2022. OUE C-REIT's debt maturity profile is also well-spread out with no more than 24% of debt due for refinancing in any financial year.

In line with the objective of delivering long-term sustainability in DPU, the Manager has elected to receive 50% of its management fees in cash with the balance in Units of OUE C-REIT for 4Q 2021.

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