OUE Commercial REIT reported that its 3Q16 amount available for distribution and distribution per unit (DPU) increased 31.6% YoY and 29.4% YoY to S$17.2m and 1.32 S-cents, respectively, mainly due to the absence of One Raffles Place contributions (acquired in Oct 2015) in the same period last year and improved performances at OUE Bayfront and Lippo Plaza.

Management highlighted that, excluding contributions from One Raffles Place, the portfolio continued to show healthy growth in net property income which similarly grew 8.5% YoY. We judge this set of results to be broadly within expectations and 9M16 distribution now forms 81.4% of our full year forecast. OUECT’s overall portfolio occupancy remained stable at 94.4% (versus 94.5% as at end 2Q16).

Maintain HOLD on OUECT with an unchanged fair value estimate of S$0.65.

Source: OCBC Research - 2 Nov 2016

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