2018 First Quarter Financial Results
(10 May 2018)

Financials Archive

Statements of Total Return

Statements of Financial Position

Review of Performance

1Q2018 VS 1Q2017

1Q 2018 net property income of S$35.3 million was 1.8% higher compared to S$34.6 million achieved in 1Q 2017. This was due mainly to lower maintenance expenses and utilities cost in the current reporting period.

Other income was S$0.3 million higher in 1Q 2018 compared to 1Q 2017, due to higher income support drawdown in relation to OUE Bayfront from the Sponsor.

Net finance cost decreased S$2.1 million year-on-year mainly attributable to lower yearon-year IRS’s fair value loss and debt establishment cost. Both have no DPU impact. This is partially offset by higher interest cost of S$0.9 million, which was a result of higher level of borrowings.

Consequently, total return for 1Q 2018 increased 24.7% to S$16.2 million, compared to S$13.0 million in 1Q 2017.

Commentary on the competitive conditions of the industry in which the Group operates and any known factors or events that may affect the Group in the next reporting period and the next 12 months


Based on advance estimates by the Ministry of Trade and Industry (“MTI”), Singapore’s 1Q 2018 GDP growth was 4.3%, higher than 4Q 2017 growth of 3.6% and ahead of its forecast for 2018 GDP growth of between 1.5% to 3.5%. The manufacturing sector grew by 10.1% YoY, with the largest contribution from the electronics and precision engineering clusters. The services sector expanded by 3.8% YoY, supported by finance & insurance and wholesale & retail trade sectors.

According to CBRE, 1Q 2018 islandwide net absorption for office space was 149,444 sq ft. Core CBD office occupancy edged up 0.3 ppt QoQ to 94.1% as at 1Q 2018, with demand supported by co-working operators, oil & gas firms as well as the insurance sector. CBD Grade A office rents continued to rise, increasing 3.2% QoQ to S$9.70 psf per month, on firmer rental expectations as pre-commitments at upcoming developments continue to be healthy.

Depending on the pace of recovery in spot rents in the Singapore CBD, negative rental reversions may potentially continue into 2018, albeit at a slower pace than that experienced in 2017. However, this is mitigated as only 5.6% of OUE Bayfront’s gross rental income is due for renewal for the rest of 2018 and its rental revenue has downside protection from the income support arrangement. At One Raffles Place, its 2018 revenue base would have improved due to the notable increase in committed office occupancy achieved in 2017, thereby mitigating potential negative reversions in 2018.


China’s economy grew 6.8% in 1Q 2018, ahead of the official target of around 6.5%, supported by strong consumer demand and robust real estate investment. Retail sales growth continued to strengthen on the back of urban wage growth, while the export sector posted strong growth ahead of the imposition of new tariffs by the US. Growth momentum is expected to slow in 2018, however, as authorities are expected to act to curb financial risks from excessive debt growth, and rein in pollution by heavy industries as the government continues to encourage more sustainable and higher quality growth.

According to Colliers International, Shanghai CBD Grade A office occupancy as at 1Q 2018 rose 0.4 ppt QoQ to 86.5%, supported by strong demand of 239,000 sq m in the quarter. Consequently, Shanghai CBD Grade A office rents as at 1Q 2018 increased 0.4% QoQ to RMB10.26 psm per day. In Puxi, Grade A office occupancy as at 1Q 2018 improved 0.5 ppt QoQ to 86.2%, while rents increased 1.7% QoQ to RMB 9.31 psm per day.

A significant amount of new office supply is expected to enter the Shanghai market over the next two years, before easing in 2020. Nevertheless, firm economic growth is expected to continue to support healthy demand from the finance and technology sectors in Shanghai and underpin occupancy as well as rental rates.