OUE is a diversified owner, developer and operator of real estate in Asia. It manages landmark assets in the commercial, hospitality, retail and residential sectors. It is also the sponsor of OUE Commercial Real Estate Investment Trust (OUECT SP, Not Rated). In 2017 and 2018, OUE expanded into the healthcare sector with the acquisition of OUE Lippo Healthcare Limited (IHC SP, Not Rated) and First REIT Management Limited (FIRT SP, Not Rated). In 2019, it entered the consumer sector with OUE Restaurants. Singapore is its largest revenue contributor, at 83% of FY20 revenue.
OUE has three revenue sources: investment properties, development properties and hospitality. Before Covid, investment properties and hospitality were stable businesses, contributing about S$500mn to OUE’s toplines. The pandemic caused FY20 revenue from all the segments to fall YoY, with its hospitality, development-property and consumer divisions bearing the brunt. Revenue from hospitality declined 64.6% YoY as room occupancy and banquet sales plunged because of travel restrictions and Covid-19 measures. Development-property contributions fell 59.9% YoY, pertaining to the completion of certain OUE Twin Peaks units sold under deferred payment schemes. Revenue from its consumer division sank 50.8% YoY, following lower revenue from OUE Skyspace L.A., which ceased operations in March 2020.
Singapore remained OUE’s largest revenue contributor at 83% of its FY20 revenue. Investment properties formed 50% of the topline. Development properties formed 26%. Historically a large recurring contributor, hospitality revenue comprised 16%. Revenue from healthcare was 6% and consumer, 2%. OUE provided a total of $19.9mn of rental rebates and assistance to eligible tenants affected in FY20.
Topline weakness persisted in 1H21, with revenue down 50% YoY. Revenue from investment properties declined 24% YoY due to an absence of contributions from US Bank Tower and lower contributions from OUE Bayfront after their divestments in September 2020 and March 2021 respectively. Hospitality revenue fell 41%, reflecting a full half-year impact of travel restrictions and Covid-19 measures put in place by the Singapore government since March 2020. Revenue from development properties was only S$0.2mn, due to the absence of completion of OUE Twin Peaks units sold under its deferred payment scheme in 1H21. As Singaporeans are progressively vaccinated and Covid-19 measures ease, hospitality’s outlook should improve from 2H21.