OUE is a real estate owner, developer and
operator with diversified asset exposure to
prime office, hotel, retail and residential
segments
A special 1-for-6 distribution-in-specie of OUE H-Trust (or S$0.15 dividend and 6.3%
yield) is in sight following the listing of OUE C-REIT. A further 8% dividend payout
is a possibility following the example of OUE HT. OUE has established a capital
recycling platform to enable the parent to focus on higher-value development
activities while simultaneously deriving a stable income stream through its stakes
in its trusts and property management platform. Maintain BUY with a lower target
price of S$3.04 (from S$3.12), based on a 30% discount to our revised RNAV of
S$4.34/share (post 21 cent dividend).
WHAT'S NEW
• Successful listing of OUE Commercial REIT (OUE C-REIT) with the REIT closing
yesterday at S$0.80, unchanged from the IPO price.
STOCK IMPACT
• 6.3% special dividend in sight. OUE has announced a
one-for-six distribution in specie
of OUE Hospitality Trust (OUE H-Trust), equivalent to S$0.15 dividend or 6.3% yield,
contingent on the divestment of OUE Bayfront to OUE Commercial REIT. OUE will retain
33-35% of OUE H-Trust post divestment, down from 45% currently. With the successful
divestment and listing, OUE will likely announce the special dividend within the next
quarter.
• 4.2% special cash dividend a possibility. OUE could also announce a further special
cash dividend of close to S$0.10/share (or 4.2% yield) assuming it distributes 45% of its
net cash proceeds from the IPO, following the potential full repayment of existing debt of
US$376.6m. This is similar to the special dividend post-listing of OUE Hospitality Trust.
• Another 3-4% yield from potential distribution-in-specie of OUE C-REIT units. In
addition, similar to the distribution-in-specie of OUE H-Trust units, OUE may also choose
to distribute OUE C-REIT units to enable shareholders to benefit from the ownership and
returns from the separate entities. A distribution-in-specie to reduce OUE's current 45-
50% stake in OUE C-REIT to a 35% stake could yield a further 3-4% yield. This
distribution is unlikely in the near term due to the six-month lock-up for OUE C-REIT, but
could be a medium-term catalyst for OUE.
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