A day after SPH REIT commenced trading, OUE Hospitality Trust (OUE HT) is next in line and will start trading at 2pm today. Given that the two companies have moved ahead with the IPOs, it could suggest greater confidence in the stock market, as reported by the Wall Street Journal. Chong Kee Hiong, chief executive of OUE HT said that “the company decided to launch the IPO now because it saw ‘some stability’ in the market although it expected volatility to continue.
 
Macquarie is listing call warrants over OUE HT, the warrants will start trading today at the same time as the shares.

OUE to raise S$600 million
Hotel and property group OUE is raising approximately S$600 million in this IPO and OUE HT will be priced at $0.88. Mr Chong said that the offering is priced at the low end of the range “to enable easier gains for investors”. At the IPO price, the projected yield of the REIT will be 7.46% for the year of 2014.
 
OUE Hospitality Trust is a stapled security consisting of OUE Hospitality REIT (OUE H-REIT) and OUE Hospitality Business Trust (OUE H-BT). According to the final prospectus, OUE H-BT will be dormant as at listing date. OUE H-REIT initial asset portfolio consists of Mandarin Orchard Singapore and Mandarin Gallery and hence investors are given the opportunity to invest in properties which are “strategically located in the heart of Singapore’s renowned shopping district of Orchard Road”. 
 
Managers of OUE HT intend to achieve growth for OUE HT by:
Optimising assets and delivering operational excellence. The manager will work jointly with the Master Lessee, Hotel Manager and Property Manager to enhance operational performance to deliver disciplined growth and maximise hotel and retail revenues
 
Growth through acquisitions. OUE HT has a strong, reputable and committed Sponsor, OUE which is a diversified real estate owner.
 
Active capital and risk management. The manager will secure diversified funding sources so as to maintain a strong balance sheet.
 

Source: Macquarie Research - 25 Jul 2013