OUEHT’s trustee recently entered into a facility agreement for a grant of a S$270.0m three-year senior secured transferable term loan facility. The Facility will be used to partially refinance the existing $630m syndicated facility and/or to partially finance the acquisition of the extension of Crowne Plaza Changi Airport, Singapore.

In addition, OUEHT announced that S$228.0m out of S$238.6m of proceeds from the underwritten and renounceable rights issue have similarly been used to partially prepay a term loan of S$293m under the existing facility agreement. We see this successful refinancing as a positive indicator of the trust’s capital management.

Nonetheless, OUEHT’s gearing currently stands at 38% following the rights issue, leaving it limited headspace to take on debt-funded acquisitions. Maintain HOLD with an unchanged fair value estimate of S$0.67.

Source: OCBC Research - 4 Jul 2016