OUE Commercial Real Estate Investment Trust (OUECT) announced that it will be redeeming 75m convertible perpetual preferred units (CPPUs) at the issue price of S$1 for each CPPU. These CPPUs were previously issued to OUECT's sponsor as part payment of the purchase consideration for OUECT's stake in One Raffles Place. 475m CPPUs will remain outstanding after the above redemption on 2 Nov 2017.

The Manager notes that this move is part of its proactive capital management strategy and to mitigate dilution in DPU from potential conversion of CPPUs into units of OUECT in the future. The redemption of CPPUs will largely be funded by OUECT's existing loan facilities.

We maintain HOLD but place our fair value rating of S$0.68 under review.

Source: OCBC Research - 3 Oct 2017