OUE

OUE: Counter surge at least 5% yesterday, after the grp announced that it will seek shareholder approval to divest its OUE Bayfront asset to its commercial REIT, and proposed a dividend in specie of OUE Hospitality Trust (OUEHT) on the basis of 1 unit of OUEHT for every 6 OUE shares held. The distribution works out to a distribution of 14.7c/sh, or c.6.1% yield. Recall that following the listing of OUEHT, OUE paid out a 20c/sh special dividend. Combined with the dividend in specie, this would imply a payout of 78% of the net proceeds from the REIT listing. Deutsche believes that the successful listing of its commercial REIT could also be followed by special dividends given management’s track record. Further value unlocking moves and shareholder returns could narrow OUE’s wide (45%) discount to NAV. Overall, the house maintains its Buy recommendation with $2.98 TP.