OUEHT

OUEHT: Free float market cap increased by 21% on 31 March after the 151.7m units dividend-in-specie. StanChart expects liquidity to improve from the current ~$0.68m/day, which could attract more investors. StanChart also thinks OUEHT could look to acquire Crowne Plaza Changi Airport, last valued at $291m, from OUE in the next 6-12 months. Given OUEHT”s current gearing of 32%, a fully debt-funded acquisition that ould raise leverage to ~41%. Depending on the funding structure, the house estimates a potential acquisition at 4.5% NPI yiled could be up to 4% accretive to distributions. OUEHT had also announced the establishment of a USD 1b MTN program. StanChart flags OUEHT has having the highest 2014e DPU yield, compared to 7.3% for hospitality SREITs. StanChart has an O/PF on OUEHT with TP of $0.95.