OUE

OUE: ($2.56) Exploring opportunities for a commercial REIT listing OUE has announced that it could be exploring the listing of a Commercial REIT, which could initially consist of its OUE Bayfront property, an 18-storey office building at Collyer Quay, alongside with its ancillary properties which comprises a tower building used for F&B purposes and a link bridge with retail shops. Current occupancy rate of OUE Bayfront stands at 93.3%. The company adds that other commercial properties owned by Lippo China Resources would also be up for consideration to divest into the proposed REIT. OUE note that key details of the proposed REIT are currently under review and the REIT’s establishment and listing would be subjected to market conditions, with no certainty that it will or will not proceed. We recall just last week, Lippo Group’s founder and Chairman, Mr Mochtar Riady said that the group aims to seek real estate acquisitions in the US, adding that overseas deals will be handled by OUE, which is headed by his son, Stephen Riady. In line with earlier guidance to investors, OUE aims to double its asset base to $10b over the next three years. Early this year, OUE made its first foray into the US with the acquisition of US Bank Tower in Los Angeles for US$367.5m. Going forward, the younger Riady expects future investments to be of similar scale, and is targeting California, New York and Miami for possible deals. Overall, OUE (Buy, TP $3.40) remains one of Maybank-KE’s top property pick in Singapore, as the group levers up for expansion and seeks to diversify its predominantly Singapore portfolio. At $2.56, OUE trades at a steep 50% discount to Maybank KE's RNAV of $5.10