OUE IPO Debuts

oue hospitality trust logo OUE Hospitality Trust (SGX: SK7) made its trading debut yesterday at 2pm with an opening price of S$0.885 a share. It was a marginal 0.6% increase over its IPO price of S$0.88.

It hit an intra-day high of S$0.89, 1.1% higher than its offer price before closing flat at $0.88. Although its performance is partially affected by the weak market sentiment, interest for this REIT is still strong with 80.5 million shares changing hands.

At the closing price of $0.88, OHT will be expected to pay out annualised 2013 distribution yield of 7.36% and projected annualised yield of 7.46% in FY 2014.

OUE Hospitality Trust is a separate listing group from Overseas Union Enterprise Ltd (SGX: LJ3). Its initial portfolio comprises of two properties – Mandarin Orchard Hotel and Mandarin Gallery along Orchard’s shopping district. The IPO was 19.1 times subscribed by retail investors and garnered strong support from institutional investors and alike.

According to the IPO prospectus, OHT is embarking on a 3 prong approach for its growth plans. It will be enhancing organic growth and commanding higher rates through ongoing refurbishments. Lastly, the more exciting point is the potential doubling in hotel portfolio size (by number of rooms) if the sponsor’s properties are offered to OUE Hospitality Trust. The acquisition pipeline can be seen below:

OUE IPO debut

Going forward, the outlook of the global economy can be a good gauge the on how well retail and hospitality trusts will fare. This is because how well hospitality and retail trusts perform usually go hand-in-hand with the number of tourist arrivals and their level of spending.

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