Although OCBC analyst Deborah Ong believes that OUEHT’s current unit prices are not attractive enough to warrant a “buy” call, it remains most positive on the REIT relative to other hospitality REITs under its coverage given the momentum from its recent RevPAR outperformance at Mandarin Orchard Singapore (MOS), the longer-term prospects for CPCA with Changi Airport’s Terminal 4 and 5, and the REIT’s 100% Singapore exposure when local hotel room supply injection dries up in 2018.
Risks to note include the fall-off in income support for CPCA from 4Q17 onwards.
Maintain “hold” with a fair value estimate of 82 cents.
As at 10.48am, units in OUEHT are trading at 1 cent higher at 82 cents, giving it a yield of 6.2% based on FY18 forecast DPU of 5.1 cents.
