OUE REIT (SGX:TS0U
) has announced that it is proposing to divest Crowne Plaza Changi Airport (CPCA) for $500 million. The proposed divestment represents an 1.3% premium to the average of two independent valuations.
OUE REIT is divesting this hospitality asset to a joint venture between its sponsor, OUE Limited, and Tokyo Century Corporation.
After considering the divestment cost of $1.5 million, the net cash proceeds from this divestment are expected to be around $498.5 million. Subject to completion, OUE REIT’s manager intends to distribute $20.0 million of net cash proceeds to unitholders evenly as special distributions over the first two years following the completion of the proposed divestment.
Assuming the proposed divestment (including the termination of the master lease agreement) was completed on Jan 1, 2025, OUE REIT’s distribution per unit (DPU) is expected to increase by 5.8% on a FY2025 pro forma basis after the special distribution, with pro forma distribution yield hitting 6.6%.
Assuming the net cash proceeds of $498.5 million are used to repay debt, aggregate leverage would fall to 36.6% from 41.5%. The REIT manager says that the increased debt headroom will provide the REIT more flexibility to optimise and rebalance its capital structure.
Upon completion of the proposed divestment, approximately 94.3% of OUE REIT’s asset under management will be located in Singapore.
“OUE REIT has a strong track record of disciplined capital allocation, recycling capital from mature assets into higher-quality opportunities. The proposed divestment of CPCA builds on this approach by further enhancing our financial flexibility to pursue value-accretive opportunities, strengthen the portfolio and deliver sustainable returns to Unitholders. This is another step in OUE REIT’s Phase 3 Value Creation journey, as we continue to optimise the portfolio and recycle capital with discipline,” says Han Khim Siew, CEO of the manager.
OUE REIT will be seeking unitholders’ approval for this proposed divestment at an extraordinary general meeting in 3Q2026, with divestment completion expected by 4Q2026.
As at 9.20am, units in OUE REIT are trading flat at 35.5 cents.
