OCBC Investment Research 2015-06-30: OUE Commercial REIT - Maintain BUY with FV estimate of S$0.88 under review

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OUE Commercial REIT: Rights issue to acquire indirect interest in One Raffles Place 

• OUE Commercial REIT (OUECT) announced a rights issue exercise to acquire an indirect interest in One Raffles Place from its sponsor OUE Limited. 
• Nine rights units for every 20 existing units will be issued at a price of S$0.555 per rights unit, and the ex-date of the rights exercise will be on 3 Jul 2015. 
• The rights issue will raise ~S$218.3m, and together with a debt drawdown of S$399.3m and a proposed issuance of S$550m of convertible perpetual preference units (CPPUs) to the sponsor, will be utilized to acquire from the sponsor an indirect interest of between 75.0% and 83.33% in OUE Centre Limited which owns 84.54% of the beneficial interest in One Raffles Place. 
• The total cost of the proposed acquisition will be between S$1,062.2m to S$1,178.3m. 
• We understand that the sponsor has undertaken to fully subscribe for its pro rata entitlement of rights units. 
• We will speak with management about this development later this morning and in the meantime, maintain BUY with our fair value estimate of S$0.88 under review. 

(Eli Lee)

Source: http://www.ocbcresearch.com/