Here are 2 possible scenarios in OUE's REIT listing dilemma

Current market conditions are getting trickier.

According to CIMB, current equity market conditions are making S-REIT listings trickier. OUE, which is eyeing REIT listing, may be facing some issues with the current market rout. Given this, CIMB noted two possible outcomes should OUE's REIT listing materialize or not.

Here's more:

REIT…
The selldown in S-REITs continues to push up the sector’s forward yields. SPH has announced that it will delay its REIT listing given the market rout.

We think that this situation may also present some issues for OUE’s proposed REIT listing. We believe that if management decides to go ahead, listing yields could come in at over 7.25%, implying no premium over the assets’ appraised value.

We estimate that a DPU yield of 7-7.5% would still lift OUE’s RNAV by c.10ct per share. Net gearing is expected to fall from 75% to 30%, with a specialdividend being a likely outcome. A successful REIT remains a key share price catalyst for the stock.

..or no REIT
If OUE REIT gets held back, OUE’s share price is likely to react negatively, though this may turn out to be temporary. Mandarin Orchard and Gallery remain the key earnings drivers for the group, accounting for more than 60% of EBIT.

We believe that OUE remains committed to an asset-light strategy. If the REIT listing plan is pulled, we expect the group to rekindle it when markets recover.

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