OUE Hospitality Trust snubs stakes acquisition offer from sponsor

Here's why it declined the offer.

According to OCBC Investment Research, OUE Hospitality Trust (OUEHT) has declined an offer from its sponsor, OUE Limited, for the acquisition of a 100% stake in Meritus Mandarin Haikou and an 80% stake Meritus

Shantou China for purchase considerations of S$58.7m and S$49.3m, respectively.

Here's more:

These stakes were part of the sponsor’s ROFR pipeline. The offer was declined as the acquisition would not have been accretive to the distribution per stapled security of OUEHT.

Our current model does not assume any acquisitions and this development does not affect our valuation.

We believe a number of investors like OUEHT because of its Singapore-based assets, and are interested in the last asset in the ROFR pipeline – the 100% stake in Crowne Plaza Changi Airport, for which an additional 200 rooms are expected to be developed by the end of 2015, which means any offer by the sponsor would likely come after that.

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