OUE Hospitality Trust's Crowne Plaza Changi Airport. (Photo: REITsWeek)OUE Hospitality Trust's Crowne Plaza Changi Airport. (Photo: REITsWeek)

Singapore-listed OUE Hospitality Trust (SGX:SK7) has announced a rights issue to raise proceeds of SGD238.6 million.

Eligible stapled security unitholders will be offered new stapled securities at the rights ratio of 33 rights units for every 100 existing units in OUE Hospitality Trust held as at the rights issue books closure date. The rights units will be issued at SGD0.54.

“The proceeds raised will mainly be used to fund the acquisition of the Crowne Plaza Changi Airport Extension”, said the trust in a statement on the evening of 7 March. Acquisition of Crowne Plaza Changi Airport Extension was approved by the stapled security holders of OUE Hospitality Trust at an extraordinary general meeting held on 13 January 2015, it added.

Crowne Plaza Changi Airport Extension is currently under construction and expected to complete around mid-2016. It represents a 243-room extension to the operating 320-room Crowne Plaza Changi Airport which OUE Hospitality Trust acquired on 30 January 2015.

“Following the rights issue and the completion of the acquisition of Crowne Plaza Changi Airport Extension, OUE Hospitality’s Trust’s gearing will be reduced from 42.0% to approximately 37.8”, said Chong Kee Hiong, CEO of the REIT manager.

To demonstrate support for OUE Hospitality Trust and the rights issue, OUE Limited, the REIT manager, Golden Concord Asia Limited, OUE Realty and Hennessy Holdings Limited will subscribe in full for their provisional allotment of the rights stapled securities, which in the aggregate represents approximately 44.2% of the rights issue, said the trust.

The new units are expected to be listed on the Singapore Exchange on 13 April 2016 at 9 a.m. Units of OUE Hospitality Trust are currently trading about 1.3% lower from its previous close at SGD0.75.

By Ridzwan Rahmat

Ridzwan has been analysing REITs and business trusts since 2008, and personally manages a portfolio comprising mainly of SGX-listed REITs. He founded REITsWeek in 2013.