OUE Commercial REIT's Crowne Plaza Changi Airport. (Photo: REITsWeek)OUE Commercial REIT's Crowne Plaza Changi Airport. (Photo: REITsWeek)

OCBC Investment Research has issued a ‘Buy’ rating on Singapore-listed OUE Hospitality Trust, citing near term catalysts that may drive its DPU growth for 2017.

Citing figures provided by the Singapore Tourism Board, the bank noted on 13 January that visitor arrivals into Singapore for November 2016 bucked the trend of declining growth rates that have plagued the republic since March 2016.

Visitor days are also up 2.2% year-on-year for the January to November period said the bank, while adding that business sentiment worldwide also appears to have turned more positive after the US elections.

“With the prospect of RevPAR stabilisation in 2018, we believe that 2017 will present important opportunities for dollar-cost averaging for our top picks given the weak operating outlook”, said OCBC, noting that OUE Hospitality Trust has two catalysts for DPU growth that will buffer it against poor operating conditions in 2017.

These are namely full-year contributions from anchor tenants Victoria’s Secret, and Michael Kors in Mandarin Gallery, and contributions from the Crowne Plaza Changi Airport’s extension.

OCBC has issued a fair value estimate of SGD0.73 on the trust.

Units of OUE Hospitality Trust finished the trading day about 0.7% higher from its previous close on the Singapore Exchange to end at SGD0.68.

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.