I am vested in both OUE Commercial Trust (OUE C) and OUE Hospitality Trust (OUE H)
But I am not taking up the offer by OUE C for OUE H as I don’t find the offer by the former compelling at all.
First, it is not a cash buyout. I ended up holding more OUE C units, which I am already very exposed.
Second, OUE C is not paying any premium over the OUE H’s latest Net Asset Value of 75 cents. Based on OUE C last traded price of 52 cents, it is only valuing OUE H at 52*1.3583 + 4.075 = 74.7 cents, which in fact is below that of the latest NAV.
Third, I don’t really see any major synergy between OUE C and OUE H. They are in different asset classes and are exposed to different risks and value drivers. I think it will require a different skill set to manage a hospitality business well. I feel by merging OUE H with OUE C, it would only dilute the future focus and management attention on OUE H and it is not beneficial to both set of shareholders.
Actually I struggle to see how the deal can be yield accretive. In their joint announcement, they mentioned that it would be value accretive but did not said that it would be YIELD accretive. As an investor of REIT, I am very much interested in the yield.
I am sad and disappointed to get another “shock” from OUE C within such a short time … maybe it is time to rethink my holding in OUE C and OUE H. I wonder how much importance they place on the interest of the minority shareholders. 😦