SINGAPORE (Nov 21): Passenger movements at Changi Airport continue to climb, registering 7.5% y-o-y growth in Sept and a 5.9% y-o-y growth for 9M17.
The increase bodes well for OUE Hospitality Trust’s Crowne Plaza Changi Airport (CPCA), which is currently only receiving minimum rent.
Although OCBC analyst Deborah Ong believes that OUEHT’s current unit prices are not attractive enough to warrant a “buy” call, it remains most positive on the REIT relative to other hospitality REITs under its coverage given the momentum from its recent RevPAR outperformance at Mandarin Orchard Singapore (MOS), the longer-term prospects for CPCA with Changi Airport’s Terminal 4 and 5, and the REIT’s 100% Singapore exposure when local hotel room supply injection dries up in 2018.
Risks to note include the fall-off in income support for CPCA from 4Q17 onwards.
Maintain “hold” with a fair value estimate of 82 cents.
As at 10.48am, units in OUEHT are trading at 1 cent higher at 82 cents, giving it a yield of 6.2% based on FY18 forecast DPU of 5.1 cents.
