Here's a glimpse of OUE's grand plans for its hospitality REIT

It's likely to get $800m from its assets.

According to Maybank Kim Eng, OUE stands to collect ~SGD800m in cash from spinning off its assets into a REIT. This would provide it with fresh dry powder for future acquisitions, with management having set sights on the US and China. 

With a presence in the hospitality, office, retail and high-end residential segments, OUE is an almost pure play on the Singapore property sector. As most of its assets are in the prime Orchard Road/Raffles Place locations, it is well-positioned to ride the growth momentum in the hospitality segment and new Grade A offices.

Here's more from Maybank Kim Eng:

OUE is in talks with the authorities to convert one tower of Twin Peaks and DBS Tower One into serviced apartments. It can then combine these together into a hospitality REIT.

Management expects minimal DC charges as the value derived from existing use is higher or equal to the value of the proposed development, if there is no change in the GFA. There should also be minor structural alterations needed, such as escape stairways.

Given the slow-moving sales in the high-end housing segment – Twin Peaks is 14% sold and due to obtain its TOP in 2015 – we think this is a good move, pending the Urban Redevelopment Authority’s approval.

It should also provide relief from the QC (Qualifying Certificate) requirements that call for all units to be sold within two years after TOP – and unsold units are not allowed to be rented out. If units remain unsold after the first, second and/or third year, developers pay 8%/16%/24% of the land purchase price (pro-rated based on the proportion of unsold units) for each respective year.