This is Eagle Hospitality Trust’s worst-case scenario on the Queen Mary

U.S. one-dollar and five-dollar currency notes; taken September 2018.U.S. one-dollar and five-dollar currency notes; taken September 2018.

Even if Eagle Hospitality Trust loses the income from its Queen Mary property, the unit price will likely still have upside, UOB KayHian said in a note Friday.

Eagle Hospitality Trust Thursday rebutted  claims in an Edge Singapore article that the Queen Mary, one of its 18 U.S. hospitality properties, has fallen into structural disrepair and could be found in default. On Monday, the trust added confirmation from the city that the Queen Mary lease wasn’t in default.

The Queen Mary is a decommissioned ocean liner which has been converted into an upscale hotel with 347 rooms; it is moored in Long Beach, California.

UOB KayHian estimated the Queen Mary accounted for 12.6 percent of Eagle Hospitality Trust’s portfolio valuation and 15.9 percent of its net property income.

“Assuming the valuation of Queen Mary is written down to zero and it no longer contributes to rental income, EHT’s 2020F distribution per unit (DPU) would drop by 22 percent from 6.60 U.S. cents to 5.12 U.S. cents, while net asset value/share would drop 21 percent from US$0.87 to US$0.69,” the brokerage said.

That would push its target price down to US$0.80 from its current US$1.02, UOB KayHian said; it kept a Buy call.

The unit price tumbled 15.5 percent on Friday to US$0.55; Singapore’s market was closed Monday for the Diwali holiday.

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