OUE Hospitality Trust IPO

Didn’t notice but apparently OUE is spinning off their 2 Orchard Hotel as a REIT.

You can read the prospectus here.

Like most hospitality REIT, it ends up as a stapled security. But you will notice the attractiveness.

• Its got 2 Mandarin Hotel which are reasonably well branded hotels
• Its got a greater than 7% dividend yield

Hospitality REITs work a bit differently from most REITs in that a sizable part of their income depends on revenue earned from the business and as such they are a proxy to the domestic tourism economy.

Even then, they look attractive versus Far East and CDL Hospitality REIT, 2 Hotel REITs listed in Singapore. Those 2 REIT will likely offer only 6% yield at current market price.

It is strange how come SPH, Mapletree this year decide to  list this properties as a REIT with so little assets. All three will list with only 2 assets.

I did not managed to look past all but there could be an explanation for the higher yield.

Both Mandarin hotels are leasehold and they run till 2057.

That is 44 years of land lease only.

Its basically like an industrial REIT with a fluctuating income and at a lower yield.

Whether to go for this IPO or not depends on the receptiveness of the investment public to this kind of segment. It used  to be very popular but given the recent drawdown its hard to say.

Long Term wise This doesn’t appeal as a long term hold. Would rather go for Aims Amp here!

To get started with dividend investing, start by bookmarking my Dividend Stock Tracker which shows the prevailing yields of blue chip dividend stocks, utilities, REITs updated nightly.

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Kyith

Kyith is the Owner and Sole Writer behind Investment Moats. Readers tune in to Investment Moats to learn and build stronger, firmer wealth foundations, how to have a Passive investment strategy, know more about investing in REITs and the nuts and bolts of Active Investing.

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Kyith worked as an IT operations engineer from 2004 to 2019. Currently, he works as a Senior Solutions Specialist in Fee-only Wealth Advisory firm Providend. All opinions on Investment Moats are his own and does not represent the views of Providend.

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