SPH REIT / OUE Hospitality

SPH REIT / OUE Hospitality: It is not possible to do a like-for-like comparison between the two Reits. End of day, the client has to make the judgment call. OUE H-Trust provides a higher 7.4% FY14e projected yield , vs SPH REIT's 5.8%. But this is balanced by: 1. Segment focus Note that OUE H-Trust's portfolio is skewed towards hospitality - a segment in which demand growth may have peaked out (after the novelty of the Integrated Resorts have worn out), although supply continues to expand (many new hotels in the pipeline). Meanwhile, SPH REIT's portfolio of shopping malls has shown resilience in occupancy and rentals (to some extent), even during the recent 2008 financial crisis. 2. Leasehold life OUE H-Trust assets have a remaining leasehold life of 43 yrs, vs SPH REIT's fresh 99yrs leaselife. 3. Pipeline OUE H-Trust has a pipeline of 1 Singapore hotel and 2 China hotels. The potential geographical diversification out of Singapore may warrant a higher risk premium. SPH REIT may inject Seletar Mall in future, so it remains Singapore focused . 4. Branding Anecdotal discussions suggest that SPH REIT has a strong retail following, in view of the SPH brand franchise. Not getting the same impression with regards the Lippo name.