OUE Exploring Setting Up Of Listed Property Trust

Source : The Business Times, September 18, 2008

Plan to inject certain hospitality assets; it has appointed professional advisers

OVERSEAS Union Enterprise (OUE) said yesterday that it is looking at setting up a listed property trust into which it will inject 'certain hospitality properties'.

Local asset: Artist's impression of the shopping gallery of Meritus Mandarin, one of OUE properties in Singapore

Professional advisers have been appointed to assist, OUE said in a filing to the Singapore Exchange.

In Singapore, OUE has Meritus Mandarin Singapore and Marina Mandarin Singapore. It also has a beach resort and spa in Malaysia and three hospitality assets in China.

There is no certainty that a listed property trust will be established or that any transaction relating to or involving the company or its subsidiaries will be entered into as a result, OUE said.

'Shareholders should bear the foregoing in mind when dealing in the shares of the company,' it said.

OUE, controlled jointly by Malaysian tycoon T Ananda Krishnan and Indonesia's Lippo Group, said that if it does enter into any definitive transaction relating to a listed property trust, it will make a prompt announcement.

OUE has chosen a 'strange time' to look at listing a real estate investment trust (Reit), a property analyst said yesterday, saying the current market turmoil means new listings are bound to be poorly received.

But if OUE 'takes its time to make up its mind', market conditions might have improved by the time the trust makes it to the market, the analyst added.

Singapore-listed Reits, or S-Reits, are beginning to look attractive compared with developer stocks, some analysts have said lately.

DBS Vickers Research said this month that the share prices of S-Reits have fallen since the start of the Q2 2008 reporting season in July, in tandem with the decline in broader Singapore market.

But the Reit index has done better than developers, the research unit said in a report.

Similarly, in a Sept 16 report DMG & Partners property analyst Brandon Lee said he prefers S-Reits to developers.

He cited the 'constant ammunition of negative newsflow currently being fired at developers' as one reason for this.

'In the near term, we are still recommending the S-Reits, for their earnings visibility and income predictability, as well as higher yields with the recent correction in share prices,' he said.