Far East Orchard Limited aka Orchard Parade Holding

[propertyinvestor]

The 3 assets sold generated 27m in profits for FY2011, they are sold for 702m (page 11 in the attachment below). but the problem here is it takes great optimism to sell at such a high price. Will you buy into such a reit with p/e around 26, i wouldnt. Moreover, the properties are not freehold.

Actually, Orchard Parade Hotel is mostly freehold. What's injected into the REIT, however, is only 50 years of the lease. This is similar to Parkway REIT's hospitals.

Indeed, the valuation of $702m looks rich. As a reference, CDL H-Trust is trading at a 6% yield. This is likely why the REIT is selling as a "stapled security". Maybe they'll stapler Greek bonds together with this, to prop up the yield It's also possible that OPHL will pay higher than market rate for the leaseback as well.

So creative of you to think about stapling bonds to units in the trust to boost yield