Far East Hospitality Trust - UOB Kay Hian 2024-02-15: Fastest Growth With Lowest Risk

• Far East Hospitality Trust will benefit from the recovery of MICE events and strong line-up of concerts at the National Stadium due to its single-minded focus on Singapore. The incentive fee of S$18m from the divestment of Central Square could be utilised to cushion the negative impact of higher interest rates.
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FY23 distributable income exceeded pre-pandemic levels.

• Far East Hospitality Trust (SGX:Q5T) reported DPU of 2.17 cents for 2H23 (+25.4% y-o-y), which is in line with our expectations. The distribution for 2H23 included:
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  2. the release of taxable income retained in 1H23 of S$2.3m.
• Distributable income for 2023 has already exceeded pre-pandemic levels (2019).

Hotels: Stellar growth despite year-end weakness.

• RevPAR for hotels increased marginally by 0.6% y-o-y to S$130 in 4Q23. Average daily rate (ADR) increased 7.6% y-o-y to S$169 but occupancy deteriorated 6.6ppt y-o-y to 76.7%. Leisure demand could have been affected by a resurgence of COVID-19 cases during November and December.
• Oasia Hotel Novena and Village Hotel Albert Court were released from government contracts in 2H23 and were still in gestation. Hotel RevPAR has recovered to 95% of pre-pandemic levels, while revenue from its hotels increased 36.5% y-o-y in 2H23.

Serviced residences: RevPAR reaches highest since IPO.

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Jonathan KOH CFA UOB Kay Hian Research | https://research.uobkayhian.com/ 2024-02-15 SGinvestors.io

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