- Far East Hospitality Trust’s 3Q business update suggests weaker RevPARs and higher operating expenses offset by lower financing expense and contribution from Japan acquisition. Hotel and serviced residences RevPAR fell by low-to-mid single digits.
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Lower finance cost, but higher operating expenses
- 3Q revenue and NPI of S$30.4m and S$25.9m, +5.7% and -1.0% y-o-y, respectively. Excluding Japan hotel, revenue fell 3.5% y-o-y. For 9M, revenue and NPI fell 0.7% and 5.4% y-o-y. Excluding Japan, 9M25 revenue fell 6% y-o-y.
- Operating expenses rose substantially on higher manpower expenses, including Japan offset by savings in utilities. Borrowing expense for 3Q fell 27.9% y-o-y (9M -19.9% y-o-y) on a 20bps q-o-q/90bps y-o-y fall in cost of debt.
Stable occupancy
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- 3Q RevPAR for Japan hotel rose 13.5% y-o-y and gross operating profit rose 27.2% y-o-y.
Cushioned by lower cost of debt
- Gearing was 33.7% (2Q 32.8%) on the back of ongoing asset upgrading works.
- Cost of debt was 3.2% (2Q 3.4%) and is guided lower for FY26 as hedge ratios potentially trend lower (3Q 65% vs 3QFY24 40.1%).
Maintain HOLD
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