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FAR EAST HOSPITALITY BOTTOM FISHING $1.20 >>60c
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PhillipTan
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09-Sep-2021 02:05
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Market has not priced in FEHT' s potential divestment of Central SquareIn Sept 7 research note, CGS-CIMB Research analysts Eing Kar Mei and Lock Mun Yee have reiterated their " add" call for Far East Hospitality Trust (FEHT) with an unchanged target price of 74.5 cents.Eing and Lock are positive on FEHT as they view that the market has not priced in the potential divestment of Central Square. FEHT had received outline advice from the Urban Redevelopment Authority (URA) in relation to the redevelopment of Central Square, which comprises a serviced residence and commercial spaces, back in March. The way Eing and Lock see it, FEHT will likely divest the asset. " While the REIT is still exploring various options for the site, we believe a divestment is a more likely scenario to pare down its gearing," they opine. " FEHT' s gearing has been hovering at the 39% to 41% level since 2018 we believe a lower gearing will provide debt headroom for acquisitions and boost inorganic growth, catalysing the stock," they add. In terms of valuation, the analysts believe Central Square could fetch a valuation of at least $300 million or $1,031.60 psf, in view of the potential strong uplift in gross floor area post-redevelopment. This represents a capital gain of around 50% over its purchase cost of $183 million and around 60% over its last valuation of $198.3 million as at Dec 31, 2020. Eing and Lock point out that Raffles Education' s corporate building and college campus situated next to Central Square was put up for sale at a guide price of $200 million, or $2,582 per square foot (psf). " Taking this as a benchmark and the cost of redevelopment into account (including a 20% developer' s margin), our back-of-the envelope calculations indicate that Central Square could fetch $1,500 psf before authority fees," they remark. The analysts view that FEHT' s gearing for FY2022 ending December could decrease to some 33%, assuming Central Square is divested in FY2022 for $300 million, with 60% of the net proceeds used to pare down debt. Given this scenario, their FY2022 distribution per unit (DPU) forecast would reduce by 5%. Nonetheless, Eing and Lock point out that the lower DPU could be offset by a one-off special distribution from the remaining net proceeds. Based on their estimates, if FEHT distributes only 5% of the remaining net proceeds of $116 million as a one-off special distribution, their FY2022 DPU forecast would bump up by 6.4% to 2.7 cents, implying a 4.3% yield. " Our analysis shows that every additional 5% increase in distribution of the remaining net proceeds as dividend will raise our FY2022 DPU by 0.29 scts, which implies 0.5% DPU yield," they add. The analysts are also upbeat on FEHT' s inclusion into FTSE EPRA Nareit Global Developed Index from Sept 20, which they view will increase its " investability" , potentially lowering the barrier for accretive acquisitions. As at 3.56pm, units in FEHT are trading are trading flat at 61.5 cents. |
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PhillipTan
Supreme |
02-Sep-2021 13:23
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Eleven of Singapore' s smaller Reits enter FTSE EPRA Nareit Global Real Estate IndexEleven of Singapore' s smaller Reits have made it into the FTSE EPRA Nareit Global Real Estate Index series, according to the index series' quarterly review changes announced by FTSE Russell on Sept 1.The entries into the FTSE EPRA Nareit Global Developed Index include AIMS APAC Reit, ARA Logos Logistics Trust, Cromwell European Reit, ESR-Reit, Far East Hospitality Trust, Keppel Pacific Oak US Reit, Lendlease Global Commercial Reit, OUE Commercial Reit, Prime US Reit, SPH Reit and Starhill Global Reit. FTSE Russell noted that the increased number of additions this quarter was due to the updated thresholds for the Developed Asia series. In June, the investable market cap threshold was lowered to 0.1 per cent of the securities' respective regional index for additions to the Developed Asia series, compared to 0.3 per cent previously. For deletions from the index series, the threshold was lowered to 0.05 per cent from 0.15 per cent. The review may be subject to changes until the close of business on Sept 3, and all constituent changes will be applied after the close of business on Sept 17. The index series, which tracks the performance of listed real estate companies and Reits, is a global benchmark jointly developed by FTSE Russell with the EPRA (European Public Real Estate Association) and the Nareit (National Association of Real Estate Investment Trusts). Prior to the review, there were 17 Singapore Reits and property trusts in the FTSE EPRA Nareit Developed Index, according to the index' s factsheet as at July 30, 2021. |
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PhillipTan
Supreme |
16-Aug-2021 20:12
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UOB Kay Hian maintains ' buy' call on Far East Hospitality Trust on reopening of borders in 4Q21UOB Kay Hian analyst Jonathan Koh has maintained his " buy" call on Far East Hospitality Trust (FEHT).Catalysts to the counter' s share price include recovery in occupancy, average daily room rate and RevPAR in 2022, as well as the acquisition of the remaining 70% stake of three Sentosa hotels, says Koh. In an August 13 report, Koh highlighted that FEHT' s fixed rents from its master leases would allow it to weather a bumpy recovery, driven by Singapore' s border reopening. Slated for 4Q2021, the initial recovery would be modest, eventually becoming more broad-based in 2H2022. Koh pointed out that the establishment of travel corridors with low-risk countries will lead to an ease of the requirements for the stay-home notice (SHN). Currently, fully vaccinated travellers from Brunei, New Zealand, China, Hong Kong, Macau and Taiwan are already allowed to serve their SHNs at their place of residence. Meanwhile, travellers from Australia, Austria, Canada, Germany, Italy, Norway, South Korea and Switzerland would be able to do so from August 20. Fully vaccinated travellers from low-risk countries are expected to be able to travel freely within Singapore upon receiving a negative polymerase chain reaction (PCR) test result at the Changi Airport. FEHT and City Developments Limited (CDL) have established a joint venture (JV) to redevelop Central Square and Central Mall. The JV is working on obtaining outline permission and planning permission to rejuvenate the precinct, says Koh. Earlier this year, it received outline advice from the Urban Redevelopment Authority under an incentive scheme in response to a joint outline application. The analyst pointed out that FEHT would reap a meaningful divestment gain given the uplift in plot ratio of Central Square (Village Residences Clarke Quay), which is valued at $198 million as at December 2020. This could be distributed to unitholders over several quarters to smooth out distribution per unit (DPU), says Koh. Meanwhile, Koh added that the reduction of management fees payable to the REIT manager, which the company announced in March last year, is meant to be permanent. The new management fee structure, which was changed to a base fee of 0.28% and a performance fee of 4% of net property income or 4% of distributable income - whichever is lower - is already enshrined in FEHT' s trust deed, Koh said in the note. Koh also highlighted that FEHT is leading the S-REIT industry, ranking second out of 43 REITs and businesses trusts on the Singapore Governance and Transparency Index 2021. Last year, it ranked fourth out of 45. Koh' s target price of 71 cents is expected to give FEHT a 20.3% upside. He has also kept his DPU forecasts unchanged. As at 3.15 pm, units in FEHT remained unchanged at 58 cents, representing 0.7 times P/B and an FY2021 DPU yield of 4.0%, according to UOB Kay Hian' s estimates. |
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PhillipTan
Supreme |
03-Aug-2021 23:24
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CGS-CIMB maintains ' add' on FEHT despite weaker 1H21 showingCGS-CIMB Research' s Eing Kar Mei and Lock Mun Yee has maintained their " add" rating and target price of 74.5 cents on Far East Hospitality Trust (FEHT) despite its weaker showing in 1HFY2021In a July 31 report, Eing and Lock highlighted that FEHT reported lower revenue and net property income (NPI) in 1HFY2021, dropping 6% and 6.2% y-o-y respectively. While revenue from hotels remained flat y-o-y due to fixed rent support, serviced residence revenue declined 7.8% y-o-y to $5.7 million, and revenue from the commercial segment fell 23.2% y-o-y to $7.4 million. Despite the weaker NPI, income available for distribution after retention increased 7.6% y-o-y to $21.7 million, thanks to lower finance expense (due to a combination of low short-term interest rates and lower fixed rates) and REIT manager' s fees. The analysts also note that hotel revenue per available room (RevPAR) declined about 35.4% y-o-y to $51 due to lower average daily room rates (ADR), which fell 35.3% y-o-y. This was due to lower rates from government contracts and companies requiring accommodation for their workers. However, on a q-o-q basis, RevPAR increased 2% due to higher local corporate demand for their employees as Covid-19 cases surged at workplaces. The analysts say that six out of nine FEHT hotels are under government contracts currently. The near-term intention is to keep all government contracts as borders remain closed. As for the serviced residences segment, revenue per available unit (RevPAU) declined 16.9% y-o-y on weaker occupancy, falling 6.5% to 76.2%. Average daily rate also dropped 9.5% to $181 due to weaker demand from companies requiring accommodation for their workers. Despite the decline in RevPAU, the serviced residences segment was supported by master lease rental which registered a smaller decline of 7.8% yoy in 1HFY2021. " Overall, FEHT' s SR continued to perform above fixed rent levels." they say. But Lock and Eing think the serviced residences segment will continue to face downward ADR pressure due to a lack of long-stay corporate demand. Meanwhile, occupancy for office developments remained stable at 80%, but retail occupancy was weaker y-o-y, coming in at 70%. They note that a change in the lease structure from fixed to turnover based and rental rebates led to weaker y-o-y revenue and NPI, but FEHT hopes to achieve 80% retail occupancy by year-end, and has set aside some income for rental rebates in 2HFY2021. Despite these, the analysts say they " continue to like FEHT for its strong master lease income support (about 80% of 1HFY2021) which enhances income stability and limits downside risks." As at 2.57 pm, units in FEHT are trading at 60 cents, with an FY2021 price to book ratio of 0.74 and 4.3% dividend yield. |
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Joelton
Supreme |
01-Aug-2021 22:39
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Far East Hospitality Trust DPS up 6.8% to S$0.011 in H1
Far East HTrust distribution per stapled security (DPS) rose 6.8 per cent to 1.10 Singapore cents for the half year ended June 30, 2021, compared to 1.03 cents for the year-ago period.
Gross revenue for H1 was S$41.6 million, 6.1 per cent lower than a year ago at S$44.3 million, the trust said in a bourse filing on Friday.
Chief executive of the Reit manager Gerald Lee noted that 81 per cent of gross revenue for the period is protected by the fixed rent component of the master leases, which provides downside protection for stapled security holders with its minimum rental payment.
FEHT' s manager also noted that revenue per available unit for serviced residences fell by 16.9 per cent year-on-year to S$138, even as it performed above the fixed rent level, while revenue for the real estate investment trust' s (Reit) retail and office spaces also decreased by 23.2 per cent from a year ago to S$7.4 million.
H1 net property income (NPI) also eased 6.2 per cent year-on-year to S$36.2 million, from S$38.6 million a year ago.
Total distributable income fell by 1.4 per cent to S$25.3 million from S$25.7 million.
The manager said that despite the fall in gross revenue and NPI, total distributable income only fell marginally due to savings of 16.9 per cent in finance expenses and 3.9 per cent in Reit manager fees.
The distribution will be paid out on Sept 7 after book closure on Aug 10.
Looking ahead, the manager said near-term business will continue to be supported by government and long-stay corporate contracts as new Covid-19 variants dampen recovery in Singapore' s hospitality industry.
" We remain sanguine about the prospects of international travel arrangements materialising in the months ahead. This is backed by the multi-ministry task force' s assurance that Singapore will progressively facilitate international travel with countries that have done well in managing the Covid-19 situation," the manager said.
Regarding its Central Square development, the manager said that it will continue to explore different options for the site. Earlier, it announced that it had received an outline advice from the Urban Redevelopment Authority (URA).
Subject to approvals from URA and other authorities, the outline advice was issued under an incentive scheme, and involves a potential rezoning and uplift in gross floor area.
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PhillipTan
Supreme |
01-Aug-2021 13:24
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Maybank Kim Eng keeps " buy" call and 70 cents target price on FEHTMaybank Kim Eng analyst Chua Su Tye has kept his " buy" call and 70 cents target price on Far East Hospitality Trust.For 1HFY2021, FEHT' s distribution per unit was up 6.8% y-o-y to 1.1 cents but down 1% over the preceding half year, excluding distribution top-ups in 2H20. Revenue in the same period dropped by 6.1% to $41.6 million and net property income down 6.2% to $36.2 million, as room rates eased. FEHT' s portfolio of 13 properties has a total of 3,143 hotel rooms and serviced residence units as at Dec 31 2020, valued at some $2.53 billion. In his July 30 note, Chua expects FEHT to see a better second half, with its hotel occupancies cushioned by isolation demand in 3Q, while RevPAR should rise towards year-end. " It remains our preferred play in a (slow) sector recovery, with the high proportion of minimum fixed rent from its master leases offering downside support amid soft RevPAR growth," he says. FEHT, according to Chua, now has a gearing of 41.3% as at June 2021, down slightly from 41.6% as at end of March. Given the 45% cap on gearing, FEHT has the room to borrow up to $290 million to fund growth. " We believe management could prioritise a redevelopment (at Village Residence Clarke Quay) ahead of acquisitions in the near term. Possible government plans, to rezone the asset and lift GFA, from a proposed integrated development, are currently being explored, with details expected by end-2021," writes Chua. For now, Chua is keeping his DPU forecast for FEHT at 2.4 cents for the whole of FY2021, an increase from1.7 cents paid for FY2020. He notes that FEHT is now trading at an undemanding valuation of just 0.7 times price to book, and has a 27% upside to his 70 cents target price. FEHT closed at 58 cents on July 30, unchanged for the day but down 6.45% year to date. |
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PhillipTan
Supreme |
30-Jul-2021 09:11
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Far East Hospitality Trust DPS up 6.8% to S$0.011 in H1Far East Hospitality Trust' s (FEHT) distribution per stapled security (DPS) rose 6.8 per cent to 1.10 Singapore cents for the half year ended June 30, 2021, compared to 1.03 cents for the year-ago period.Gross revenue for H1 was S$41.6 million, 6.1 per cent lower than a year ago at S$44.3 million, the trust said in a bourse filing on Friday. Chief executive of the Reit manager Gerald Lee noted that 81 per cent of gross revenue for the period is protected by the fixed rent component of the master leases, which provides downside protection for stapled security holders with its minimum rental payment. FEHT' s manager also noted that revenue per available unit for serviced residences fell by 16.9 per cent year-on-year to S$138, even as it performed above the fixed rent level, while revenue for the real estate investment trust' s (Reit) retail and office spaces also decreased by 23.2 per cent from a year ago to S$7.4 million. H1 net property income (NPI) also eased 6.2 per cent year-on-year to S$36.2 million, from S$38.6 million a year ago. Total distributable income fell by 1.4 per cent to S$25.3 million from S$25.7 million. The manager said that despite the fall in gross revenue and NPI, total distributable income only fell marginally due to savings of 16.9 per cent in finance expenses and 3.9 per cent in Reit manager fees. The distribution will be paid out on Sept 7 after book closure on Aug 10. Stapled securities of FEHT closed flat at S$0.58 on Thursday. |
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PhillipTan
Supreme |
08-Jul-2021 12:17
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CGS-CIMB sees stronger RevPAR for hospitality REITs, ART remains top pickCGS-CIMB Research anticipates Singapore hospitality REITs to deliver better revenue per average room (RevPAR) in the 2Q2021, on the back of government contracts in Singapore combined with better performance from select overseas markets. For Singapore, analysts Eing Kar Mei and Lock Mun Yee point out that following the rise in Covid-19 cases in recent months, government contracts for hotels have risen to 40% as of June, compared to 30% in December 2020. Eing and Lock expect this government-driven support to continue into 2022, anticipating that some 60% of REITs' occupancy will be supported by government contracts in 2021 before this comes down to an average of 40% in 2022. They also note that leisure demand for Singapore hotels remained weak during 2Q2021 due to the heightened alert imposed from May 16. " Except for hotels based in Sentosa, we expect the demand for non-government contract hotels in 2Q2021 to be mainly driven by corporate businesses," the analysts add. Nonetheless, Eing and Lock believe Singapore will deliver an overall stronger RevPAR on a q-o-q basis in the 2Q. Beyond Singapore, the analysts view that Europe, US and China likely saw y-o-y RevPAR improvements in the 2Q2021, thanks to less restrictive Covid-19 measures and higher vaccination rates. For Australia and New Zealand, while occupancy has improved gradually since the start of the year, Australia' s recovery in 2Q2021 was stymied by tighter restrictions in April-June. For Maldives, the analysts believe RevPAR could be weaker due the ban on visitors from South Asian countries since May 9 as well as the seasonal lull in 2Q. RevPAR in Japan and Malaysia are also expected to remain weak given on-going Covid-19 restrictions. Given the outlook for Singapore and the rest of the world, Eing and Lock reiterate that Ascott Residence Trust (ART) remains their top hospitality REIT pick, given its higher exposure to markets with stronger domestic demand. " We expect ART to deliver stronger overall q-o-q RevPAU in 2Q2021, driven mainly by Europe, and China," they say. They have an " add" call on ART with a target price of $1.20. CGS-CIMB also has " add" calls on Far East Hospitality Trust (FEHT) with a target price of 74.5 cents as well as CDL Hospitality Trust (CDLHT) with a target price of $1.43. Eing and Lock expect CDLHT to deliver better overall RevPAR, similarly driven by Europe, with some staycation demand in Singapore. For FEHT however, despite stronger q-o-q hotel RevPAR, the analysts anticipate lower overall income due weaker performance from the service residence segment. Nonetheless, they have an overall optimistic outlook for the sector. " With rising vaccination rates globally, we think the recovery going forward would be more sustainable vs. last year," they surmise. The analysts highlight that ART, CDLHT and FEHT are trading below book and expect the market will price in ahead of recovery. In addition, they point out that FEHT is a close candidate for FTSE EPRA Nareit, which just revised its free float market cap inclusion criteria. " We believe further improvements in share price in tandem with the improving Covid-19 situation will place FEHT in a good position for FTSE EPRA Nareit inclusion," they say. As at 10am, units in ART, CDLHT and FEHT are trading at $1.06, $1.26 and 59.5 cents. |
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paul1688
Veteran |
07-Jul-2021 12:40
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From CGS-CIMB 6 July 2021 Far East Hospitality Trust ADD, TP S$0.745, S$0.59 close While FEHT&rsquo s hotel RevPAR could be strong qoq, serviced residence RevPAU could be weaker due to slower long-stay corporate business. FEHT&rsquo s free float adjusted market cap of US$399m is just a tad lower than the FTSE EPRA Nareit Developed Market Asia new minimum inclusion threshold of c.US$411m (as at May 2021). We believe an inclusion into the index will re-rate FEHT. |
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Joelton
Supreme |
01-May-2021 15:52
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FEHT Q1 net property income falls 8.4% on lower gross revenue
IN a business update on Friday, Far East Hospitality Trusts (FEHT) said it posted a 6.9 per cent decline in gross revenue to S$21.3 million for Q1 2021. This was down from S$22.9 million in Q1 2020.
Net property income also fell 8.4 per cent to S$18.2 million in the first quarter of 2021, from S$19.9 million in the same period last year.
This was due to lower occupancies in the serviced residences (SR) and rental assistance provided to tenants at the commercial premises. It added that while the master lease rental for the hotel segment was at the fixed rent level, the SR segment continued to perform above the fixed rent.
Noting that its finance expenses were 21.4 per cent lower largely due to short-term interest rates, the Reit manager said income available for distribution was S$12.5 million.
For its hotels portfolio, it recorded an increase in average occupancy in Q1 2021 by 10.8 percentage points to 76.1 per cent due to its hotels securing contracts from companies needing to house their workers as well as from the government for isolation purposes amid the ongoing pandemic. Its revenue per available room (RevPAR) for hotels declined 45.7 per cent year on year to stand at S$51.
As for its SR portfolio, there was a fall in average occupancy by 8.9 percentage points to 74.7 per cent due to a lack of inbound travel into Singapore. Nonetheless, the trust added that support from long-stay corporate sources helped to minimise the negative effect of the pandemic, keeping the SRs performing above fixed rent.
FEHT said that its average debt maturity stands at 2.6 years. It refinanced its term loan of S$215 million due in March 2021 with a sustainability-linked loan facility for a term of five years. The trust added that discussions with lenders for the refinancing of the S$100 million term loan due in December 2021 are ongoing.
Stating its outlook for 2021, the Reit manager said it expects to see " muted" average new room supply of 1,842 rooms annually from 2021 to 2024 compared to an average of 2,400 annually from 2015 to 2019.
Yet, it shared that upward trends in vaccine rollouts and the possibility of international travel recovering in the second half of 2021 continue to remain bright spots.
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Joelton
Supreme |
21-Apr-2021 12:29
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Far East Hospitality signs Indonesia agreement, sets sights on regional expansion
FAR East Hospitality has inked a new partnership in Indonesia as part of a larger plan to increase its footprint within the region.
The group on Tuesday announced that it has teamed up with ARTOTEL Group, an Indonesian boutique hospitality and lifestyle group, in a strategic alliance agreement. Under the terms of the partnership, both sides will collaborate across operations, branding, and training, as well as support business growth across markets.
Both Far East Hospitality and ARTOTEL Group will be represented as an " Affiliate Brand" in their ecosystem and distribution channels, said Far East. It will also work with ARTOTEL Group to enhance its presence in Indonesia and obtain meaningful market share.
Arthur Kiong, chief executive officer of Far East Hospitality Management, said that he expects to see strong synergies for both Singapore and Indonesia as both are key inbound markets for their respective tourism sectors.
" From a brand architecture perspective, it fits into a niche segment which we are currently not represented. Amid discussions to explore a ' travel bubble' between both countries, we look forward to leveraging our combined portfolio to appeal to both domestic and regional markets," he added.
In addition to its Indonesian entry, Far East Hospitality has also ramped up its hotel portfolio in Japan. Far East Village Yokohama will be Far East Hospitality and the Village brand' s second property in Japan. This comes a year after the opening of Far East Village Hotel Ariake in July 2020. The 277-key Far East Village Yokohama will be managed by Far East Hospitality under a hotel management agreement with Far East Organization. The property is slated to open in June this year.
In Singapore, Far East Hospitality will expand into the resort and spa category with the opening of Oasia Resort Sentosa in the second half of 2021.
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PhillipTan
Supreme |
16-Apr-2021 09:59
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DBS Market View Update SREITs have anticipated this pullback in US 10-yr yield - Our Singapore Stock Pulse March 22 comments on SREITs' resilience and US 10-yr yield' s potential pullback from c.1.9% down to c1.5% is panning out well - US 10-yr yield' s recent high was 1.77%, fell to as low as 1.527% before ending at 1.576% in overnight US trade - SREITs should see positive reaction today on US 10-year yield' s pullback but bear in mind that REITs had started to recover a month ago, up 7.5% so far - Pullback in 10-yr yield had already been anticipated - At the current level, the risk for US 10-yr yield is tilting more to the upside going forward - Technical support of US 10-yr yield remains at c.1.5%, rangebound trade from c. 1.5% to c.1.9% should continue in coming months - Our interest rates strategist recently raised his US 10-yr yield forecast to 2% (from 1.75%) by end-2021 - US 10-yr yield could still see downside of 7bps vs upside of 33bps in the coming months - Our current picks for SREITs are Prime US, MAGIC, Far East Hospitality Trust |
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Joelton
Supreme |
30-Mar-2021 09:35
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Far East Hospitality Trust secures maiden sustainability-linked loan of S$125m from OCBC
FAR East Hospitality Trust (FEHT) has secured its first sustainability-linked loan facility worth S$125 million for a term of five years from OCBC Bank, which is the sole lender for this transaction.
The loan will be used to refinance FEHT' s existing bank borrowings, with the loan' s interest margin tied to selected sustainability targets that were set together with OCBC Bank. They include the reduction in the energy consumption of its portfolio and improvements in the Building and Construction Authority of Singapore' s Green Mark Certification for its properties.
If these pre-set targets are met, the interest margin on the facility will be subsequently reduced on a tiered basis.
FEHT has 13 properties in Singapore, consisting of nine hotels and four serviced residences.
OCBC Bank said providing this sustainability-linked loan is a natural progression, with the bank having worked with various real estate investment trusts (Reits) and corporates on their sustainable financing journey.
The facility agreement also places restrictions on a change in the manager of the Reit and a change in ownership of the Reit manager, FEHT said.
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Joelton
Supreme |
25-Mar-2021 09:26
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CGS-CIMB reiterates ' add' on FEHT expects accelerated recovery from FY2023
CGS-CIMB reiterates " add" on Far East Hospitality Trust (FEHT) with a higher dividend discount model-based target price of 74.5 Singapore cents from its previous target price of 63.9 cents after factoring in an accelerated recovery from FY2023.
The new target price implies 0.95 times of the trust' s price-to-book value, said CGS-CIMB analysts in a Tuesday report.
This comes after the hotel and serviced residence hospitality trust announced that it received an outline advice from the Urban Redevelopment Authority (URA) in relation to the redevelopment of Central Square (Village Residence Clarke Quay).
The outline advice was issued under an incentive scheme, and involves a potential rezoning and uplift in gross floor area, subject to approvals from URA and other authorities.
The analysts said that in the event that FEHT decides to divest the asset to pare down gearing by the end of 2021, the distribution per unit (DPU) for FY2022-2023 will be reduced by an estimated 2 per cent.
Further, gearing will fall to about 34 per cent from 38.5 per cent, making FEHT one of the most lowly-geared real estate investment trusts (Reits) in the country, they added.
Given that the tourism industry is an important pillar of the sector, the analysts find that the " recovery of FEHT hinges on the pace of Singapore reopening its borders" , but at the same time believe that the government is " wary of the risks" .
While the analysts do not expect the Reit to hit its hotel variable income until 2022, the Reit " should continue to be supported by its master lease income which underpins the stability of its DPU" . The master lease will not expire until 2032, according to the research house.
" We expect FEHT' s hotel segment to be supported by its master lease income in FY2021/22 forward, and achieve variable income in FY2023 as we assume accelerated recovery of international travel from end 2022," the analysts said in the report.
They also expected the serviced residence segment to continue receiving variable income, supported by demand from long-term guests, and added that its retail segment should deliver stronger income ahead due to minimal rental rebates and improvements in the operating environment.
Upside and downside risks highlighted by the analysts included a stronger or a slower recovery from the Covid-19 pandemic.
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Joelton
Supreme |
24-Mar-2021 09:27
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FEHT receives outline advice on redevelopment of Central Square
The manager of Far East Hospitality Trust (FEHT) has announced that it has received an outline advice from the Urban Redevelopment Authority (URA) in relation to the redevelopment of Central Square, which comprises a serviced residence and commercial spaces, including office and retail units.
The outline advice was issued under an incentive scheme in response to a joint outline application.
According to the manager, the proposed plan is intended to rejuvenate the precinct with an integrated development, and involves a potential rezoning and uplift in gross floor area which are subject to specific approvals from URA and other relevant authorities.
It also includes plans for improvements of common areas to encourage a wide variety of activities such as outdoor dining, exhibitions and events.
The manager says that it will explore various options for the site to &ldquo deliver optimal value for stapled securityholders&rdquo , including a possible divestment to a suitable third-party to undertake any proposed redevelopment.
In the meantime, the commercial and hospitality spaces at Central Square will continue to be in operation.
The manager highlights that at this stage, there is no certainty that the transaction will occur and that no decision or binding agreement has been entered into in respect of any redevelopment or divestment, which would be subject to various approvals.
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Joelton
Supreme |
12-Feb-2021 11:53
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Far East Hospitality Trust DPS drops 30.7% to 1.38 S cents for H2
FAR East Hospitality Trust' s (Far East H-Trust) distribution per stapled security (DPS) fell 30.7 per cent to 1.38 Singapore cents for the half year ended Dec 31, 2020 compared to 1.99 cents for the year-ago period.
Gross revenue for the half-year period was S$39 million, 34.8 per cent lower than a year ago at S$59.8 million. The manager attributed the fall in revenue to lower rentals in its hotel arm, as well as rental rebates and lower occupancy for its offices.
Net property income eased 38 per cent to S$33.6 million for H2 2020 compared to S$54.1 million for H2 2019.
Total distributable income for the half year dipped 29.5 per cent year on year to S$27.5 million from S$38.9 million the previous year.
The distribution will be paid out on March 22 after book closure on Feb 22.
Meanwhile, the trust' s full-year DPS was 2.41 cents, 36.7 per cent lower from 3.81 cents last year. Total distributable income for the year slipped 35.2 per cent to S$47.9 million from S$73.9 million for 2019.
The manager said that the trust' s earnings were largely affected by the fall in inbound travel due to Covid-19. This was however mitigated by high fixed rentals of the master leases, which made up 77 per cent of its gross revenue for FY2020, since all 20-year master leases on hotels and serviced residences were supported by the sponsor, Far East Organization, they added.
In the long term, the manager was optimistic of a gradual recovery trajectory on the back of vaccine roll-outs, along with government support and measures such as the Job Support Scheme and SingapoRediscovers vouchers to help revive the hospitality sector.
" Singapore is well-positioned to bounce back as a hub for corporate travel with strong foreign direct investment commitments," the manager said.
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Joelton
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24-Dec-2020 09:34
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Still room for upside for hospitality Reits despite rally
Full recovery in revenue per available room may only materialise in 2022 or even 2023, some analysts say
THE rollout of the first vaccine this month heralds the start of a recovery for the hospitality sector, but have hospitality Reits already rallied too far ahead?
Units in Singapore-listed hospitality Reits leapt in November as news of successful vaccines by the likes of Pfizer/BioNTech and Moderna had investors betting that the green shoots were finally emerging for the tourism industry.
The availability of a vaccine will put hospitality Reits on the path to recovery in 2021, but a full recovery in revenue per available room (RevPAR) - an indicator of performance - may only materialise in 2022 or even 2023, some analysts say. It also remains to be seen whether business travel volumes will be adversely affected in the long-term by a shift towards virtual meetings.
Here in Singapore, vaccines will be widely available by Q3 2021, with sufficient doses for the entire country. However, unlike other markets such as Australia and the United States, the city-state lacks a big enough domestic market to offset the shortfall in tourists, which makes the lifting of border controls the real game-changer. The International Air Transport Association had projected earlier this year that international travel may only rebound to pre-pandemic levels in 2024, although the emergence of vaccines now offers some hope that this forecast may be on the conservative side.
With border controls firmly in place, the hotel sector in Singapore has been largely propped up this year by block bookings by the government to house those serving stay home notices (SHN) and quarantine orders demand from those displaced by Malaysia' s movement control order and of late, staycationers.
The block-bookings of SHN and quarantine facilities, however, is expected to start tapering off from Q4 2020.
Thus, hospitality groups with exposure to countries with a sizeable domestic market are seen as benefiting from the recovery in domestic demand ahead of international travel taking off.
With the likes of Ascott Residence Trust (ART), CDL Hospitality Trusts (CDLHT) and Far East Hospitality Trust (FEHT) powering ahead in November, are valuations still attractive?
CGS-CIMB analyst Eing Kar Mei, who identified ART as a choice pick, reckons there is still upside for the hospitality sector, noting that the three Reits are trading below 0.9x price to book value. Even as the outlook remains somewhat cloudy, the market will price in a recovery ahead of the fundamentals, she told The Business Times.
Similarly, OCBC Investment Research analyst Chu Peng sees valuations as undemanding, singling out ART as a top pick with a fair value price of S$1.20. This comes on the back of ART' s defensive portfolio with exposure to long-stay leases and geographically diversified footprint, which will allow it ride on the recovery that will take place in markets with domestic demand.
Nearly 70 per cent of ART' s properties are also located in the Asia Pacific, which overall has been more successfully at containing the pandemic compared to the United States and Europe.
Meanwhile, DBS Group Research has raised its target price for CDLHT, FEHT and Frasers Hospitality Trust to S$1.40, S$0.70 and S$0.70 respectively. It has a buy call on all four counters, including ART (with a target price of S$1.25).
This is not to say there won' t be challenges ahead for the hospitality sector, the biggest one being still depressed occupancies in the months ahead as tourism tries to claw back some semblence of normalcy.
And as recent developments such as the new, more contagious strain of virus in the UK has shown, the road to recovery may be fraught with bumps along the way.
Any pullback in prices should serve as an opportunity for investors to scoop up hospitality counters at a more attractive entry point.
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Joelton
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20-Nov-2020 09:41
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Far East Hospitality positions itself for the long haul as it expands footprint
It inks three new management contracts in core markets Singapore, Australia and Japan
AMID an ongoing pandemic, Far East Hospitality is betting on the long-term potential of the tourism industry: It is pushing ahead with expansion plans, having inked three management contracts in its core markets Singapore, Australia and Japan.
The pandemic will transform travel patterns and the hotel operator is positioning itself to capitalise on these opportunities in the future, chief executive Arthur Kiong told The Business Times (BT) in an interview.
" We have a very long (-term) view on where our business will be headed. Even though the immediate future does not look bright, we think the crisis will change the tourism landscape significantly in the key markets we' re operating in," he said.
Singapore' s upcoming Greater Southern Waterfront, for example, will be a game-changer, he reckons. " Travel over the next few years is going to be inconvenient, even with vaccines. We have to be unique," he stressed. Hotels must thus be able to leverage the surrounding precinct to deliver compelling experiences for guests.
Where the Singapore tourism industry is concerned, Mr Kiong also sees the shift from mass tourism to high-value tourism as promising, and expects the pandemic will create opportunities for segments such as medical tourism to make a comeback.
" The pandemic repositions Singapore as a place that is safe and clean. When medical tourism makes a comeback, we too want to be ready for that," he added. In this respect, Far East Hospitality already has hotel properties near medical clusters such as Novena, Orchard and Bugis.
The company, a joint venture between Far East Orchard and The Straits Trading Company, has nine brands of hotels, serviced residences and apartment hotels, namely, Oasia, Quincy, Rendezvous, Village, Far East Collection, Adina Hotels, Vibe Hotels, Travelodge Hotels and TFE Hotels Collection.
In the second quarter of 2021, Far East Hospitality will, in a calculated move, open its fourth property on Sentosa. This will add to the Village Hotel Sentosa, The Barracks Hotel and The Outpost, which all cater to different demographics.
The 191-room Oasia Resort Sentosa operated under the Le Meridien banner until last month it will next come under the Oasia brand, after Far East Hospitality clinched a management agreement from Far East Organization. Far East Organization purchased the property in mid-2019, after it was put up for sale in 2018.
Oasia Resort Sentosa represents the hotel management company' s foray into the resort and spa category, featuring offerings such as healthy cuisine, among other things.
The pandemic has prompted Far East Hospitality to operate its own spa at Oasia Resort Sentosa, while working with Far East Organization on a concept restaurant for the hotel so it can differentiate the experience from those offered by competitors.
Elsewhere in the region, Mr Kiong expects increased intra-Asia travel in the future, zeroing in on markets such as Japan, Vietnam and Australia.
" Domestic tourism is going to take centre stage for some time to come," he said. " You want to be in markets where there is very buoyant and robust domestic tourism growth."
Far East will open a second Village property in downtown Yokohoma, Japan, in the second quarter of 2021, after opening its first property in Japan, the Far East Village Hotel Ariake, this year.
The 277-room Far East Village Hotel Yokohama property is owned by Far East Organization and will be targeted at business travellers.
" Tourism in Japan has picked up gradually since the easing of travel curbs and the resumption of reciprocal green lanes for business and official travel," said Mr Kiong.
" We are also hopeful that launching the property will give us the opportunity to capture the domestic market."
Finally, the Quincy Hotel Melbourne is slated to open in Q1 2021, making it the first Quincy property outside Singapore. The property is owned by a third party. Far East Hospitality is working together with its joint venture partner Toga Far East Hotels (TFE) to manage the hotel.
Even as the tourism industry battles one of its biggest crises yet, there are still opportunities for an owner-operator such as Far East Hospitality to take advantage of, Mr Kiong told BT. This includes gunning for new management contracts amid industry consolidation, as well as seizing the opportunity to pick up properties that might be on the market at good value.
Globally, the recovery is proving uneven, with some countries being able to fall back on domestic demand to revive tourism. For now, he expects that a strong recovery for Singapore tourism will materialise only in the second half of 2021, given that international borders are still largely shut and business travel comes with stringent requirements such as testing and pre-approved itineraries.
This year, Singapore' s hotel industry has been propped up by government contracts that block off hotels as dedicated government quarantine facilities (GQFs) and Stay-Home Notice (SHN)-dedicated facilities. Hotels also cater to those displaced by Malaysia' s movement control order and been supported by the Jobs Support Scheme (JSS), Mr Kiong noted.
However, as the situation in Singapore is contained, the need for such dedicated facilities will dwindle, which will present a challenge as Singapore concurrently reopens its borders in a slow, measured way, he pointed out.
The JSS, which subsidises staff costs, is slated to taper off from March next year.
While the flurry of bored Singapore residents booking staycations helps with business somewhat, it may not be enough on its own. Staycations by Singaporeans would typically account for 10 per cent of their overall room inventory, said Mr Kiong, although he hopes that number will go up this year.
Performance also varies, with destination hotels such as those on Sentosa doing better than those catering to business travellers.
Far East Hospitality manages (directly or indirectly) 100 hotels and serviced residences in eight countries - Singapore, Australia, Denmark, Germany, Hungary, Japan, Malaysia and New Zealand. Of these, some 40 per cent are owned by Far East-related entities.
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joakim
Member |
21-Sep-2020 05:37
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Interesting that it bounced back down after hitting/close to hitting the TP of analysts from CIMB, DBS, OCBC, MayBank. Seems manipulated. Safer to buy back at 0.50. Low market cap stock.Go to http://t.me/sgHuat to join SG largest trading and investor community on Telegram with 5.4k members! (@sgHuat)
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Puppylearn
Senior |
16-Sep-2020 08:02
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Waiting dividend to buy bag leh....
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