• Market under appreciating FEOR&rsquo s new 2030 framework  to unlock value and focus on its asset light business 
• Potential for divestment and unlocking of non-core SG properties to crystallise gross proceeds of up to SGD2.20/ share
• Vision to grow its lodging platforms by > 50% from 72k beds to 110k beds by 2030 will reinvent its earnings profile from an asset heavy one (c.2 &ndash 2.5% asset yield) to asset light platforms (c.8 &ndash 10% ROE) 
• Our SOTP analysis shows a fair valuation of SGD2.00 / share at a c.30% discount to RNAV, implying upside of c.68%

The Business 

Lodging operator within &lsquo essential&rsquo lodging sectors.  Far East Orchard Limited (FEOR) is a Singapore-listed lodging platform focused on long-stay accommodation, with core capabilities spanning PBSA investment, hospitality management and fund management. Backed by Far East Organization (c.63.6% stake), FEOR is the only fully vertically integrated lodging platform on the SGX, capturing value across the entire lifecycle from asset origination to management and eventual exit, with exposure to structurally resilient &ldquo essential&rdquo lodging segments.

The Stock 

Transformation into an asset light operating model Exit of non-core SG assets to crystallise up to SGD 2.2/share (gross). Deep value counter with fair value of SGD2.00 / share.  We see a glide-path towards its 2030 vision with the group executing a decisive pivot towards an asset-light model, anchored by the potential divestment of c.SGD1.1bn of non-core Singapore assets (c.SGD2.20/share, gross) in the immediate term. This should unlock value and provide dry powder for reinvestment. Under its 2030 framework, the group targets > 50% growth in PBSA beds (from c.72k to 110k), scaling its fee-based operating and fund management platform. This transition is set to structurally enhance returns, shifting earnings from low-yielding asset ownership (c.2&ndash 2.5% returns) to higher-quality, capital-efficient income streams (c.8&ndash 10% ROE). We see a clear pathway for NAV gap closure, driven by asset monetisation, capital recycling and platform expansion, with our SOTP valuation of SGD2.00/share implying c.68 upside. 

A first and final dividend of S$0.04 a share has been proposed for FY2025

[SINGAPORE] Hospitality and student housing player Far East Orchard&rsquo s net profit fell 15.5 per cent to S$34.4 million for the six months ended Dec 31, 2025, due to lower net fair-value gains and higher finance costs, the company said on Friday (Feb 27).

 

Revenue rose 65.3 per cent year on year to S$156.3 million, mainly driven by the consolidation of revenue from UK-based operator Homes for Students Limited (HFS) after the completion of a phased acquisition in September 2025.

 

The group recognised lower net gains of S$23.2 million in H2 FY2025, compared with S$24.9 million a year earlier. 

 

This was primarily due to lower net fair-value gains on its investment properties of S$7.7 million, from S$32.3 million previously. The decline was partially offset by a one-off S$19.8 million remeasurement gain on its equity interest in HFS.

 

Total expenses increased to S$59.6 million, from S$48.1 million in H2 FY2024.   Far East Orchard   : O10 -1.53% attributed this to the inclusion of HFS&rsquo operating costs and higher finance expenses after the expiration of low-rate fixed-interest hedges in December 2024.

 

The board proposed a first and final dividend of S$0.04 a share for the financial year ended Dec 31, 2025. This is lower than the total payout of S$0.05 a share in FY2024, which included a first and final dividend of S$0.04 a share and a special dividend of S$0.01 a share.

 

&ldquo Certain cities face more challenges due to less favourable demand-supply dynamics, resulting in lower occupancy,&rdquo the group noted.

 

Its hospitality segment&rsquo s revenue rose to S$69 million in H2 FY2025. This, it said, was mainly driven by &ldquo higher room rates and fee contributions from newly opened hotels in Japan&rdquo . This helped offset weaker performance from owned hotels in Australia and leased properties in Singapore.

 

While Japan was a bright spot for Far East Orchard, it noted that growth may moderate in 2026 as demand stabilises.

 

The group expects global conditions in 2026 to &ldquo remain challenging, with risks from trade and geopolitical uncertainties, potential market volatility and financing cost pressures&rdquo .

 

Alan Tang, group chief executive officer of Far East Orchard, noted that pre-leasing for the next academic year in its UK-based purpose-built student accommodations is &ldquo tracking positively, marginally ahead of the same period last year&rdquo . 

 

The group &ldquo will likely see higher revenue contribution from the UK market&rdquo , he added.

Group doubles down on hospitality and PBSA, plans to recycle capital out of non-core assets

 

[SINGAPORE] Far East Orchard (FEOR) is scaling up its lodging platform with a five-year plan, and is eyeing &ldquo strategic disposal&rdquo of its non-core real estate assets. 

 

The company, held by the Ng family&rsquo s Far East Organization, announced on Monday (Nov 24) it is targeting S$3 billion in assets under management by 2030, up 50 per cent from its S$2 billion core-asset goal for 2025.

 

It also plans to expand to 25,000 hotel rooms and 85,000 purpose-built student accommodation (PBSA) beds by 2030. The addition would bring FEOR&rsquo s total lodging inventory to 110,000 rooms and beds, roughly a 50 per cent increase from its portfolio of more than 72,000 units as at November 2025.

 

The targets are tied to the group&rsquo s five-year growth strategy to strengthen core capabilities, grow recurring earnings and maintain &ldquo asset-right&rdquo discipline. 

 

FEOR said it plans to deepen its asset-management and fund-management capabilities, expand its lodging portfolio, and allocate capital to priority assets while recycling out of lower-yielding or non-core positions. 

 

Core assets comprise its hospitality operations under Far East Hospitality and Toga Far East (TFE) Hotels, hospitality assets, PBSA operations in the UK, as well as PBSA and hospitality fund management platforms. 

 

Listed as non-core assets are two medical suites in Novena commercial development Woods Square in Woodlands the Singapore Business Federation Center, a 31-storey commercial building on Robinson Road in the Central Business District with 48 medical suites and 199 office units and the freehold land on which its Orchard Rendezvous Hotel sits along prime Tanglin Road.  

 

Responding to queries from The Business Times, FEOR executive director and group chief executive Alan Tang said the company plans to divest its non-core assets when opportunities arise and to recycle the proceeds into its core assets, though there is currently no definite timeline for the disposals.

 

The group plans to expand its hospitality business across key geographies. It aims to grow its hotel management platform in Japan and selectively expand into priority South-east Asian cities, as well as raise its UK and Europe exposure through the TFE properties. 

 

It hopes to capture rising domestic and regional travel demand, capitalise on mid-scale segment recovery, and sees strong operational capabilities in key gateway cities. 

 

In fund management, the group will build a lodging-focused platform and seed new funds with a mix of existing assets and new acquisitions. 

 

For the PBSA segment, FEOR plans to grow fee-based business, selectively expand into build-to-rent and co-living in the UK and Europe, as well as optimise and recycle capital within the UK PBSA portfolio. 

It aims to expand the segment and build up fund management capabilities 

[SINGAPORE] When real estate veteran Alan Tang took over as group chief executive officer of Far East Orchard (FEOR) on Jan 1, 2020, few could have foreseen how quickly the world would change with the spread of Covid-19.

 

Within weeks, borders closed and travel collapsed &ndash a sudden shock for a company heavily exposed to global hospitality.

 

&ldquo The first year was trying,&rdquo Tang recalled in a recent interview with The Business Times, just after the group reported that its net profit had doubled year on year to S$37.6 million for the nine months ended Sep 30.

 

&ldquo I was trying to understand the business, and getting to know my colleagues and teams, all in the midst of lockdowns and restrictions,&rdquo he said.

 

Yet the upheaval also opened a window of opportunity.

 

While hotels went dark, the group&rsquo s UK purpose-built student accommodation (PBSA) portfolio remained stable, as most students continued living on-site and attending classes virtually. 

 

On the hotel front, Tang credited his team for securing government business to keep operations running, even as the crisis exposed hospitality&rsquo s vulnerability.

 

By mid-2020, Tang convened a strategic review that led to FEOR25 &ndash a five-year plan to build a more resilient lodging platform by growing hospitality and PBSA to 25,000 rooms and 5,000 beds, respectively, by 2025.

 

&ldquo Covid helped us firm up our resolve,&rdquo he said, noting the need to diversify and strengthen recurring income beyond hotels.

 

Student accommodation a key profit driver

Since then, the group&rsquo s PBSA segment has expanded steadily and indeed, brings in more operating profit than hospitality. Based on its 2024 annual report, operating profit rose to S$37.1 million in 2024, more than double the S$13.6 million recorded in 2020.

 

Hospitality, meanwhile, recovered from an S$18.7 million loss in 2020 to a S$29.1 million profit in 2024 as travel resumed.

 

Assessing the outcome of FEOR25, Tang reflected that the group &ldquo gave it the best shot right in the midst of Covid&rdquo .

 

PBSA growth &ldquo overachieved&rdquo , aided by its majority stake in UK operator Homes For Students (HFS), which manages over 55,000 beds.

 

On the hotel side, however, Tang acknowledged that FEOR &ldquo will not be able to meet our hospitality target&rdquo of 25,000 rooms, citing reasons such as higher interest rates and elevated development costs.

 

Still, PBSA&rsquo s resilience helped balance the portfolio. &ldquo That&rsquo s why I think at the end of the day it&rsquo s always good to have levers you can pull,&rdquo Tang said. &ldquo I&rsquo d say it&rsquo s a pretty good outcome.&rdquo

 

The group also launched its first fund &ndash the FE UK PBSA Development Fund, which closed in June with £ 96 million (S$166 million) raised.

 

Describing it as &ldquo the cherry on top&rdquo , Tang said that although it was not part of the original FEOR25 roadmap, the fund allows FEOR to scale its PBSA business without straining its balance sheet, while generating recurring fee income and strengthening its integrated lodging platform.

 

With FEOR25 nearing its final year, the group is crafting its next roadmap, informally called FEOR2030.

 

Tang said the plan is likely to deepen FEOR&rsquo s fund-management capabilities, expand into adjacent lodging segments such as co-living or build-to-rent, and continue growing PBSA in the UK and Europe.

 

Where Far East stands in different markets

Nevertheless, Tang remains measured in where the group deploys capital. In Singapore, he said the post-pandemic travel surge has peaked.

 

But while &ldquo pent-up demand gave (the group) a very strong recovery&rdquo , Tang noted that visitor levels were still below 2019&rsquo s, and increasing labour and operating costs are offsetting profits.

 

In Australia, FEOR&rsquo s largest hospitality base, recovery is uneven.

 

&ldquo It&rsquo s such a vast continent so the pace differs. Sydney is doing better, for example, than Melbourne,&rdquo he said. 

 

The group is refurbishing hotels such as Rendezvous Perth Scarborough and Adina Sydney Darling Harbour.

 

Tang said these assets fall under FEOR&rsquo s asset life cycle programme, where properties are reviewed for potential divestment after enhancement. No decision has been made, though some older non-core investments are &ldquo already slated for sale&rdquo .

 

The UK remains central to the group&rsquo s PBSA business, supported by strong structural demand.

 

But obstacles remain. &ldquo The challenge right now is construction cost, as well as the regulatory processes,&rdquo Tang said, adding that this includes tighter fire-safety rules and limited contractor capacity.

 

Japan is another bright spot. Tang called it &ldquo the bright star right now for hospitality&rdquo amid booming tourism, though competition is intense.

 

Europe, beyond the UK, presents a longer-term opportunity for the HFS platform, while the United States remains in a &ldquo rough patch&rdquo and is not a priority.

 

Share price yet to catch up with valuation

Still, some investors may not fully appreciate that FEOR has revamped its business model.

 

The company&rsquo s shares hovered around S$1 in recent years, although in July, it recorded a 52-week high of S$1.32. Year-to-date, the stock is up some 15 per cent.

 

An unrated report by SAC Capital in October noted that the counter was trading at a 12-month trailing price-to-earnings ratio of 10.5 times, far below the mainboard average of 19.9 times.

 

This comes despite FEOR&rsquo s net profit rising to S$59 million in FY2024 &ndash more than thirty-nine times the S$1.5 million recorded in FY2020.

 

Asked about the gap, Tang said investor perception has yet to catch up with the company&rsquo s transformation.

 

He added that FEOR is still often seen as a property developer.

 

&ldquo We&rsquo ve moved on from that. We&rsquo re not a developer anymore &ndash we&rsquo re building up our recurring-income base. That&rsquo s the story we need to keep stressing so the market understands what we&rsquo re trying to do.&rdquo

The sharp increase is mainly driven by one-off gains of S$24.9 million

[SINGAPORE] Hospitality and student housing player Far East Orchard&rsquo s net profit more than doubled to S$37.6 million for the nine months ended Sep 30, up from S$16.9 million in the same period a year earlier.

 

The sharp increase was largely driven by one-off gains totalling S$24.9 million. 

 

These comprised a S$9.1 million gain from its acquisition of a 6.7 per cent stake in the Woods Square integrated commercial development, and a S$15.8 million remeasurement gain on its previously held 49 per cent interest in UK-based student accommodation operator Homes For Students (HFS), following the completion of its second-phase acquisition.

 

Excluding these one-off gains, profit would have been S$12.7 million, the mainboard-listed company said in a bourse filing on Thursday (Nov 6).

 

Group chief executive Alan Tang said the completion of the HFS acquisition marked an important milestone in strengthening Far East Orchard&rsquo s lodging platform and expanding its UK footprint. 

 

He added that the group remains focused on building a resilient business through disciplined capital management and operational excellence despite near-term challenges.

 

Revenue for the period fell 4.2 per cent to S$134.2 million, while operating profit declined 8.9 per cent to S$42.9 million.

 

These declines were attributed to weaker performance in the group&rsquo s hospitality segment, which was affected by ongoing refurbishment works at Rendezvous Hotel Perth Scarborough in Australia. 

 

Contributions from its hospitality joint ventures in Australia and Europe also fell, mainly due to softer performance in Europe &ndash which had benefited from a stronger events calendar in 2024 &ndash as well as the impact of a cyber incident in March 2025.

 

Far East Orchard said business interruption claims helped cushion the impact of the cyber incident. However, its Australia joint venture was affected by a one-off liability recognised this quarter, related to a claim previously disclosed as a contingent liability.

 

Revenue remained stable in its purpose-built student accommodation (PBSA) segment, though operating profit was weighed down by higher costs.

 

As at Sep 30, the company&rsquo s 13 PBSA assets &ndash comprising more than 3,700 beds &ndash had an occupancy rate of 88.4 per cent for the 2025/2026 academic year.

 

For its hospitality segment, Far East Orchard noted that Singapore recorded 12.9 million visitor arrivals from January to September, a 1.3 per cent decline year on year and below the Singapore Tourism Board&rsquo s full-year target of 17 million to 18.5 million. 

 

The group said tourism arrivals were gradually recovering in Australia, supported by major sporting events, though demand remains uneven across cities. 

 

Meanwhile, Japan recorded over 30 million visitor arrivals year to date, but the pace of growth has moderated, the group said.

 

Despite the challenging outlook, Far East Orchard said it will continue investing in refurbishments at Rendezvous Hotel Perth Scarborough, Adina Apartment Hotel Sydney Darling Harbour and Adina Apartment Hotel Frankfurt Neue Oper to support long-term growth.

 

Far East Orchard said it &ldquo anticipates challenging operating conditions&rdquo amid uneven global growth and varying inflation trends, even as the International Monetary Fund slightly raises its 2025 and 2026 growth forecasts. 

 

The group said it will continue to monitor developments and manage potential impacts on its operations.

Far East Orchard has completed the second stage of the phase acquisition of Homes For Students (HFS), a student accommodation provider in the UK, raising its interest to 84%.

 

Far East Orchard first announced the acquisition of a 49% stake in HFS in April 2024, for GBP17.6 million. It acquired the 49% stake from two non-management sellers.

 

The group completed the first stage of the phased acquisition, acquiring about 35% of stake in HFS for GBP25 million, about $43.3 million. With its current stake at 84%, HFS becomes a subsidiary of Far East Orchard.

 

HFS operates over 55,000 beds in more than 55 university towns and cities in the UK and Ireland, providing an integrated student accommodation management and facilities management service.

 

Far East Orchard plans to acquire the remaining stake in HFS by November 2030.

 

Far East Orchard has reported earnings of $19.6 million for the 1HYF2025 ended June 30, up 7.5% y-o-y. Excluding the $9.1 million one-off gain from an acquisition made in January, earnings would have declined to $10.5 million.

 

The group&rsquo s revenue for the 1HFY2025 declined 6.1% y-o-y to $91.3 million, and profit after tax declined 8.3% y-o-y to $18 million.

 

The group says that this decline was due to the weaker performance in the Hospitality business segment, impacted by the ongoing refurbishment works at its owned hotel in Australia, the Rendezvous Hotel Perth Scarborough (RHPS).

 

The group&rsquo s leased and managed property, Orchard Rendezvous Hotel, Singapore, continued to be affected by surrounding construction works. The divestment of Rendezvous Hotel Perth Central in December 2024 also resulted in the absence of contribution from that asset in 1HFY2025.

 

In addition, a cybersecurity incident affecting Toga Far East Hotels (TFE Hotels) and the Adina Europe joint venture in March 2025 had impacted operations.

 

Meanwhile, recurring income from the UK PBSA business segment remained resilient, underpinned by the acquisition of HFS in April 2024, which contributed positively to the share of results in 1H FY2025.

 

Property development earnings also contributed positively, with a higher share of results from Woods Square following its 6.7% interest increase in January 2025 (WS acquisition). A one-off gain of $9.1 million recognised from the WS acquisition helped cushion the impact of the softer operating results.

 

Excluding the one-off gain, profit after tax would have been lower y-o-y, reflecting the operational challenges and continued macroeconomic pressures.

 

As at June 30, the group&rsquo s hospitality portfolio comprises over 17,500 rooms, excluding the approximately 500 rooms in the pipeline. The group&rsquo s PBSA portfolio occupancy stood at 92% for the AY24/25, and its owned UK PBSA portfolio comprises about 3,700 operational beds and about 1,000 beds under development.

This supports the company&rsquo s pivot &lsquo towards an asset-light model and its objective of growing recurring fee-based income&rsquo

 

[SINGAPORE] Far East Orchard on Wednesday (Jun 18) said its first private student accommodation development fund in Singapore has secured £ 96 million (S$166 million) in total committed capital at its closing.

 

This includes £ 70 million raised at its first closing in August last year. At the time, the company said it had a target aggregate commitment of £ 100 million.

 

Institutional investors account for 63.5 per cent of the FE UK Student Accommodation Development Fund&rsquo s capital, with Far East Orchard : O10 0% retaining the remaining 36.5 per cent stake, the company said in a bourse filing.

 

The fund focuses on purpose-built student accommodation (PBSA) development opportunities in strong universities across the United Kingdom.

 

To date, it has committed more than 35 per cent of the raised equity into two such developments &ndash a 273-bed project in Glasgow, Scotland and a 239-bed one at Plymouth Grove in Manchester, England.

 

The company said the establishment and closing of this inaugural fund mark a &ldquo significant step forward&rdquo in its strategy to &ldquo build a resilient lodging platform&rdquo .

 

It added that the fund also supports &ldquo its strategic pivot towards an asset-light model and its objective of growing recurring fee-based income&rdquo .

On May 15, Far East Orchard chair and non-executive director Koh Kah Sek purchased 20,000 shares at an average price of S$1.04 apiece. Her direct interest is 0.03 per cent. This followed Far East Orchard providing a Q1 FY 2025 business update on May 8, in which it reported a profit after tax of S$17.1 million in Q1 FY 2025. This included a one-off gain of S$9.2 million from acquiring an additional 6.7 per cent interest in Woods Square.

 

Revenue and operating profit were also impacted by refurbishment in Australia, stronger contributions from the UK purpose-built student accommodation segment, and continued expansion with a new acquisition in Manchester and a hotel opening in Osaka.

Significant rise is driven by one-off gain of S$9.2 million from acquisition of additional stake in Woodlands Square

 

[SINGAPORE] Hospitality and student housing player Far East Orchard : O10 +0.97%&rsquo s net profit more than doubled to S$17.3 million for the first quarter ended Mar 31, 2025, from S$6.9 million the previous corresponding period, the company announced on Thursday (May 8).

 

The significant rise in its Q1 net profit was driven by a one-off gain of S$9.2 million from the acquisition of an additional 6.7 per cent interest in Woodlands Square in January 2025, it added.

 

This gain arose from the higher fair value of net assets acquired compared to the purchase consideration.

 

However, revenue for the period fell 8.6 per cent to S$46.5 million, while operating profit declined by 4.4 per cent to S$17.3 million.

 

These declines were attributed to reduced contributions from the hospitality business, which was affected by ongoing refurbishment works at Rendezvous Hotel Perth Scarborough (RHPS).

 

Nevertheless, Far East Orchard said that its overall performance was supported by stronger contributions from its purpose-built student accommodation (PBSA) and property development segments

 

The company&rsquo s acquisition of a 49 per cent stake in PBSA operator Homes for Students (HFS) in April 2024 began to positively contribute to the share of results in Q1 FY2025.

 

HFS has expanded its portfolio to over 55,000 owned and managed beds across the UK.

 

Additionally, the company recognised a higher share of results from Woodlands Square in the property development segment, driven by increased sales in the first quarter of FY2025 and a rise in its shareholding from 33 per cent to 40 per cent.

 

Far East Orchard&rsquo s performance reflects the results of scaling its lodging platform, said chief executive Alan Tang. He highlighted that the company&rsquo s PBSA development fund is progressing well, with the recent acquisition of a second development site in Manchester, a 239-bed project, in April.

 

&ldquo These initiatives strengthen our asset-light strategy, boost fee-based income, and highlight the resilience of our diversified approach as we focus on sustainable, long-term growth,&rdquo added Tang.

 

As at Mar 31, the company&rsquo s 13 operational PBSA assets, comprising over 3,700 beds, had 67 per cent reservations for the academic year 2025/26, aligning with current market trends.

The 239-bed facility is expected to be completed in 2028

 

[SINGAPORE] Far East Orchard : 5TJ +2.94% announced on Thursday (Apr 3) that it would acquire a purpose-built student accommodation (PBSA) site in Manchester for £ 10.9 million (S$19.1 million).

 

The 275-year leasehold site, which was granted planning permission a year ago, will be developed into a 239-bed PBSA property. It is expected to be completed in 2028.

 

This move marks the group&rsquo s maiden entry into Manchester, and brings its portfolio of existing and pipeline PBSA assets to over 4,900 beds.

 

The buyer, Plymouth Grove Development, is a subsidiary of the group, held through a limited partnership with the private student accommodation development fund FE Student Accommodation Development (FESAD).

 

This will be the second development project undertaken by FESAD, which was set up in August 2024. Its previous acquisition took place in 2024 in Glasgow, Scotland, where the PBSA site is to be developed by 2026.

 

The group&rsquo s wholly owned subsidiary Far East Orchard Investments (UK), Aurum Investments (a wholly owned subsidiary of Woh Hup Holdings) and an unrelated third-party investor hold 50 per cent, 21.4 per cent and 28.6 per cent in this Manchester development, respectively, through FESAD.

 

The group chief executive officer of Far East Orchard, Alan Tang, said: &ldquo The venture into Manchester is an exciting move into a new UK city for the group&rsquo s PBSA business segment, and we are pleased to continue this journey with Woh Hup through the fund we established in 2024.&rdquo

 

He added that the group&rsquo s student accommodation portfolio is a key pillar in its strategy to build a resilient lodging platform underpinned by sustainable and recurring income.

 

The total cost of development of the site, including its purchase price, is estimated to be around £ 47.0 million, based on current estimates and barring unforeseen circumstances.

 

The acquisition is not expected to have any material impact on the consolidated net earnings per share and consolidated net tangible assets per share of Far East Orchard for the current financial year ending Dec 31.

The incident has had no impact on Far East Orchard&rsquo s networks, which are &ldquo completely independent&rdquo from those of TFE Hotels, the group says

[SINGAPORE] Far East Orchard said on Friday (Mar 14) that hotels under its hospitality joint venture, Toga Hotel Holdings Unit Trust, were hit by a cybersecurity incident.

 

This has affected the networks of TFE Hotels, which is the operating business of Toga Hotel Holdings Unit Trust.

 

Far East Orchard holds a 35 per cent interest in Toga Hotel Holdings Unit Trust through the company&rsquo s 70 per cent-owned subsidiary Far East Hospitality Holdings. The units of the trust are held equally by Australian real estate developer Toga Group and Far East Hospitality Holdings.

 

According to a statement posted by TFE Hotels on its website, systems in many of TFE&rsquo s hotels have since been restored, with the hotels able to serve guests.

 

It added that as an interim measure, some hotel teams are manually assisting guests, with the hotels&rsquo phone lines diverted to a central customer-service team. Its hotels also have measures in place to prevent the storage of credit card details on its systems.

 

TFE is currently working with relevant cyber experts towards the restoration of operations, which includes complete access to all its back-end systems, as well as for further investigations.

 

Far East Orchard said that the cybersecurity incident has had no impact on its own networks, which are &ldquo completely independent&rdquo from those of TFE Hotels.

Board proposes a first and final dividend of S$0.04 per share, along with a S$0.01 per share special dividend

HOSPITALITY and student housing player Far East Orchard&rsquo s net profit fell 29.4 per cent to S$40.7 million for the six months ended Dec 31, 2024, hit by lower fair value gains and higher expenses, the company said in a bourse filing on Friday (Feb 28).

 

Revenue for the period rose 1.9 per cent to S$94.5 million, driven by rental growth in the purpose-built student accommodation (PBSA) segment, as well as contributions from the Southampton PBSA asset acquired in May 2023.

 

However, the company recognised lower net gains of S$24.9 million in H2, compared to S$$57.8 million in the year-ago period. This was due to smaller fair value gains on investment properties and higher unrealised currency losses.

 

Total expenses also increased by S$1.2 million to S$48.2 million, with administrative costs up due to inflation and added operating costs to support the enlarged PBSA portfolio.

 

The company&rsquo s board has nevertheless proposed a first and final dividend of S$0.04 per share, along with a S$0.01 special dividend, following the successful divestment of Rendezvous Hotel Perth Central in December 2024.

 

This brings its total dividend for FY2024 to S$0.05 per share, up from S$0.04 per share in FY2023. The payment date for the FY2024 dividend has not been announced

 

For FY2024, Far East Orchard&rsquo s net profit was down 10.6 per cent to S$59 million while revenue rose 4.5 per cent to S$191.9 million.

 

Headwinds

Far East Orchard faced headwinds as occupancy in its PBSA portfolio dropped to 90 per cent in the 2024-2025 academic year, from 99 per cent in the academic year before that. The company attributed the fall to lower international student acceptance.

 

Meanwhile, its hospitality segment&rsquo s H2 revenue fell by about S$500,000 to S$64.1 million due to the weaker performance of its leased properties in Singapore and owned hotels in Australia. The revenue of one Australia hotel was also hit by the start of refurbishment works in October 2024.

 

A silver lining is the Japan market, where Far East Orchard saw additional revenue contributions from a leased hotel, which began operations in April 2023, and stronger performance from its managed properties.

 

Far East Orchard is riding the recovery in global travel and rental reversions in the PBSA segment, said chief executive Alan Tang.

 

&ldquo The strategic expansion of the PBSA business as part of strengthening our lodging platform has also contributed to the positive momentum towards the group&rsquo s (2025) strategy,&rdquo he added.

 

That said, Tang expects a &ldquo flattening&rdquo of the rent and room rate growth in the company&rsquo s PBSA and hospitality businesses, due to the &ldquo normalisation of the post-pandemic surge and market uncertainties&rdquo .

 

&ldquo Despite easing inflation and slow interest rate decline, we continue to operate in an elevated cost environment amid the ongoing economic and geopolitical uncertainties. We will adopt a cautious approach to remain focused on scaling our lodging platform,&rdquo he said.

 

Far East Orchard shares ended Friday flat at S$1.04, before results were announced.

Wholly owned subsidiary Tannery acquires 6.7% of the company&rsquo s share capital

 

A UNIT of Far East Orchard (FEO) has acquired an additional stake in its commercial property in Woodlands for S$25 million.

 

Woods Square, an integrated commercial development comprising offices and retail spaces, was completed in 2020 and was a joint venture between FEO&rsquo s wholly owned subsidiary Tannery, Far East Civil Engineering (FECE), and Sekisui House.

 

Each joint venture partner held a one-third interest in the share capital of Woodlands Square, the company set up to own and undertake the development of Woods Square.

 

In a bourse filing on Friday (Jan 24), FEO said Tannery and FECE agreed to purchase all of Sekisui House&rsquo s interest in Woodlands Square.

 

Tannery acquired 6.7 per cent of the company&rsquo s stake for S$25 million.

 

Meanwhile, FECE acquired the remaining 26.7 per cent stake. FECE is wholly owned by the estate of Ng Teng Fong, a controlling shareholder of FEO.

 

This resulted in Tannery and FECE now owning 40 per cent and 60 per cent of the company, respectively.

 

FEO said the consideration paid by Tannery is lower than 6.7 per cent of the net asset value of Woodlands Square. &ldquo This strategic opportunity allows the company to utilise its excess cash to generate higher returns to deliver long-term value to shareholders,&rdquo it added.

 

It also said the office and retail units at Woods Square are &ldquo close to 100 per cent leased, while the office units held for sale continue to achieve stable selling prices&rdquo .

FEO expects the acquisition to further contribute to its income stream.

 

The pro forma net tangible asset per share of FEO for its financial year ended Dec 31, 2023 &ndash assuming the acquisition took place on Dec 31, 2023 &ndash would be unchanged at S$2.59.

 

Meanwhile, pro forma earnings per share &ndash assuming the acquisition took place on Jan 1, 2023, and excluding the one-off gain &ndash would rise to S$0.139, from S$0.137.

The group&rsquo s focus on student housing and hospitality has boosted growth, despite economic uncertainty and volatility 

 

SINCE Alan Tang took on the mantle of Far East Orchard&rsquo s (FEOR) chief executive officer in 2020, the group has been hard at work in building its lodging platform, honing in on student housing and hospitality to deliver growth and returns. And that has reaped results.

 

For the first nine months of its latest financial year ended September (9M FY2024), FEOR&rsquo s earnings have more than doubled year on year to S$16.9 million, from S$7.6 million in the first nine months of FY2023.

 

9M FY2024 revenue was up 4.5 per cent to S$140.1 million, from S$134.1 million in the same period last year. Revenue for 9M FY2024 was around 76.3 per cent of FY2023&rsquo s full-year revenue of S$183.6 million.

 

For comparison, FEOR recorded earnings of S$1.5 million on revenue of S$112.2 million in FY2020 &ndash the first full-year following Tang&rsquo s appointment to the helm.

 

Tang attributed much of the growth to the group&rsquo s clear vision and mission of being an enduring real estate enterprise in Singapore, delivering steadfast growth to stakeholders.  

 

From that came the FEOR 25 strategy, the company&rsquo s current five-year plan to grow its recurring income stream by riding on hospitality and student accommodation &ndash chosen based on its existing niche in the two sectors, said Tang. 

 

He pointed out that the two sectors are complementary as well, with hospitality assets being generally resilient to inflation since &ldquo people will always want to travel&rdquo , while purpose-built student accommodations (PBSA) are &ldquo good natural diversifiers&rdquo and a countercyclical tool to hotels and the like. 

 

The UK&rsquo s PBSA market &ndash where most of FEOR&rsquo s beds are &ndash has a structural supply-demand gap that makes it a favourable market to continue exploring, Tang added. &ldquo Demand will continue to outstrip supply with projected full-time undergraduates growing at a faster pace than PBSA pipelines, and this will continue to fuel rental growth.&rdquo  

 

Tackling targets

Under the FEOR 25 strategy, the group aims to grow its hospitality and PBSA portfolios to 25,000 rooms and 5,000 beds, respectively, by 2025.

 

It also planned to grow its lodging platform into a &ldquo vertically integrated ecosystem spanning key capabilities such as asset management, operations and investment&rdquo across the business, said Tang. &ldquo (This) also gives us the leeway to expand our business segments horizontally to other accommodation types and services.&rdquo

 

Currently, Tang said, the group is on track to hit most of its targets, but there are admittedly some wins and some losses. 

 

In the hospitality sector, for instance, FEOR now has more than 17,000 operational rooms across its entire hospitality portfolio with 1,400 rooms in the pipeline. That puts the total at nearly 19,000 rooms, still some way to go to reach the 25,000 rooms it hoped to have by next year.

 

&ldquo Even with one year to go, that&rsquo s still quite a stretch, I would say,&rdquo Tang acknowledged. 

 

On the other hand, the group has about 3,700 operational beds in its PBSA portfolio, with another thousand under development. This works out to just under 5,000 beds &ndash well before the 2025 deadline. 

 

Furthermore, FEOR acquired in April a 49 per cent stake of Homes For Students, a UK-based PBSA operator managing over 40,000 beds across the UK.

 

Writing the next chapter

Meanwhile, the group&rsquo s plan for the next five years after 2025 is still up in the air. What is certain is that FEOR&rsquo s next five-year strategy will continue building on its vision and mission, said Tang. 

 

Tang added that the group will also remain agile and flexible to pivot if necessary. 

 

This could mean diversifying its lodging platform beyond hospitality and PBSA, especially since there are many other sectors to potentially explore, such as co-living and build-to-rent accommodation. 

 

Even within the PBSA and hospitality segments, Tang noted that there is still room for growth and expansion across other geographies. 

 

He cited Japan as an example for hospitality &ndash covering the cities of Tokyo, Osaka and Fukuoka would give the group five to 20 properties easily, since the market is so large and deep, said Tang.  

 

On the PBSA front, he noted that with the Homes For Students operating platform in the UK, the group could expand to other European cities, as they are on the same side of the pond. 

 

But he emphasised that the group &ldquo cannot just be fixated on lodging&rdquo assets. &ldquo Right now, the focus is not on (property development or investment, two of FEOR&rsquo s other business segments), but it doesn&rsquo t mean it will never be,&rdquo he said. 

 

In the meantime, he highlighted the importance of staying true to the group&rsquo s long-term goals over chasing short-term profits. &ldquo It is a fairly deliberate act to keep the longer-term picture in mind &ndash sticking to it and now we&rsquo ve seen some fruits.&rdquo