Far East Hospitality Trust (FEHT) has reported a 4.2% year-on-year decline in gross revenue to SGD51.6 million for the first half of 2025, according to DBS Group Research. The decline is attributed to weaker performance from its Singapore hotels, although this was partially offset by contributions from the newly acquired Four Points by Sheraton Nagoya. Despite the dip, DBS maintains a ‘buy’ rating with a target price of SGD0.70, citing the trust’s attractive valuation and resilience amidst a higher supply landscape in Singapore.
The Singapore-based real estate investment trust, which focuses on hospitality assets, experienced a 9.1% year-on-year drop in distribution per unit (DPU) to 1.78 Singapore cents. This aligns with DBS’s full-year estimate of 3.67 Singapore cents. The decline in revenue was also influenced by a 5.7% and 6.5% drop in revenue per available room (RevPAR) for hotels and serviced residences, respectively, due to increased supply and lower MICE (meetings, incentives, conferences, and exhibitions) activity.
Despite these challenges, FEHT’s borrowing costs decreased by 30 basis points to 3.40%, and the acquisition of the Nagoya property is expected to enhance net operating income yields from 3.7% to 4.9% by the financial year 2026. Geraldine Wong, an analyst at DBS, noted, “FEHT remains well positioned to capture budget-conscious travellers, offering an attractive value proposition for tourists.”
Looking ahead, FEHT is poised to benefit from an anticipated increase in visitor arrivals, with the Singapore Tourism Board projecting up to 18.5 million tourists this year. The trust’s strategic asset enhancement initiatives and rebranding efforts are expected to bolster its market share in the competitive Orchard area.
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