Far East Hospitality Trust (FEHT) has demonstrated resilience in the first half of 2025, with its mid-tier hotels performing better than expected amid a sector-wide slowdown, according to a CGS International report. The trust’s distribution per unit (DPU) for the first half of the year was 1.78 Singapore cents, forming 46% of the full-year forecast of 3.84 cents. This performance was bolstered by a S$5.4 million top-up from the divestment of Central Square.
FEHT’s management has strategically adjusted room rates to maintain occupancy levels, particularly in the second quarter of 2025. Despite a 5.7% year-on-year decline in revenue per available room (RevPAR) for Singapore hotels, the trust’s mid-tier properties have been favoured by travellers seeking more affordable options. This trend is expected to continue, with forward bookings for the third quarter holding steady.
The trust also reported a S$2.4 million year-on-year saving in interest expenses, thanks to a decrease in the average cost of debt. Additionally, FEHT plans to issue earn-out stapled securities on 20 August 2025, following the acquisition of Oasia Hotel Downtown.
Looking ahead, FEHT is open to acquiring smaller properties in Japan and Singapore, potentially funded through capital recycling of mature assets. The trust’s gearing ratio increased slightly to 32.8% by the end of June 2025. CGS International maintains an “Add” rating for FEHT, with a target price of S$0.74, citing potential re-rating catalysts such as improved tourist arrivals and accretive acquisitions. However, risks include a global travel demand slowdown and changes in interest rates.
“`
