Brokers' take

Singapore Hospitality Sector | Neutral OCBC Investment Research, Feb 8

Full-year RevPAR/RevPAU growth rates came in at -8.6 per cent for CDL Hospitality Trusts, -5.7 per cent for OUE Hospitality Trust (OUEHT), and -3.0 per cent for Ascott Residence Trust. Far East Hospitality Trust will be announcing their results before trading hours on Feb 22.

In terms of operational outlook, we are less concerned with the expected lack of MICE events this odd-numbered year and see global economic optimism as the key determining factor of trading conditions. Going by FY16 net property income (NPI), hospitality Reits are trading at implied cap rates (or NPI over market capitalisation and net debt) of 5 per cent to 6 per cent. Our top pick within hospitality is OUEHT ("buy"; TP: S$0.750), as we expect it to be buffered by inorganic contributions from its recent acquisition.