REAL estate group Far East Orchard is expecting its hospitality business to stabilise in the next two years following a gradual recovery from the Covid-19 pandemic last year, the company said on Saturday (Apr 15).

Its operational priority is to grow its hospitality portfolio to 25,000 rooms by 2025 and to deepen its presence in Singapore, Australia and Japan, it said in response to questions from the Securities Investor Association Singapore (Sias) ahead of its annual general meeting on Apr 19.

Since the start of its FEOR 25 five-year strategy, Far East Orchard has, together with its joint venture Toga Far East Hotels, added 15 hotels under management with about 3,300 rooms across Australia, New Zealand, Germany, Japan and Singapore.

This year, it expects to open five new managed hotels with more than 750 rooms, it said.

At the same time, it plans to grow its purpose-built student accommodation (PBSA) portfolio to 5,000 beds, focusing on cities in the United Kingdom with high-tariff universities and strong student growth.

It added that the PBSA business segment has provided a steady stream of recurring income during the pandemic to mitigate the adverse impact of Covid-19 on its hospitality business performance.

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Return on assets in financial year 2022 was 0.83 per cent, as the hospitality segment has not fully recovered, it said.

Total shareholder return for 2013 to 2022 was -28.3 per cent, said the company, noting that this is “generally in line with our development and hospitality peers”.

However, its three-year total shareholder return over the pandemic was 2.4 per cent, which it said is better than its peers.

Amid the rising interest rate environment, Far East Orchard said one of its financial priorities is to continue actively manage the impact of rising rates through interest rate hedging, repayment of borrowings and maintaining a healthy gearing ratio.

As at Dec 31, one-third of the group’s borrowings are hedged.