Hospitality S-Reits, integrated resorts most exposed to fallout from outbreak: Moody's
Vivienne Tay
Singapore
THE revenue-generating capacities of Singapore's gaming sector and hospitality real estate investment trusts (Reits) will be the hardest hit by the novel coronavirus outbreak, according to Moody's Investors Service.
This is because the two industries generate the majority of their revenue from foreign visitors, Moody's said in a report on Wednesday.
Tourist arrivals to Singapore are set to fall "significantly" in the coming months, given that travel restrictions have already led to cancellations of tour and hotel bookings, Moody's noted.
The Republic's two integrated resorts - Marina Bay Sands and Resorts World Sentosa - will be susceptible to large falls in gaming revenues, although both have sufficient cash to meet committed capital spending in 2020 and have minimal debt maturities this year, wrote Moody's vice-president and senior credit officer Jacintha Poh.
Elsewhere in Asia, Macau - the world's gambling mecca - on Tuesday told casino operators in the territory to close for two weeks in an attempt to curb the coronavirus spread.
As for Singapore's hospitality industry, occupancy rates across some properties are likely to weaken amid the drop in tourist arrivals.
Moody's has ratings on two Singapore-listed hospitality Reits: Frasers Hospitality Trust and Ascott Residence Trust. Although both Reits generate less than 25 per cent of their revenues from Singapore, regional travel will also weaken amid fear of contagion, Ms Poh said.
Nonetheless, the trusts are expected to have sufficient liquidity in the next 12 months to buffer against the fall in travel numbers, she added.
Analysts also downgraded their calls on two other Singapore hospitality Reits - Far East Hospitality Trust (FEHT) and CDL Hospitality Trusts (CDLHT) - to "hold" on Monday, citing the virus outbreak. DBS Group Research lowered its price target on FEHT to S$0.69 from S$0.80 previously, while OCBC Investment Research reduced its fair value estimate on CDLHT to S$1.62 from S$1.69.
Travel restrictions and virus-related concerns have also resulted in the cancellation or postponement of events in Singapore's meetings, incentive travel, conferences and exhibitions scene.
The National Association of Travel Agents Singapore postponed its annual travel fair to May 1 to 3, after exhibitors expressed concerns that turnout could be low if the event went ahead on Feb 21 to 23.
Shares of Genting Singapore, which owns Resorts World Sentosa, rose two cents, or 2.4 per cent, to S$S$0.865 on Wednesday. Likewise, the Reits and business trusts ended mostly higher, in line with a general market recovery.
