The Business Times
REIT WATCH

Hospitality Reits waiting to take off

Published Mon, Mar 15, 2021 · 05:50 AM

THE International Air Transport Association (Iata) expects personal and leisure travel to return from the second half of 2021 as borders reopen to tourists and travellers.

The tourism-related sectors may be on the cusp of a gradual recovery. Singapore lists five actively traded hospitality trusts with an average price-to-book ratio of 0.8 time and an average distribution yield of 4.6 per cent.

The five, in terms of size, are: Ascott Residence Trust (ART), CDL Hospitality Trusts (CDLHT), Far East Hospitality Trust (FEHT), Frasers Hospitality Trust (FHT), and ARA US Hospitality Trust.

Locally, hotel operators have also seen some uptick in local demand from staycations.

Of those five, the trusts whose portfolios are exposed to the Singapore market are: FEHT (100 per cent), CDLHT (66 per cent), FHT (35 per cent) and ART (16 per cent).

ART is the largest by market capitalisation and also the most diversified hospitality trust with 86 properties across 15 countries. It reported a varied pace of recovery across regions in its latest update. China is leading the pace as domestic travel has resumed, with Australia and Singapore picking up gradually. Europe and the United States have seen a resurgence in Covid-19 cases.

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CDLHT, the second largest, has 15 hotels and two resorts across Singapore, Australia, Japan, New Zealand, the United Kingdom, Germany, Italy, and the Maldives. Four of its six Singapore hotels operate as isolation facilities, which is expected to support occupancy for Q1 2021. The other two hotels in Singapore see demand from staycations, project groups, foreign workers and reciprocal green lane travel arrangements.

FEHT has a pure Singapore portfolio of nine hotels and four serviced residences. In its latest update, the trust continues to benefit from stable master leases signed with well-capitalised companies of its sponsor. Fixed rents made up 77 per cent of its FY2020 revenue. Also, corporate customers contributed 82.1 per cent of its serviced residences revenue and 63 per cent of its hotel revenue.

FHT has a portfolio of 15 assets in Australia, Singapore, the UK, Japan, Malaysia and Germany. Given the market size for domestic travel in Australia, Japan and the UK, the trust expects a rebound in domestic tourism to help its properties recover sooner than the rest of its portfolio, as noted in its latest update.

ARA US Hospitality Trust is Asia's first pure-play US hospitality trust with a portfolio of 41 upscale hotels across 22 states, including Hyatt-branded and Marriott-branded hotels.

Based on its latest update, it notes that the US hospitality industry is expected to recover in tandem with the robust US GDP rebound forecasted in 2021. Domestic leisure travel is expected to drive recovery from Q2 2021, followed by the domestic corporate segment. SGX RESEARCH

  • For more research and information on Singapore's Reit sector, visit sgx.com/research-education/sectors for the monthly S-Reits & Property Trusts Chartbook.

  • Source: SGX Research S-Reits & Property Trusts Chartbook.

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