Far East Hospitality Trust went public on the Singapore stock exchange in 2012, as a stapled security. Back then, it was at an offering price of S$0.93 per stapled security, and traded at a 1.0x P/B ratio.
At IPO, Far East Hospitality Trust had a market capitalization of ~S$1.4 billion. Its portfolio started with 11 Singapore properties, including seven hotels and four serviced residences worth ~ S$2.1 billion.
Far East Hospitality Trust focuses on hospitality assets to provide stable income from urban tourism and business travel.
Today, this hospitality giant trades at ~S$0.60 per unit. This means its P/B ratio has dropped to 0.67x, and paid a S$0.043 dividends per unit over the past 12 months.
This means it’s trading at a 7% dividend yield. This compares with other Singapore hospitality trusts I wrote about before here.
Despite owning more assets, its market cap still remained ~S$1.4 billion.
Is Far East Hospitality Trust a bargain opportunity today? Let’s get into it.
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Far East Hospitality Trust: A Singapore Hospitality “Pure-Play”
FEHT’s portfolio is focused. Today, this Singapore REIT has 13 properties – ten hotels, with the remaining three being serviced residences.
All but one are located in Singapore. The only overseas property is Four Points by Sheraton Nagoya, Japan.
What’s more, Far East Hospitality also owns retail units and office spaces that are housed in eight of its 13 properties.
Why its Master Lease Model works
One thing I like about Far East Hospitality Trust is it operates under a master lease structure. Let me explain.
Far East Hospitality Trust leases a large proportion of its portfolio of hotels and serviced residences to its sponsor, Far East Organization and its subsidiaries.
These lessees then manage operations, sub-leasing, and maintenance. Why do this in the first place? Risk control.
You see, this guarantees a predictable rental income stream to Far East Hospitality Trust, which provides a fixed base rent plus a variable income tied to the property’s performance.
It reduces operational risks – as its sponsor absorbs costs like utilities, or marketing. Furthermore, this reduces occupancy fluctuations and seasonal demand risk.
This way, Far East Hospitality Trust benefits from predictable rental income. This way, Far East Hospitality Trust can focus on capital management and growth.
If things go well, Far East Hospitality Trust enjoys 33% of gross operating revenue (GOR) and 30% of gross operating profit (GOP) of its properties – a big upside.
Last year, 58% of Far East Hospitality Trust’s revenues came from fixed rent, 26% came from variable rent, with the remaining 16% from Far East Hospitality Trust own rental revenue.
Far East Hospitality Trust latest financial results: a soft patch
Far East Hospitality Trust’s latest 1H2025 results were weaker than expected:
- Gross revenue fell by 4.2% to S$51.5 million
- Net property income declined by 7.7% to S$45.6 million
- Distributions per unit (DPU) fell by 9.2% to S$0.178 per unit
For Far East Hospitality Trust’s Singapore hotels:
- Occupancy rate by 1% to 79.4% – still steady
- Average daily rates fell by 4.5% to S$168
- Revenue per available room (RevPAR) fell by 5.7% to S$133
Its gross revenue dropped due to lower contributions from the Singapore hotels and serviced residences.
This was offset by stronger performance of its commercial premises and its newly acquired Four Points by Sheraton in Japan.
There was also a lack of large-scale events during the first quarter of 2025. This would usually boost demand for hotel space.
As a result, the weaker performance translated to a decline in DPUs for the first half.
Balance sheet: One of the strongest amongst Singapore REITs
Far East Hospitality Trust leverage ratio is highly manageable, at 32.8%. This is well below MAS regulatory cap of 50%. In other words, it has only S$771 million debt outstanding, with an interest coverage ratio of 3.1x.
This is much lower than most REITs and indicative of a strong balance sheet.
In addition, its average cost of debt is 3.4%. And debt expires every 3.2 years, on average. Meanwhile, ~60% of its debt is fixed interest rates. This shows it still hedges much of its interest rate risk – a comfort signal for income investors.
For the rest of this year, Far East Hospitality Trust doesn’t need to refinance anymore debt. Its debt maturity profile is well staggered, with ~20% of its debt maturing every year for the next five years from 2026 to 2030.
Singapore Tourism: Recovery continues in 2025
In my view, one of the most important metrics for Far East Hospitality Trust is the number of visitor arrivals in Singapore.
In fact, Early 3Q2025 data showed continued recovery, with ~5% more arrivals year over year in July and in August. This reached over 90% of 2019 levels.
The tail end of 2025 looks promising, with Far East Hospitality Trust expecting a further recovery of tourism arrivals.
One concern is the currently stronger Singapore Dollar, which makes tourism into Singapore expensive.
Here’s the other thing. Compared to the first half of 2025, the second half are expected to have more vibrant events.
This should bode well for Singapore’s tourism on top of boosting revenues for Far East Hospitality Trust.
The table below shows a non-exhaustive list of both leisure and MICE (Meetings, Incentives, Conferences, and Exhibitions) events, as well as some recent developments.
They all come from Singapore’s Tourism Board.
My final thoughts
At a discounted 0.67x P/B ratio, Far East Hospitality Trust looks relatively “cheap” against its other Singapore REIT peers.
While I don’t see potential catalysts that will boost Far East Hospitality Trust in the near future, its current 6.7% dividend yield is a big attraction, especially in this current low interest rate environment.
Meanwhile, there is some defensiveness to Far East Hospitality Trust’s earnings given its master lease structure and extremely low debt.
In addition, its dividends are largely covered by some of Singapore’s high-quality hospitality assets including Rendezvous Hotel Singapore and Oasia Hotel.
