To The Moon

Hospitality trusts recently took the spotlight as the S-Reit sub-segment reported year-on-year (yoy) growth in distribution per unit (DPU) for FY2023, bolstered by a base effect and a strong recovery in international travel. The five hospitality trusts recorded, on average, 21% yoy growth in FY2023 DPU.

Four of the trusts –  $ARA HTrust USD(XZL.SI)$ ,  $CapLand Ascott T(HMN.SI)$ $CDL HTrust(J85.SI)$ $Far East HTrust(Q5T.SI)$ $Frasers HTrust(ACV.SI)$ – reported full-year FY2023 earnings ending Dec 31, 2023. Frasers Hospitality Trust : ACV 0% (FHT) reported full-year FY2023 (ending Sep 30, 2023) in November 2023, and recently unveiled its Q1 FY2024 business updates.

REIT Watch - Five hospitality S-Reits and property trusts

1. $ARA HTrust USD(XZL.SI)$

$ARA HTrust USD(XZL.SI)$ declared a distribution per stapled security (DPS) of 3.43 US cents for FY2023, a 12.3% increase from FY2022. This was attributed to improved revenues and a robust operational performance.

Portfolio occupancy, while still below pre-pandemic levels, improved 4 percentage points yoy to 69.3%. Average daily room rate grew 5.3% and boosted revenue per available room (RevPAR) to US$96, representing 12.9% growth yoy.

2. $CapLand Ascott T(HMN.SI)$

Clas increased FY2023 DPS by 16% yoy to 6.57 Singapore cents. The increase was due to contributions from 18 new acquisitions and stronger operating performance as international travel continued to recover.

Its H2 2023 revenue per available unit (RevPAU) hit 103% of pre-pandemic levels in H2 2019 on a pro forma basis. In particular, Clas noted that RevPAU for its Japan assets increased 90% yoy.

3. $CDL HTrust(J85.SI)$

CDLHT announced a DPS of 5.70 Singapore cents for FY2023, representing an increase of 1.2% yoy. While net property income improved 11.8%, DPS growth was weakened on the back of higher interest expenses. CDLHT recorded all-time highest full year RevPAR for five of its hotels across Singapore, Japan, the UK and Italy.

4. $Far East HTrust(Q5T.SI)$

The DPS for FEHT grew 25.1%, surpassing DPS in FY2019, before the pandemic. RevPAR of its hotel portfolio and RevPAU of its serviced residence portfolio increased 47.8% and 17%, respectively, yoy.

FHT’s DPS for FY2023 (ended Sep 30, 2023), grew 49.3% yoy due to sustained recovery in global tourism and an improved operating environment. In FHT’s latest Q1 FY2024 business update, it noted that RevPARs of all country portfolios were higher yoy in Q1 FY2024, except for Singapore and the UK, because of the easing of pent-up travel demand in these markets.

Most of the five trusts noted that while strong operational performance was partially offset by higher interest expenses, the trusts were prudent in capital management.

The cost of borrowings for the five trusts grew, on average, by 80 basis points between Dec 31, 2022 and Dec 31, 2023. However, the average gearing ratio of the five trusts rose only marginally – from 36.2% as of Dec 31, 2022, to 36.4% as of Dec 31, 2023. The gearing ratio at CLAR, FEHT and FHT dipped 0.1%, 0.7% and 0.7%, respectively, during the period. 

https://www.sgx.com/research-education/market-updates/20240304-reit-watch-hospitality-s-reits-record-21-dpu-growth