Far East Hospitality Trust (FEHT) reported a muted set of 1Q16 results, but was still within our expectations. Gross revenue remained unchanged at S$27.4m, while DPU increased 0.9% to 1.08 S cents, making up 23.4% of our FY16 DPU forecast. RevPAR for FEHT’s Hotels portfolio remained unchanged at S$141 in 1Q16, while RevPAR for its Serviced Residences portfolio dropped 8.7% to S$188.

The biennial Singapore Airshow provided some uplift in Feb 2016 but challenges still remain given the oversupply situation in the hotel segment. Looking ahead, FEHT remains cautious on the corporate segment, noting the current economic environment and supply of ~2,700 new hotel rooms entering this year. We keep our HOLD rating but place fair value estimate of S$0.64 under review pending the analyst briefing.

Source: OCBC Research - 27 Apr 2016