Far East Hospitality Trust’s (FEHT) FY16 results were within expectations, with revenue and DPU making up 100.3% and 102.6% of our forecast respectively. FY16 DPU dropped 5.9% to 4.33 S cents, on the back of a 5.3% decline in Hotel RevPAR to S$139 and a 5.8% drop in Serviced Residences RevPAU to S$146.

In comparison, 4Q16 DPU fell 4.3% YoY to 1.12 S cents on a more pronounced 7.3% decline in Hotel RevPAR to S$136, and a smaller 2.3% drop in Serviced Residences RevPAU to S$146. FEHT’s assets were affected by the weak corporate segment, which outweighed the stronger events calendar in 2016 for hotels.

We are likely to maintain HOLD but place our fair value of S$0.62 under review pending further details from the briefing.

Source: OCBC Research - 22 Feb 2017