Far East Hospitality Trust’s (FEHT) 2Q17 results were within expectations. 2Q17 gross revenue dropped 1.0% YoY to S$25.9m while NPI slipped 1.4% YoY to S$23.2m.

DPU dropped 4.0% YoY to 0.97 S cents or 25.4% of our full-year forecast. 1H17 DPU dropped 9.1% YoY to 1.90 S cents or 49.8% of our full-year forecast.

2Q17 Hotel RevPAR dropped 1.3% to S$134, with the REIT manager noting that demand for hotel accommodation picked up QoQ, although the increased supply of hotel rooms and soft corporate business put a damper on room rates. Serviced Residences RevPAU declined 5.7% YoY to S$177, mainly due to a 4.5 ppt YoY drop in occupancy to 81.5%.

We place our Hold rating and fair value of S$0.60 under review pending further details..

Source: OCBC Research - 4 Aug 2017