THE managers of hospitality real estate investment trusts in Singapore (S-Reits) have been actively managing their portfolios, as they carry out asset acquisitions and enhancements, as well as proactive capital management to create value.
The five trusts that focus on hospitality assets delivered mixed results in 2024, with operating performance mostly resilient, even as travel demand normalised following the post-pandemic travel boom. The Reit managers are cautiously optimistic about the sector’s prospects as they strengthen and optimise their portfolios.
CapitaLand Ascott Trust’s (Clas) gross profit rose 8 per cent on year to S$198 million in H2 2024, while revenue edged up 6 per cent at S$423.2 million. This was mainly due to stronger operating performance, and additional contributions from Clas’ new acquisitions and properties, which have completed their asset enhancement initiatives (AEI) in 2024.
Core distribution per stapled security (DPS) increased 3 per cent on year in the second half.
In 2024, Clas completed over S$500 million in divestments and about S$350 million in accretive investments. Part of the divestment proceeds have been used to pare down debt to optimise its balance sheet, and will also be used to fund AEIs.
Revenue per available unit (RevPau) for the fourth quarter grew 9 per cent on year to S$176, because of higher average daily rates and higher average occupancy, with RevPau higher for all of Clas’ key markets. The manager said that the trust is expected to remain resilient given its geographic diversification, range of lodging asset classes and different contract types.
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Far East Hospitality Trust’s (FEHT) H2 2024 gross revenue and net property income (NPI) both rose 0.2 per cent on year to S$54.9 million and S$49.9 million respectively. It posted higher contributions from all segments supported by better operating performance.
However, distribution per stapled security (DPS) fell 4.1 per cent in H2, mainly due to higher finance costs and changes in proportion of Reit manager fees paid in stapled securities. Full-year DPS came in at S$0.0404 cents, down 1.2 per cent on year, but still higher than pre-Covid levels in 2019.
Its manager remains positive about the prospects of the Reit sector and hospitality industry, noting that Singapore interest rates are expected to ease, and the country remains a premier destination for business, entertainment, cultural and culinary experiences.
In February, the trust made its maiden expansion into Japan, with the acquisition of Four Points by Sheraton Nagoya as part of its strategy to diversify its portfolio, while maintaining a strong focus on Singapore. The investment strategy of the trust would be expanded to include a global scope and other adjacent lodging asset classes to mitigate potential concentration risks.
CDL Hospitality Trusts (CDLHT) reported growth in RevPar for H2 2024 and FY2024 for most of its portfolio markets. But DPS slipped 11.9 per cent on year in the second half, amid higher interest costs and lower net property income.
However, the manager is eyeing growth, noting that CDLHT successfully completed two acquisitions in the fourth quarter – namely Hotel Indigo Exeter and Benson Yard student accommodation, its maiden investment into the purpose-built student accommodation sector. “Along with The Castings, which opened in July 2024, these living assets will contribute to a more diversified and balanced income profile. These three assets will be new contributors to earnings growth in 2025,” Vincent Yeo, chief executive of CDLHT’s managers said.
Elsewhere, US-focused Acrophyte Hospitality Trust reported a 3.8 per cent decline in revenue for FY2024, with gross operating profit and net property income also coming in lower.
The operational performance for FY2024 was impacted by the sale of three hotels, and AEIs at six of its higher performing hotels. On a same-store basis, gross revenue increased by 0.2 per cent, while NPI declined by 5.2 per cent, primarily due to increased insurance costs.
Acrophyte’s trustee-manager noted that business travel – especially meetings and group events – is poised to be a bright spot in 2025, and it remains cautiously optimistic about the strength and resilience of its operational performance, especially with its newly renovated hotels.
Frasers Hospitality Trust, which provided its first quarter business update, reported that RevPar was positive across its key geographical markets.
The manager is also undertaking a proactive portfolio reconstitution and asset management strategy to enhance returns via proactive asset enhancement, unlock value via opportunistic divestments, and create growth via yield-accretive acquisitions. SGX RESEARCH
The writer is a research analyst at SGX.
For more research and information on Singapore’s Reit sector, visit sgx.com/research-education/sectors for the monthly S-Reits & Property Trusts Chartbook.
