Far East Hospitality Trust 2025: Portfolio Performance, Financial Highlights, Growth Strategies & Singapore Tourism Outlook

Key Highlights

Gross Revenue: For the nine months ended September 2025 (YTD Sep 2025), Far East Hospitality Trust (FEHT) reported gross revenue of S\$81.9 million, a marginal decrease of 0.7% year-on-year (YoY). This was mainly attributed to softer performance in the Singapore Hotels and Serviced Residences (SRs), partially offset by growth in commercial premises income and the newly acquired Japan hotel.
Net Property Income: Net property income declined by 5.4% YoY to S\$71.6 million. However, the gap improved progressively through the quarters as market conditions recovered.
Finance Expenses: Finance expenses fell significantly by 19.9% YoY to S\$18.4 million, benefiting from lower fixed and floating interest rates and proactive debt management.
Portfolio Diversification: The trust now owns 13 properties valued at S\$2.57 billion, including 10 hotels in Singapore, 3 serviced residences, and the newly acquired Four Points by Sheraton Nagoya in Japan. This marks FEHT’s first strategic overseas expansion.
Dividend Yield: FEHT offers an attractive annualised dividend yield of 5.9% based on 1H 2025 DPS payout and the share price as at 30 September 2025, substantially outperforming local benchmarks and risk-free rates.
Balance Sheet Strength: Aggregate leverage remains low at 33.7%, with 65% of debt at fixed rates and an average cost of debt at 3.2%. The trust maintains a large proportion (97.9%) of unencumbered assets, providing significant financial flexibility.

Portfolio Performance

Singapore Hotels

3Q 2025: Average occupancy increased to 86.5%, driven by large-scale events (e.g., World Aquatics Championship), although ADR moderated to S\$171 due to lower high-rate demand post-Formula 1 Grand Prix. RevPAR fell 4.3% YoY.
YTD Sep 2025: Occupancy held steady at 81.8%, but ADR declined 4.8% YoY to S\$169, resulting in a 5.2% drop in RevPAR to S\$138, reflecting softer demand in the first half and a high comparison base from previous years.

Japan Hotel – Four Points by Sheraton Nagoya

Acquisition Impact: The property contributed positively, with 3Q 2025 RevPAR up 13.5% YoY and GOP rising 27.2% due to event-driven demand and higher passenger traffic at Chubu International Airport. This diversification enhances FEHT’s income resilience.

Singapore Serviced Residences

3Q 2025: Occupancy steady at 87.8%; ADR decreased by 2.8% to S\$270, partly due to construction disruptions. RevPAU fell 3% YoY.
YTD Sep 2025: Occupancy dipped to 81.4% amid softer corporate demand, while ADR remained flat at S\$270. RevPAU declined 5.2% YoY to S\$220.

Revenue Breakdown & Strategic Diversification

Revenue Mix: Hotels remain the anchor of portfolio revenue (74%), with serviced residences and commercial premises contributing 10.3% and 15.7%, respectively. The newly acquired Japan hotel accounted for 5.2% of YTD Sep 2025 gross revenue, supporting resilience through geographic and income diversification.
Master Lease Structure: Singapore assets have a fixed rent component (S\$63.5 million p.a.) and a variable rent structure, ensuring downside protection with upside potential. The Japan hotel operates under a management agreement, allowing FEHT to fully participate in its upside.

Asset Management and Enhancement Initiatives

Recent Asset Enhancements: Major refurbishment and rebranding works were completed at Regency House (now Adina Serviced Apartments Singapore Orchard), The Elizabeth Hotel (now Vibe Hotel Singapore Orchard), and Orchard Rendezvous Hotel, significantly refreshing the portfolio and positioning for higher returns.
2025 Enhancements: Ongoing upgrades include the replacement of the chiller system at Village Hotel Changi (expected energy savings of 40-45% and BCA Green Mark GoldPlus certification) and restroom upgrades at Village Residence Robertson Quay.
Portfolio Expansion: Recent acquisitions, such as Four Points by Sheraton Nagoya, and the pipeline of Sponsor ROFR (Right of First Refusal) assets in Singapore, provide avenues for future growth. Asset recycling and selective divestments (e.g., Central Square) further enhance returns.

Growth Strategies

Value-adding Acquisitions: FEHT continues to pursue acquisitions from its Sponsor’s pipeline and suitable third-party properties, supported by prudent capital management and an optimal debt/equity mix.
Prudent Leverage: Early refinancing of S\$157.2 million in term loans with sustainability-linked facilities in December 2024 reduced funding costs and extended debt maturity.
Interest Rate Sensitivity: A 25bps change in interest rates on variable-rate debt would impact DPS by about 0.03 cents, demonstrating limited downside risk from interest rate volatility.

Outlook: Tourism Recovery & Positive Sector Developments

Visitor Arrivals: Singapore’s visitor arrivals in 3Q 2025 reached 91% of pre-pandemic levels, supported by major events such as the World Aquatics Championships. Shorter average stays and competitive room night demand are noted, but overall travel demand remains healthy.
Major Events Pipeline: Upcoming leisure, sporting (e.g., Singapore Tennis Open, HSBC SVNS 2026), and MICE events (e.g., Singapore FinTech Festival, World Cities Summit) are expected to further boost demand. The Singapore Tourism Board aims to triple MICE sector receipts by 2040.
Infrastructure Developments: Major projects such as Changi Airport Terminal 5 (expanding connectivity to over 200 cities by the mid-2030s), the expansion of Marina Bay Cruise Centre (enabling dual-ship calls and exclusive homeporting of the Disney Adventure cruise ship from March 2026), and new tourist attractions (Universal Studios’ Super Nintendo World, expanded Singapore Oceanarium, Mandai Wildlife Reserve) will reinforce Singapore’s position as a key destination and support sustained hospitality demand.

Macroeconomic Environment

Global Growth: The IMF forecasts global growth to moderate to 3.2% in 2025 and 3.1% in 2026 amid persistent uncertainty, but Asia remains resilient and is expected to drive regional travel demand.
Singapore Dollar: MAS has maintained a firm Singapore Dollar policy, which could affect cost competitiveness for price-sensitive travellers, but also supports asset value stability.
Interest Rates: Central banks are expected to further cut interest rates as inflation eases, likely translating to lower financing costs for FEHT and supporting future distributions.

Potential Price Sensitive and Shareholder-Relevant Points

Resilience Through Diversification: The addition of the Japan hotel and stronger commercial premises income have offset softness in the Singapore hospitality segment and reduced concentration risk.
Attractive Dividend Yield: The trust’s 5.9% yield is well above benchmarks and could attract yield-seeking investors, potentially supporting share price appreciation.
Active Asset Management: Ongoing and completed refurbishments, sustainability upgrades, and prudent capital management position FEHT for improved operational efficiency, higher returns, and asset value uplift.
Growth Pipeline: The Sponsor’s ROFR asset pipeline and potential for further acquisitions in Singapore and overseas markets offer upside potential for earnings and NAV growth.
Tourism Recovery and Major Events: Continued recovery in visitor arrivals, infrastructure upgrades, and upcoming international events bode well for demand, occupancy, and room rates.
Strong Balance Sheet and Debt Management: Low leverage, high proportion of fixed-rate debt, and early refinancing mitigate risk and ensure financial stability.

Conclusion

Far East Hospitality Trust enters the final quarter of 2025 with robust financials, a diversified and refreshed asset base, and significant upside potential from ongoing asset enhancements, strategic acquisitions, and sector-wide recovery. The trust’s prudent capital management, attractive yield, and exposure to both domestic and international hospitality markets position it well for sustainable growth and resilience against macroeconomic headwinds.

Disclaimer

This article is for informational purposes only and does not constitute investment advice or a recommendation to buy or sell any securities. Investors should review official documents and seek independent financial advice before making any investment decisions. The information has been compiled from publicly available sources and may be subject to change without notice. Past performance is not indicative of future results.