Broker: CGS International
Date of Report: April 8, 2026
Excerpt from CGS International report.
Report Summary
- Sector Call: Overweight on Singapore Hospitality REITs. Top pick is Far East Hospitality Trust (FEHT), followed by CapitaLand Ascott Trust (CLAS) and CDL Hospitality Trust (CDREIT).
- Key Actionable Ideas:
- FEHT (Far East Hospitality Trust): ADD. Target Price: S\$0.72. FEHT is viewed as the best proxy to Singapore’s hospitality market, supported by its Singapore-centric portfolio and potential asset acquisitions.
- CLAS (CapitaLand Ascott Trust): ADD. Target Price: S\$1.13. Preferred for its stable distribution profile, with Singapore and Australia supporting performance. Redevelopment of the former Somerset Liang Court expected to complete in 2026.
- CDREIT (CDL Hospitality Trust): ADD. Target Price: S\$0.90. Rebound candidate due to attractive valuation, return of room inventory, and interest cost savings. Potential for higher room rates in FY26F and ramp-up of UK portfolio.
- Highlights:
- Hospitality S-REITs expected to report positive 1QFY26F updates after a strong 11% YoY rebound in Singapore hotel RevPAR for Feb 2026, particularly in luxury and upscale segments.
- Key risks: Weakness in long-haul travel from North America and Europe due to US-Iran conflict, higher utility costs, and assets outside Singapore. However, utility costs are largely hedged or passed through for the major REITs.
- Sector valuations have priced in much of the downside risk. Share prices of the major hospitality REITs are trading at attractive yield spreads and discounts to book value.
- Implications:
- Investors should focus on FEHT as the strongest Singapore-centric hospitality play, with CLAS and CDREIT as alternatives for diversified exposure and potential valuation rebound.
- Every 1% decline in FY26F RevPAR assumptions could reduce DPU by 0.5% to more than 1% for the main hospitality REITs.
Above is an excerpt from a report by CGS International. Clients of CGS International can be the first to access the full report from the CGS International website: https://www.cgsi.com
