Variable rent accounts for less than 5% of master lease rental income for FEHT’s hotels in 2022, compared to the pre-pandemic rate of 29% in 2019, as variable rent is assessed on an annual basis. With the recovery gathering pace, the analyst expects hotel revenue per available room (RevPAR) to increase 51% to $135 in FY2023 and 5% to $142 in FY2024.
UOB Kay Hian Research analyst Jonathan Koh has maintained his “buy” call for Far East Hospitality Trust (FEHT) with a target price (TP) of 71 cents.
In his report dated Nov 28, Koh says that FEHT is a pure play on the recovery of room rates in Singapore, with variable rent recovering to pre-pandemic levels. “FEHT will benefit from the reopening of Singapore’s international borders since April 2022 on a full-year basis in 2023. One of its nine hotels started to contribute variable rent in 3QFY2022, with a second hotel expected to do so in 4QFY2022,” says Koh.
