“Hence, we cut our FY21-22 Singapore RevPAR assumptions by 23-33% for CDLHT and FEHT as we tone down our ADR (average daily rate) forecasts to assume a higher occupancy from alternative business which commands lower room rates and lower occupancy from tourists which commands higher rates. We believe the sector will see a slow recovery and assume a full recovery only in 2024, i.e. in line with STB’s expectations of a 3 - 5 year recovery journey.”
As expected, hospitality REITs will take more time to recover, perhaps only in 2024, say CGS-CIMB Research analysts Eing Kar Mei and Lock Mun Yee in an October 1 note. The analysts are maintaining their “overweight” call on S-REITs, highlighting their “add” calls on Ascott Residence Trust with a target price of $1.05, CDL Hospitality Trust at $1.16 and Far East Hospitality Trust at 62.9 cents.
“We had expected a recovery in tourist arrivals towards the end of 2020 but with Singapore only allowing tourists from New Zealand, Brunei, Australia and Vietnam so far, we think our FY2021-2022F Singapore RevPAR (revenue per available room) for the REITs are overly bullish,” write Eing and Lock.
