CDLHT, FEHT to see improved results going into 2022

This was according to a report published by UOBKayHian. 

A report published by UOBKayHian’s Jonathan Koh revealed positive ratings for both City Developments Hospitality Trusts (CDLHT) and Far East Hospitality Trust (FEHT). 

On the side of CDHL, W Hotel experienced a boost due to staycation demand, with the hotel’s RevPAR rebounding 28% quarter-on-quarter (QoQ) to $221 in the third quarter (Q3) of 2021. 

Grand Millenium Auckland, another property owned by CDHL, continues to serve as a managed isolation facility since the second quarter of 2020. The contract is set to expire in the first quarter of 2022, and amounted for 29.6% of NPI in Q3 2021.

Meanwhile, FEHT entered into a put-and-call option agreement over the divestment of Central Square for $313.2m. In this agreement with City Developments, the consideration represents a 57.9% premium on the independent valuation of $198.3m as of 20 December, as well as a 70.8% premium on the original share price of $183.3m on 12 August. 

After receiving outline advice from the Urban Redevelopment Authority to redevelop both Central Square and Central Mall, owned by City Developments, a maximum permissible gros floor area of 78% was set. City Developments took the spot as the highest bidder. 

Also noted by UOBKayHian was FEHT’s position as a defensive hospitality REIT in Singapore. Nine hotels and three serviced residences, all owned by FEHT, are under master lease agreements with subsidiaries within their sponsor, Far East Organisation. Overall, the fixed rent component from its master lease totalled 72% of total gross revenue from its hotels and SRS in pre-COVID-19. These fixed rents also formed 81% of the first half of 2021’s gross revenue, with the 20-year master leases set to last until 2032.

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