The airline and travel industries have seen surging demand since the end of the pandemic.
Many people book vacations and spend money to see different parts of the world.
This activity bodes well for the hospitality sector, and investors may be eager to enjoy a slice of this pie.
Hospitality REITs allow you to gain exposure to the hospitality sector while also supplying you with a steady stream of dividends.
Here are four Singapore hospitality REITs that sport distribution yields of 4.2% and higher.
Far East Hospitality Trust (SGX: Q5T)
Far East Hospitality Trust, or FEHT, owns a portfolio of 12 properties totalling 3,015 hotel rooms and serviced residence units.
The portfolio was valued at around S$2.5 billion as of 31 December 2024.
The trust reported a mixed set of earnings for 2024 with gross revenue inching up 1.8% year on year to S$108.7 million.
Net property income (NPI) edged up 0.6% year on year to S$99.3 million.
Distribution per stapled security (DPS) stood at S$0.0404, down 1.2% year on year.
At a unit price of S$0.55, FEHT offers a trailing distribution yield of 7.3%.
The trust reported a higher average occupancy of 81% for its hotels in 2024, up 0.9 percentage points (ppt).
However, serviced residences saw a 3.6 ppt year-on-year fall in average occupancy.
Hotel revenue per available room (RevPAR) increased by 5.7% year on year to S$144 but serviced residences experienced a slight year-on-year dip of 0.4%.
FEHT had an aggregate leverage of 30.8% along with an average cost of debt of 4.1%.
The manager believes that the REIT is poised to benefit from a potential interest rate cut which will lead to lower financing costs.
Frasers Hospitality Trust (SGX: ACV)
Frasers Hospitality Trust, or FHT, has a portfolio comprising 14 assets in nine key cities in Asia, Australia, and Europe.
FHT’s total assets under management (AUM) stood at around S$2 billion as of 30 September 2024.
For its fiscal 2024 (FY2024) ending 30 September 2024, gross revenue rose 7.6% year on year to S$132.5 million.
NPI edged up 2.1% year on year to S$92.5 million.
However, the trust experienced higher finance costs arising from the high-interest-rate environment along with increased taxes.
These caused DPS to decline by 7.5% year on year to S$0.022592.
At a unit price of S$0.535, FHT offers a trailing distribution yield of 4.2%.
The trust released an encouraging business update for the first quarter of fiscal 2025 (1Q FY2025) ending 31 December 2024.
RevPAR for its key geographical markets rose across the board, with Japan’s RevPAR experiencing the highest year-on-year jump at 18.3%.
Singapore and Australia also logged year-on-year RevPAR increases of 4% and 4.4%, respectively.
FHT also had a low gearing of 35% with an effective cost of borrowing of 3.7%.
CDL Hospitality Trusts (SGX: J85)
CDL Hospitality Trusts, or CDLHT, owns a portfolio of 22 properties comprising 4,924 hotel rooms, 352 built-to-rent apartment units, 404 purpose-built student accommodation (PBSA) units, and a retail mall.
Its AUM stood at S$3.5 billion as of 31 December 2024.
CDLHT also reported a mixed set of earnings for 2024.
Revenue crept up 1% year on year to S$260.3 million but NPI fell by 2.2% year on year to S$135.2 million.
DPS fell by 6.7% year on year to S$0.0532, largely due to higher funding costs from higher floating-rate loans, refinancing of fixed-rate loans, and additional borrowings taken to fund the trust’s built-to-rent project in the UK.
At a unit price of S$0.79, CDLHT’s units offer a trailing distribution yield of 6.7%.
For 2024, most of its geographic regions saw positive year-on-year RevPAR growth except for Singapore and New Zealand.
The trust had a gearing of 40.7% with a S$610 million debt headroom before hitting the statutory gearing limit of 50%.
Its weighted average cost of debt was 4%.
During 2024, CLDHT conducted two acquisitions in the UK – one of Benson Yard, a PBSA in Liverpool, and the other of Hotel Indigo in Exeter.
There are also asset enhancement initiatives (AEIs) planned for W Singapore at Sentosa Cove, Ibis Perth, and Grand Millennium Auckland.
CapitaLand Ascott Trust (SGX: HMN)
CapitaLand Ascott Trust, or CLAS, is the largest lodging trust in Asia Pacific with an AUM of S$8.8 billion as of 31 December 2024.
Its portfolio consists of 100 properties with more than 18,000 units in 45 cities across 16 countries.
CLAS also reported a mixed set of earnings that was bogged down by higher finance costs.
Revenue rose 9% year on year to S$809.5 million while gross profit increased by 10% year on year to S$370.9 million.
DPS, however, fell by 7% year on year to S$0.061.
Based on a unit price of S$0.87, CLAS provides a trailing distribution yield of 7%.
The portfolio’s revenue per available unit (RevPAU) increased by 9% year on year to S$176 for the fourth quarter of 2024.
CLAS has a gearing of 38.3% along with a low effective borrowing cost of 3%.
For 2024, the trust acquired three assets for around S$350 million in Japan, the US, and Singapore.
The group also splashed out S$250 million for eight AEIs which were partially funded by the master lessee or operators, to help enhance the value and profitability of its properties in prime locations.
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Disclosure: Royston Yang does not own shares in any of the companies mentioned.
