SINGAPORE (Feb 7): OCBC Investment Research is maintaining “overweight” on Singapore’s hospitality space as the sector’s REITs – namely CDL Hospitality Trusts (CDL HT), Ascott Residence Trust (ART) and Far East Hospitality Trust (FEHT) – rally into the new year with total returns of +5.7%, +2.5% and +6.5%, respectively.
In a Thursday report, analyst Deborah Ong attributes the recent rally to three catalysts, namely: favourable operational outlooks by the three REITs on RevPAR growth; expectations of a pause in the Fed rate hike; and recent hospitality transactions conducted at rich valuations versus valuations of comparable assets on balance sheets.
In particular, Ong has highlighted OUE Hospitality Trust as OCBC’s top “buy” pick with a fair value estimate of 82 cents. At the unit price of 69 cents, its FY19F dividend yield of 7.1% is 70 bps and 150 bps over that of FEHT’s and CDL HT’s, respectively.
