Positive Outlook for Far East Hospitality Trust Despite Q1 Challenges: Buy Rating Supported by Strategic Acquisitions and Financial Advantages

Far East Hospitality Trust (Q5T – Research Report), the Real Estate sector company, was revisited by a Wall Street analyst on April 30. Analyst Lock Mun Yee from CGS-CIMB reiterated a Buy rating on the stock and has a S$0.74 price target.

Lock Mun Yee has given his Buy rating due to a combination of factors influencing Far East Hospitality Trust’s performance. Despite a decrease in revenue and net property income in the first quarter of 2025, the trust is expected to benefit from reduced interest expenses due to lower debt costs. This financial advantage is anticipated to partially offset the weaker operational performance observed in the same period.
Furthermore, management’s expectations for stable revenue per available room (RevPAR) and occupancy rates in the upcoming quarter, supported by forward bookings, contribute to a positive outlook. The trust’s strategic acquisition of Four Points Nagoya is also expected to enhance its financial performance from the second quarter of 2025 onwards. Additionally, the potential for accretive acquisitions in Singapore and Japan, coupled with a robust dividend yield forecast, supports the Buy recommendation. However, risks such as global travel demand fluctuations and interest rate changes are noted as potential challenges.