Mixed H1 2025 performance, but hospitality S-Reits push ahead with portfolio reconstitution and diversification

[SINGAPORE] Three out of five Singapore-listed hospitality trusts have reported half-yearly financial results for the first half of 2025 over the past week, with two more due to report this week.

CapitaLand Ascott Trust (Clas) reported a resilient performance in H1 2025, with revenue rising 3 per cent year on year to S$398.5 million and gross profit up 6 per cent to S$182.5 million, driven by stronger operating performance, portfolio reconstitution and asset enhancement initiatives (AEIs). Core distribution in H1 2025 rose 1 per cent to S$91.6 million, although distribution per stapled security (DPS) dipped slightly to 2.53 Singapore cents.

Clas benefited from stable income streams, with 66 per cent of gross profit derived from master leases and living sector assets. Notably, most of its key markets – Australia, Japan, the UK and US – registered revenue per available unit (RevPau) growth year on year, while Singapore experienced a slight decline due to increased competition and the absence of major events.

Clas continued its proactive portfolio reconstitution strategy in H1 2025, aimed at enhancing long-term value and income stability. Since 2024 to date, the trust completed more than S$500 million in divestments at up to 55 per cent premium to book value, and redeployed into accretive acquisitions totalling S$530 million in assets in Japan and the US and lyf Funan Singapore. Three more AEIs are planned throughout 2026, and redevelopment of the Somerset Clarke Quay serviced residence is under way with completion expected in 2026.

Far East Hospitality Trust (FEHT) faced headwinds in H1 2025, with gross revenue declining 4.2 per cent year on year to S$51.6 million and net property income (NPI) falling 7.7 per cent to S$45.6 million. The decline was mainly due to softer performance from Singapore hotels and serviced residences, partially offset by contributions from commercial premises and the newly acquired Four Points by Sheraton Nagoya in Japan.

Distribution to stapled securityholders decreased 8.7 per cent to S$36.0 million, translating to a DPS of 1.78 Singapore cents. Despite the earnings decline, FEHT maintained a strong balance sheet with aggregate leverage at 32.8 per cent, interest coverage ratio at 3.1 times, and average cost of debt at 3.4 per cent.

The trust’s portfolio remained anchored in Singapore, with Japan contributing to income diversification. Gerald Lee, chief executive officer of the Reit manager said: “After a slow start in the first half of the year amid macroeconomic headwinds and cautious corporate sentiments, demand has started to trend more positively.”

CDL Hospitality Trusts (CDLHT) experienced a softer first-half, with NPI falling 11.9 per cent year on year to S$58.6 million and total distribution after retention declining 20.2 per cent to S$25.1 million, or DPS of 1.98 Singapore cents.

The decline was attributed to softer performance in most markets, except for Japan, the UK and Australia, as well as higher interest costs. Singapore revenue per available room (RevPar) fell 14.2 per cent due to the absence of large-scale events and ongoing renovations at W Hotel.

However, CDLHT had positive contributions from its UK portfolio, particularly from new acquisitions such as Hotel Indigo Exeter and living assets Benson Yard and The Castings. Japan also performed well, with RevPar up 13.7 per cent and NPI rising 11.4 per cent.

Frasers Hospitality Trust will be reporting business updates for the third quarter period on Aug 4, while Acrophyte Hospitality Trust will be reporting financial results for the first half of 2025 on Aug 6. SGX RESEARCH

The writer is a research analyst at SGX. For more research and information on Singapore’s Reit sector, visit sgx.com/research-education/sectors for the S-Reits & Property Trusts Chartbook.