Far East H-Trust to co-develop $443.8 million hotel in Sentosa with sponsor

Far East Hospitality Trust (Far East H-Trust) announced it has entered into a joint venture agreement with Far East Organization Centre (FEOC), a unit of Far East Organization, to participate in the development of a new $443.8 million hotel project located on Sentosa.

Far East H-Trust will hold a 30.0% stake.

The development is a heritage hotel site at Artillery Avenue, Sentosa. Integrating two distinctive hotels - Outpost Hotel Sentosa and Village Hotel Sentosa, they will collectively house 850 guest rooms.

Outpost Hotel Sentosa will cater to travelers looking for a stylish upscale product, while Village Hotel Sentosa will present an experiential stay for families, leisure and meeting groups where they can have the opportunity to discover the rich cultures and heritage of the surroundings.

The hotel has a 60-year leasehold.

Far East H-Trust’s stake will be fully funded by debt and the development is expected to be completed in 2018.

Far East H-Trust closed 0.61% lower at 81.5 cents on Friday.

UBS tips Singapore's high-yield, high-beta plays

UBS expects Singapore's equity market to be rangebound in 2013. Singapore's economic restructuring and policy shift could result in higher labor costs and headwinds for companies, while the city-state's exports may not fully benefit from the mild external improvement as its electronics sector underperforms, the house says.

But it adds, "Low domestic interest rates, still-undemanding valuations, and attractive dividend yields could continue to limit the market's downside risks." It advises a balanced portfolio of high-dividend stocks, such as REITs and media companies, and high-beta stocks trading at low valuations, such as offshore & marine and commodity-related stocks. UBS expects Singapore's residential property market faces "a year of tests" and keeps a cautious view; it advises avoiding Singapore property developer stocks.

Its key stock picks are CDL Hospitality Trust (J85.SG), CapitaMall Trust (C38U.SG), Far East Hospitality Trust (Q5T.SG), SPH (T39.SG) and SingTel (Z74.SG).


 

FEHT's Rendezvous bid is incremental: OSK-DMG

Far East Hospitality Trust (Q5T.SG) likely won’t have an issue financing its move to explore acquiring leases for Straits Trading’s (S20.SG) Rendezvous Grand Hotel and adjoining retail wing, says Goh Han Peng, an analyst at OSK-DMG.

 

He notes the trust’s gearing was around 30% at the time of its listing at end-August, and it can gear up to 40%-45%, he says. He expects fund-raising to be a combination of debt and equity.

 

“It’s an incremental acquisition,” he says, noting it adds to FEHT’s existing 11 hotels and serviced residences. Far East Orchard’s (O10.SG) MOU to acquire Straits Trading’s hospitality management operations and stakes in three Australian hotels also has “very manageable” financing, he says.

 

“Far East Orchard is now flush with cash,” he says, noting it sold its hotels to FEHT. Any definitive agreement on the deals won’t be signed until after year-end, the companies said. FEHT is up 1% at $0.985; Far East Orchard is up 0.5% at $1.86. Straits Trading is up 7.8% at $3.45.

 

OCBC starts Far East Hospitality Trust at Buy

OCBC initiates Far East Hospitality Trust (Q5T.SG) at Buy with a $1.08 fair value, noting that the counter is Singapore’s largest pure hospitality REIT play--the trust has 11 properties in its portfolio, with an asset value of about $2.14 billion.

“With a mix of hotels and serviced residences, the portfolio is able to ride on the up-cycle in the hotel industry, while the serviced residences would provide downside protection during economic slowdowns,” OCBC analyst Sarah Ong says in a note.

She adds, the trust’s sponsor, Far East Organization, has identified three hotels and four serviced residences as “Sponsor Right of First Refusal” properties, which could be offered to Far East Hospitality Trust and thereby add to its portfolio 1,242 rooms and
serviced-residence units, or a 49.1% increase, bringing the total to 3,773.

The stock is down 0.5% at $1.03.