F1 Singapore Grand Prix 2023: 3 Singapore REITs That May Benefit

What happened?

The F1 Singapore Grand Prix is back! With its iconic night race setting, the Marina Bay Street Circuit is set to come alive with the roar of engines once again. 

According to F1 Singapore Grand Prix organisers, the night race from 15 September to 17 September will attract approximately 250,000 spectators. This will be down from the record high of 302,000 last year, but close to the average attendance since the event started in 2008. 

Apart from wondering if Carlos Sainz or Charles Leclerc of Ferrari, Sergio Perez of Red Bull or Lewis Hamilton of Mercedes will take pole position, you might also be thinking which Singapore REITs might benefit from the influx of tourists into Singapore.

3 Singapore REITs that may benefit from F1 Singapore Grand Prix

According to past data, the F1 Singapore Grand Prix has generated hundreds of millions in tourism receipts for Singapore. In particular, hotels have benefitted enormously from the influx of international visitors. 

In fact, some hotels had shared as early as April that they expect rooms to be fully booked over the race. CNA reported that close to half of the rooms at Pan Pacific Hotel were taken up by April, and checks had showed that rooms were listed for more than S$1,000 a night for the race weekend. 

This could provide a boost to tourist arrivals in Singapore, which reached a 3-year high of 1.42 million in July 2023 according to the Singapore Tourism Board.

Together with the increase in tourist arrivals, the average revenue per available room (RevPAR) for hotels in Singapore also reached a multi-year high of S$261 in July 2023. 

The recovery in tourist arrivals has helped to boost the performance of selected hospitality REITs. 

For example, Frasers Hospitality Trust has seen as total return of 14% year-to-date, Far East Hospitality Trust has seen as total return of 5% year-to-date, while CapitaLand Ascott Trust has seen a total return of about 1% year-to-date as of 15 September 2023.

Let’s compare a these hospitality REITs and understand how they might benefit from the F1 Singapore Grand Prix. 

#1 – Frasers Hospitality Trust (SGX: ACV)

Frasers Hospitality Trust has 14 hospitality assets across 6 countries, including Singapore, Australia, UK, Japan, Malaysia and Germany. 

Singapore is the largest contributor to its portfolio, representing 42% of its total portfolio value of S$1.98 billion as of September 2022. 

The assets that it owns in Singapore include the 5-star luxury hotel InterContinental Singapore, and Fraser Suites Singapore - a luxurious serviced residence at the prime River Valley district. 

In the nine months ending June 2023, Frasers Hospitality Trust reported an increase in RevPAR in Singapore of 77% compared to the previous year.

With surging average room rates, Frasers Hospitality Trust’s Singapore RevPAR of S$283 in the third quarter FY2023 would be 15% above pre-COVID levels. 

Frasers Hospitality Trust’s gearing remains moderate at 35.3% as at June 2023. In addition, 74% of its borrowings are on fixed rates, limiting the impact of further interest rate increase on its distributions. 

With the improvement in performance, Frasers Hospitality Trust reported a dividend per security of 1.2649 cents in the first half of FY2023, a 80% increase compared to the previous year. 

Based on its share price of S$0.50 as of 15 September, this would represent an annualized yield of 5.1%.

The strong operational performance and capital position led to growing investor confidence in Frasers Hospitality Trust, with its share price up by 11% year-to-date, making it the best performing hospitality REIT.  

• Frasers Hospitality Trust share price performance
• Frasers Hospitality Trust analysis
• Frasers Hospitality Trust dividends

#2 – Far East Hospitality Trust (SGX: Q5T)

Far East Hospitality Trust has a portfolio of 9 hotels and 3 serviced residences in Singapore valued at about S$2.45 billion as of December 2022. 

This would include familiar names such as Oasia Hotel Downtown, Orchard Rendezvous Hotel and Village Hotel Bugis. 

The average RevPAR for its portfolio of hotels rose 96.9% in the first half of 2023 compared to the previous year, supported by the recovery in tourist arrivals into Singapore. 

Far East Hospitality Trust has a low leverage of 32.0% as of June 2023, and about 47% of its debt is at fixed rates. 

With the improvement in operational performance, Far East Hospitality Trust announced a dividend per security of 1.92 cents in the first half of 2023. 

Based on its share price of S$0.625 on 15 September, this would represent an annualized yield of 6.2%. 

• Far East Hospitality Trust share price performance
• Far East Hospitality Trust analysis
• Far East Hospitality Trust dividends

#3 – CapitaLand Ascott Trust (SGX: HMN)

CapitaLand Ascott Trust is the largest hospitality trust in Asia Pacific, with total assets of S$8.1 billion as of 30 June 2023. 

This would include 107 properties across 15 countries, including Japan, Singapore, USA, UK and Australia. The bulk of its assets would be in Asia Pacific, which makes up 59% of its portfolio as of June 2023. 

Its 5 properties in Singapore including Ascott Orchard contributed about 18% of its total assets. 

CapitaLand Ascott Trust’s portfolio Revenue per available Unit rose 20% in the first half of 2023 compared to the previous year to reach S$149. This would also be close to 98% of the pre-Covid levels. 

In Singapore, total revenue per available unit reached S$111 in the second quarter, a 14% increase compared to the previous year, supported by strong corporate demand and rising leisure demand. 

In particular, management noted that the outlook for the third quarter remains positive with the F1 Singapore Grand Prix 2023 expected to provide a further uplift. 

CapitaLand Ascott Trust’s share price saw selling pressure recently after the trust announced a preferential offering entitled unitholders the right to buy 29 new units at S$1.025 each for every 1,000 units held.

With the preferential offering undersubscribed, there has been further downward pressure on its share price. 

• CapitaLand Ascott Trust share price performance
• CapitaLand Ascott Trust analysis
• CapitaLand Ascott Trust dividends

What would Beansprout do?

The F1 Singapore Grand Prix could provide a further boost to Singapore’s tourism sector, which has seen a steady recovery over the past year. 

With rising hotel room rates, Singapore hospitality REITs have seen improving distributions over the past year. 

Across the hospitality REITs with a sizeable portion of their portfolios comprising of Singapore assets, Frasers Hospitality Trust has performed the best year-to-date with a total return of about 14% as of 15 September.

Far East Hospitality Trust is commonly seen as a proxy to Singapore’s hospitality sector as all of its assets are located in Singapore. With the strong recovery in hotel room rates, Far East Hospitality Trust has seen the most significant recovery in RevPAR in recent quarters. 

Across the three hospitality REITs, Far East Hospitality Trust also has the lowest gearing ratio of 32%, and the highest annualized dividend yield of 6.2%.

On the other hand, CapitaLand Ascott Trust’s share price might remain under pressure after the recent under-subscription of its preferential offering.

For investors who are looking at hospitality REITs in Singapore, use our REIT tool to compare hospitality REITs and find the best REIT for your portfolio.