Frasers Hospitality Trust - Exposure to Australia and Singapore’s hospitality sectors

Hospitality S-REIT with predominantly Australia and Singapore assets

Frasers Hospitality Trust, or FHT, is a hospitality trust with a portfolio of 14 quality assets located in Singapore (2), Australia (3), the UK (6), Japan (1), Malaysia (1), and Germany (1). The hospitality trust’s portfolio was valued at S$1.98 billion as of 30 September 2024. 

As of fiscal 2024 (FY2024) ending 30 September 2024, Australia and Singapore contributed 35% and 25% to the trust’s gross revenue of S$132.5 million. 

However, Singapore came in first for net property income (NPI) contribution at 28% with Australia a close second at 25%. Hence, our analysis will focus on these two geographic regions which constitute more than half of gross revenue and NPI.

Distributions remain pre-pandemic levels

While revenue and NPI have recovered meaningfully since FY2022 as global tourism rebounded, distribution per stapled security (DPSS) remains well below pre-COVID levels. 

FY2024 DPSS fell 7.5% year-on-year, and now stands at just 51% of FY2019 levels, due to higher interest and tax expenses.

Mixed performance across markets

Singapore and Australia saw differing fortunes when it came average daily rate (ADR) and room occupancy. 

The ADR is defined as the average paid for rooms sold within a given period and is a key operating metric to determine whether room rates are increasing, or declining. 

The chart below shows Singapore’s ADR and occupancy rates from FY2023 to the first quarter of fiscal 2025 (1Q FY2025) ending 31 December 2024.

ADR and occupancy rate declined for FY2024 because of rising competitive pressures and also due to weaker demand, in line with the performance of the overall Singapore market. 

The extended stay segment was also impacted by a rising supply of private residential units. 

Although visitor arrivals to Singapore increased by 26.8% year on year for FY2024, the average length of stay decreased from 4 days to 3.5 days. As for 1Q FY2025, ADR continued to decline as hotel players adjusted their pricing downwards to encourage higher occupancy.

On the flip side, Australia reported higher occupancy rates for FY2024 compared to a year ago because of higher demand in the Corporate, Group, and Leisure segments as major events resumed after the pandemic ended. ADR, however, dipped slightly year on year because of a surge in new hotel supply.

Occupancy continued to trend higher for 1Q FY2025 as demand stayed strong in the Corporate and Leisure segments. ADR also rose because of the recovery in international visitation to Australia, according to Tourism Research Australia. For FY2024, total tourism spending reaches A$48.4 million, 7% higher than pre-pandemic levels.

Strategic review announced

On 23 April 2025, Frasers Hospitality Trust announced that it is conducting a strategic review. 

As part of the review, various options, including exploring options with the sponsor of FHT are being considered to ensure alignment with interests of shareholders. 

However, there is no certainty or assurance that any transaction will arise, and Frasers Hospitality Trust may continue with its existing business strategy.

No major acquisitions in recent years

Frasers Hospitality Trust adopts a three-pronged strategy of asset enhancement, non-core divestments, and yield-accretive acquisitions to drive long-term growth. 

However, the trust has not acquired any assets since 2016 and recently declined a right-of-first-refusal asset from its sponsor, citing strategic misalignment. 

Its most recent capital action was the sale of Sofitel Sydney Wentworth in 2021.

Low gearing of 35%

Frasers Hospitality Trust has a low gearing of 35.0% as at 31 December 2024. Its effective cost of borrowing rose to 3.7% as at 31 December 2024 from 3.5% as at 30 September 2024. 

The weighted average debt to maturity is 2.9 years, with 21% of its debt is due in FY2025.

Key risks

Frasers Hospitality Trust remains vulnerable to foreign exchange risk, with 72% of NPI generated overseas. 

In addition, a sharp economic slowdown and weaker travel demand may impact its net property income.

Trading at a premium to book value

With a net asset value per stapled security of S$0.64 as at 31 December 2024, Frasers Hospitality Trust is currently trading at a 3% premium to its book value. 

Based on its total distribution per stapled security (DPS) of 2.2592 Singapore cents in FY 2024, Frasers Hospitality Trust trades at a distribution yield of 3.4%. 

Check out Beansprout's guide to the best stock trading platforms in Singapore with the latest promotions to invest in Frasers Hospitality Trust.

Related links:

• Frasers Hospitality Trust share price history and share price target
• Frasers Hospitality Trust history and dividend forecasts

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