Far East Hospitality Trust: Largest pure Singapore hospitality REIT (initiate with BUY and a RNAV-based fair value of S$1.08)

Far East Hospitality Trust: Largest pure Singapore hospitality REIT 
● Pure Singapore hospitality play 
● Strong sponsor 
● Clear and sizeable pipeline 

Largest diversified hospitality portfolio 
by asset value 
Far East H-Trust's portfolio consists of 11 
properties in Singapore, including seven 
hotels and four serviced residences, with 
2,531 rooms/units in total. The trust has the 
largest diversified hospitality portfolio in 
Singapore by asset value, equaling S$2.14b. 
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 due to 
the longer average stay. We note that the 
hotels have good locations, with the majority 
located in the Core Central Region. Five of 
the hotels are close to private hospitals, 
enabling them to benefit from anticipated 
growth in Singapore's healthcare tourism. 

Positive outlook for the Singapore 
hospitality sector 
For 2012-2014, we estimate that the overall 
hotel room demand in Singapore will grow at 
6.4% p.a., outstripping expected hotel 
supply growth of 4.8% p.a. On a combined 
basis, we see Mid-tier and Upscale hotel 
room supply growing at 4.8% p.a. 

Credible and experienced sponsor 
The Sponsor is part of Far East Organization, 
which is the largest private property 
developer in Singapore. Far East 
Organization has developed real estate in the 
residential, hospitality, commercial, medical 
and industrial sectors. It has substantial 
experience managing hospitality assets and 
its total hospitality portfolio (including the 
initial portfolio of the Far East H-Trust) 
comprises 18 properties valued at more than 
S$3.0b as at 31 Dec 2011. The hospitality 
operations have also established three inhouse 
brands - Village, Oasia and Quincy. 

Visible and substantial pipeline 
Three hotels and four serviced residences 
have been identified by the Sponsor as 
Sponsor Right of First Refusal (ROFR) 
properties which could be offered to Far East 
H-Trust. These properties, if acquired could 
increase the number of hotel rooms/serviced 
residence units in the trust by 1,242 
rooms/units, or 49.1%, to 3,773.