Company Name: FAR EAST HOSPITALITY TRUST
| Research House: Golman Sachs | Price Call: HOLD | Target Price: 1.02 |
Goldman Sachs initiates Far East Hospitality Trust at Neutral with $1.02 target. It says FEHT’s key strengths include being well-positioned in the mid-tier/upscale segments, which are the fastest growing and most scalable, and its master-lease structure, which generates more efficient rental revenue flow-through vs peers.
The house expects 9.5% DPU CAGR over 2011-14 and 5.2% over 2012-2014 vs hospitality S-REIT peers’ 2.6%. “We believe Far East H-Trust offers a good mixture of organic and acquisition growth drivers.” But it adds FEHT’s high-growth potential and strengths are largely priced in.
It notes the unit trades at 2012-13 dividend yields of 5.4%-5.8%, vs closest peer CDL Hospitality Trusts trading at 6.0%-6.1% and hospitality S-REITs’ average 6.6%-6.9%. It adds, while Singapore’s hospitality sector outlook remains robust, it is past its golden years, forecasting 2011-14 average RevPAR growth per annum of 4%-5%. FEHT is up 0.5% at $1.03.
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