Should You Invest In Frasers Hospitality Trust [Fundamental Analysis]
In this article, we'll be conducting a fundamental analysis of Frasers Hospitality Trust and its suitability to achieve the following investment objective: To deliver a stable dividend yield of 5% to 6% per year while having high capital preservation ability.
Information Is Accurate Up To Feb 2024
Frasers Hospitality Trust is a hospitality REIT that was listed in 2014 and owns 14 hotel properties across Singapore, Australia, United Kingdom, Germany, Japan and Malaysia.
What I Like About FHT:
The management has done a great job with their capital management and the balance sheet health is decent.
What I Do Not Like About FHT:
With all hospitality REITs, the dislike comes with regard to the cyclical nature of hospitality properties and also the unpredictability revolving around the post-COVID recovery.
Minimum master lease rental per unit has been on a decline post covid, thereby further intensifying the impact and cyclical risk of the property performances to unit holders. (Figure 12)
Updates From Recent Performance (1Q 2024)
International travel, though close, had yet recovered to pre-covid levels
RevPARs of all country portfolios were higher Y.O.Y except for SG & UK
International tourism is expected to recover to pre-pandemic levels in 2024 thereby providing a higher occupancy rate to FHT properties
SG RevPAR decreased 25.7% Q.O.Q and 16.6 Y.O.Y due to the easing of pent-up demand and the absence of large-scale events (i.e. F1)
Capital management ratio worsened slightly due to the impact of a higher cost of borrowing environment
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Daniel is a Licensed Independent Financial Consultant with MAS and a Certified Financial Planner (CFP®).
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This article is meant to be the opinion of the author
This article is for information purposes only
This article should not be seen as financial advice
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