Investment summary

During the national address on 31 May, PM Lee pledged to reopen Singapore in a controlled and safe manner to maintain its status as an international hub. As part of Singapore’s strategy to reopen, the government will accelerate its vaccination program and aims to have two-third of its population receiving at least one dose of vaccines before early July. With faster vaccine deliveries over the next two months, Singapore aims to become the first country in the region to achieve mass vaccination.


The statement from PM Lee has boosted confidence of a gradual recovery ahead. While the resurgence of Covid-19 in Singapore has delayed cross-border travel initiatives e.g. travel bubble with Hong Kong and border reopening, we believe Singapore’s capability to control the pandemic with accelerated rollout of vaccines and aggressive approach such as extensive and faster testing and contact tracing could help the country emerge from the pandemic and reopen its borders safely after mass vaccination. The pace and extent of the reopening of borders will depend on the global pandemic situation and rollout of vaccines. However, the risk of resurgence of Covid-19 remains as it takes time to achieve herd immunity.


For the three hospitality REITs under our coverage, our order of preference is Ascott Residence Trust [BUY; FV: SGD1.22], CDL Hospitality Trusts [BUY; FV: SGD1.38] and Far East Hospitality Trust [BUY; FV: SGD0.66]. ART remains our top hospitality REIT pick. Despite recent global infection resurgence, we believe ART’s focus on corporate and long-stay serviced residences, its geographically diversified portfolio with exposure to countries with large domestic markets, and stable income sources (~75% of gross profit in 1Q21) could provide income stability and a buffer to the fall in occupancy.


• Worst is likely over with a gradual recovery ahead
• Singapore pledges to reopen as vaccination gains momentum
• Change in travel behaviour due to Covid-19 accelerated the need for digital transformation