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Key Takeaways

Manulife US REIT’s (MUST) 3Q21 portfolio occupancy was down 0.8 ppt QoQ to 90.9%, but was above the US Class A average of 83.8%. Management saw stronger leasing momentum in 3Q21 with 149k sq ft executed which is higher than management’s earlier guidance of 127k sq ft. YTD Sep 2021, rental reversion came in at +1.3%. With MUST’s rents largely below market (excluding Michelson) and improving leasing momentum, management expects full year rental reversion to be modestly positive. As at 30 Sep 2021, 0.8% and 11.8% of leases by GRI were due for expiry in 4Q21 and FY22 respectively. As the US economy recovers and people prepare to return to office with high vaccination rates, we believe MUST is a beneficiary of the US reopening. We maintain our fair value estimate of USD0.83. BUY. (5 Nov)

Ascott Residence Trust’s (ART) 3Q21 with portfolio RevPAU rose 49% YoY and 8% QoQ to SGD70, largely due to higher average daily rate. ART also announced its fourth acquisition of student accommodation, Seven07 (entry EBTIDA yield: 4.5%; Average occupancy: 100%) in the US. While the pro-forma DPU accretion is only 1.2%, management expects strong rental growth of 8% for academic year 2022 based on strong pre-leasing momentum. Post-acquisition, ART’s longer-stay accommodation will increase to 12% of AUM, on track to achieve its medium target of 15-20% for income stability. We continue to like ART for its geographically diversified, long-stays portfolio, and strong balance sheet, together with SGD330 of undistributed capital gains which could be used to smoothen the DPU loss from the impact of Covid-19. We increase our fair value estimate marginally from SGD1.21 to SGD1.22. BUY. (3 Nov)

CDL Hospitality Trusts’ (CDLHT) 3Q21 revenue and NPI grew 32.8% and 34.8% YoY to SGD40.0m and SGD20.5m, respectively. Overall, CDLHT saw sequential improvement in RevPAR performances for most of its markets except for Australia and the Maldives. Performances of its overseas hotels were generally stronger as compared to Singapore in 3Q21, due to strong domestic demand and easing of travel restrictions. We continue to see CDLHT as a beneficiary of broader vaccine distribution, progressive reopening of borders, and resumption of domestic/international travel. We maintain our fair value estimate at SGD1.34. BUY. (1 Nov)

Far East Hospitality Trust’s (FEHT) 3Q21 gross revenue rose marginally by 0.7% YoY to SGD20.8m while NPI grew 2.6% YoY to SGD18.3m. Its Hotels RevPAR decreased 22.4% YoY to SGD52 as more companies looked for alternative accommodation for their Malaysian workers to reduce costs. Separately, 3Q21 SRs RevPAU was down 18.5% YoY to SGD128, on the back of lower occupancy rate and ADR. We keep our fair value estimate of SGD0.64. HOLD. (1 Nov)