Far East Orchard H2 net profit falls 15.5% on lower fair-value gains, higher finance costs

[SINGAPORE] Hospitality and student housing player Far East Orchard’s net profit fell 15.5 per cent to S$34.4 million for the six months ended Dec 31, 2025, due to lower net fair-value gains and higher finance costs, the company said on Friday (Feb 27).

Revenue rose 65.3 per cent year on year to S$156.3 million, mainly driven by the consolidation of revenue from UK-based operator Homes for Students Limited (HFS) after the completion of a phased acquisition in September 2025.

The group recognised lower net gains of S$23.2 million in H2 FY2025, compared with S$24.9 million a year earlier.

This was primarily due to lower net fair-value gains on its investment properties of S$7.7 million, from S$32.3 million previously. The decline was partially offset by a one-off S$19.8 million remeasurement gain on its equity interest in HFS.

Total expenses increased to S$59.6 million, from S$48.1 million in H2 FY2024. Far East Orchard attributed this to the inclusion of HFS’ operating costs and higher finance expenses after the expiration of low-rate fixed-interest hedges in December 2024.

The board proposed a first and final dividend of S$0.04 a share for the financial year ended Dec 31, 2025. This is lower than the total payout of S$0.05 a share in FY2024, which included a first and final dividend of S$0.04 a share and a special dividend of S$0.01 a share.

The payment date for the latest dividend has not been announced.

For FY2025, Far East Orchard’s net profit was down 8.4 per cent year on year at S$54 million, even as revenue rose 29.1 per cent to S$247.6 million.

Headwinds

Far East Orchard’s occupancy in its purpose-built student accommodation portfolio dropped to 88 per cent for the 2025-2026 academic year, from 92 per cent in the previous cycle.

“Certain cities face more challenges due to less favourable demand-supply dynamics, resulting in lower occupancy,” the group noted.

Its hospitality segment’s revenue rose to S$69 million in H2 FY2025. This, it said, was mainly driven by “higher room rates and fee contributions from newly opened hotels in Japan”. This helped offset weaker performance from owned hotels in Australia and leased properties in Singapore.

While Japan was a bright spot for Far East Orchard, it noted that growth may moderate in 2026 as demand stabilises.

The group expects global conditions in 2026 to “remain challenging, with risks from trade and geopolitical uncertainties, potential market volatility and financing cost pressures”.

Alan Tang, group chief executive officer of Far East Orchard, noted that pre-leasing for the next academic year in its UK-based purpose-built student accommodations is “tracking positively, marginally ahead of the same period last year”.

The group “will likely see higher revenue contribution from the UK market”, he added.

Shares of Far East Orchard fell 1.5 per cent or S$0.02 to S$1.29, before the news.