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Far East Hospitality Trust Ends 2013 with Lower Than Expected Results

Far East Hospitality Trust (SGX: Q5T) reported its full year results for Financial Year 2013 (FY 2013) yesterday. Its gross revenue went down 6% to S$122 million, as compared to its initial public offering (IPO) forecast of S$131 million. Meanwhile, its net property income and distribution per unit were 5% and 3% lower than expected, respectively. The former came in at S$111 million while the latter figure was at 5.64 Singapore cents.

The trust has a portfolio of 12 properties consisting of eight hotels – such as Orchard Parade Hotel, Rendezvous Hotel Singapore, and Village Hotel Changi among others – and four serviced residences that are all located in Singapore.

For the hotels, the average occupancy rate, average daily room rate and room revenue per available room (RevPAR) stood at 86.4%, S$191.90, and S$165.70 respectively. RevPAR is obtained by multiplying the average daily room rate by its occupancy rate. CDL Hospitality Trusts (SGX: J85), a competitor of Far East Hospitality trust in the hospitality segment, had a slightly higher average occupancy rate of 87.4% in 2013.

For the serviced residences, the average occupancy rate, average daily room rate and room revenue per available unit (RevPAU) were at 89%, S$255.00 and S$226.90 respectively. Just like RevPAR, one can arrive at the RevPAU by multiplying the average daily room rate and the occupancy rate.

As of 31 Dec 2013, the Trust’s gearing ratio stood at 30.9%. This was an improvement over the previous quarter where the gearing was at 31.6%. Average cost of debt was at 2.2% and the weighted average debt to maturity is at 3.3 years.

In comparison with other trusts in the hospitality segment, Far East Hospitality Trust isn’t excessively levered as it has a gearing ratio that’s in-line with its peers. For instance, CDL Hospitality has a gearing ratio of 29.7% and another hospitality trust, OUE Hospitality Trust (SGX: SK7), has its latest gearing ratio (as of 31 Sep 2013) at 33.2%.

Far East Hospitality Trust ended 2013 with a net asset value per unit of S$0.9832.

The trust also revealed that Rendezvous Hotel Singapore had completed its refurbishment works and that the hotel was re-launched in January this year. Far East Hospitality Trust also said that it will continue to optimise the value of its existing assets and try to improve their competitiveness by implementing asset enhancement initiatives in a holistic and progressive manner. Renovations for 2014 are already planned for at the properties in its portfolio, including The Elizabeth Hotel, Village Hotel Albert Court, Village Hotel Changi and Regency House.

The trust last traded at S$0.80. This translates to a historical price-to-book ratio of 0.8 and a distribution yield of 7.1%, based on Far East Hospitality Trust’s latest results.

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The information provided is for general information purposes only and is not intended to be personalised investment or financial advice. Motley Fool Singapore contributor Sudhan P doesn’t own shares in any companies mentioned.