Frasers Hospitality Trust Has A Yield of 8.6% Now: 2 Things Investors Should Know

Frasers Hospitality Trust (SGX: ACV) is a stapled trust that consists of a real estate investment trust and business trust. Its focus, as its name suggests, is on the ownership of hospitality-related properties.

As of 30 June 2016, Frasers Hospitality Trust has 14 properties located across eight cities in Asia, Australia, and Europe. These properties collectively have 3,206 rooms, of which 2,692 are hotel rooms and 842 are serviced residence units.

Right now, Frasers Hospitality Trust has a distribution yield of 8.6%, which is among the highest within the REIT universe of Singapore’s stock market.

Here are two aspects of the trust’s business fundamentals that are related to its yield:

1. Growth in the first nine months of its fiscal year:

The table below shows the year-on-year changes in several of Frasers Hospitality Trust’s financial numbers for the first nine months of its fiscal year ended 30 September 2016 (FY2016). These numbers are the gross revenue (GR), net property income (NPI), NPI margin, distributable income (DI), and distribution per stapled security (DPS).

Source: Frasers Hospitality Trust earnings presentation

We can see that there has been growth in all the numbers. GR and NPI had both stepped up by 20% due to the additions of Sofitel Sydney Wentworth and Martim Hotel Dresden to the trust’s portfolio.

2. A diverse portfolio

Frasers Hospitality Trust runs a geographically diverse portfolio. Here’s a chart showing the trust’s revenue sources from various countries in the third-quarter of FY2016:

Source: Frasers Hospitality Trust earnings presentation

No single country made up more than 30% of the trust’s net property income. Another thing worth noting about the trust is that 56% of its gross revenue in the quarter came from variable rent whereas 44% was from fixed rent – that’s another form of diversification that the trust has in its business.

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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 Lawrence Nga doesn’t own shares in any companies mentioned.