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Frasers Hospitality Trust’s Latest Annual General Meeting: 3 Slides Investors Should See

Frasers Hospitality Trust  (SGX: ACV) hosted its latest annual general meeting on Thursday, 19 January 2017.

The stapled trust (it comprises a real estate investment trust and a business trust) owns 15 properties that are located across nine cities in Asia, Australia, and Europe. As part of its AGM, Frasers Hospitality Trust had prepared a presentation. There were three slides from the presentation deck that caught my eye.

An overview

2017-01-19 Fraser Hospitality Trust Overview
Source: Frasers Hospitality Trust’s AGM presentation

The slide above captures the key activities for the stapled trust in its financial year ended 30 September 2016 (FY2016). Among the highlights was Frasers Hospitality Trust’s acquisition of Maritim Hotel Dresden. This was funded by $100 million in perpetual bonds. The new acquisition brings the total number of properties under the trust’s portfolio to 15 (more on this in the next slide).

Elsewhere, the stapled trust also took some steps to defend the health of its balance sheet which I will cover in the third slide later.

Geographical diversification

2017-01-19 Fraser Hospitality Trust Slide
Source: Frasers Hospitality Trust’s AGM presentation

Frasers Hospitality Trust might be listed in Singapore, but its properties are located in nine different cities in seven countries. The 15 properties provide over 3,900 rooms and are collectively valued at $2.2 billion.

The location of the trust’s properties provide geographical diversification, but this exposes the trust to the risk of currency fluctuations. As was noted in the first slide above, Frasers Hospitality Trust had moved to strengthened its balance sheet after volatility in the pound sterling following Brexit threatened its gearing level.

This brings us to the next slide which focuses on the stapled trust’s debt profile

Debt profile

2017-01-19 Fraser Hospitality Trust Debt Table
Source: Frasers Hospitality Trust’s AGM presentation

Frasers Hospitality Trust has a gearing level of 37.7% right now. REITs in Singapore are subject to a gearing ceiling of 45%. Among the highlights of the trust’s debt profile is that 86% of its total borrowings are on fixed rates, and thus protected against short-term interest rate hikes. Meanwhile, the stapled trust also has an interest coverage of around 4.9 times.

On the flipside, it’s worth noting that there is a high concentration of debt maturing in 2019. Investors might want to watch the progress the stapled trust makes in terms of refinancing its debt.

Foolish takeaway

Like most investor presentations, Frasers Hospitality Trust will be attempting to put its best foot forward in presenting itself to investors. The slides above are a representation of the REIT manager’s efforts to provide its perspective on Frasers Hospitality Trust.

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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.