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10 Things to Know About Far East Hospitality Trust’s Latest Earnings

Far East Hospitality Trust (SGX: Q5T) is a Singapore-centric hospitality stapled group. The real estate investment trust component has a portfolio of 12 properties, which consists of eight hotels and four serviced residences. Some of the hotels include Orchard Parade Hotel, Rendezvous Hotel Singapore and The Quincy Hotel.

This morning, the trust announced its financial results for the third quarter ended 30 September 2017 (3Q2017). Here are 10 things investors should know from the earnings announcement:

1. For the quarter, gross revenue fell 2% year-on-year to S$27.5 million. This was due to lower master lease rental from the hotels and serviced residences, and weaker performance from the retail and office spaces.

2. The net property income was S$24.8 million in 3Q2017, a decline of 2.3% as compared to the same period last year.

3. Income available for distribution slumped 5.4% to S$19.2 million.

4. The reporting quarter’s distribution per stapled security was 1.03 cents, down 8% from 1.12 cents a year ago.

5. The net asset value per stapled security was at S$0.8942, as of 30 September 2017. This is a decline from S$0.9090 seen at the end of last year.

6. For the hotels portfolio, the average occupancy improved to 89.4% as compared to 3Q2016’s 88.4%. The average daily rate (ADR) declined slightly by 0.7% to S$159. As a result, revenue per available room, calculated by multiplying the ADR by the occupancy rate, increased by 0.4% to S$143.

7. As for the serviced residences portfolio, the average occupancy and ADR for the quarter were at 89% and S$221 respectively. They were down one percentage point and 2.3% year-on-year respectively. Correspondingly, revenue per available unit tumbled 3.4% to S$196 in 3Q2017.

8. Revenue from the retail and office spaces, which are not covered by the master leases, slipped 4.5% year-on-year to $5.6 million. This was on the back of lower occupancy and a marginal decrease in rental rates.

9. As of 30 September 2017, the trust’s gearing ratio was 32.1%, with the weighted average cost of debt at around 2.5% per annum.

10. Looking ahead, Far East Hospitality Trust said that the growth of hotel supply would continue to outstrip demand this year. However, new hotel supply is expected to ease off next year as most of the new hotels under development would be completed by then. Over at the Orchard Parade Hotel, refurbishment of the guest rooms and the club lounge is on track to be completed in 2Q2018.

The trust opened for trading at S$0.715 today. This gives a price-to-book ratio of 0.8 and a trailing distribution yield of 5.7%.

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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.