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Far East Hospitality Trust’s Q1 Earnings: What You Need to Know

Far East Hospitality Trust (SGX: Q5T) reported a drop in its distribution per unit (DPU) yesterday.

The latest report was for the first quarter of the fiscal year ending on 31 December 2019 (FY18/19). Far East Hospitality Trust’s portfolio consists of 13 properties with 3,143 hotel rooms and serviced apartments which are valued at S$2.63 billion as of 31 December 2018.

Let’s take a quick look at the results.

  1. Gross revenue for the reporting quarter increased by 8.0% year-on-year to S$27.8 million while net property income rose by 9.0% to S$25.07 million. The increase in revenue was due to a 10.4% increase in the master lease rental which offset a 0.5% decrease in retail and office revenue. As for net property income, the increase was on the back of the additional contribution from Oasia Hotel Downtown.
  2. Distributable income, however, dropped by 1.2% to S$17.4 million compared to the same period in the previous year. This resulted in a 3.2% pullback in DPU which came in at 0.91 cents.
  3. Next, let’s look at the Trust’s debt profile. As of 31 March 2019, the hospitality trust’s gearing stood at 39.9%. The weighted average annualised interest rate came in 2.9% with approximately 69.5% of its debt on fixed-rate loans. The average debt duration for the REIT stood at 3.6 years.
  4. As for the Trust’s operational statistics, it saw a slight drop in its average occupancy for both hotels and serviced apartments which ticked down from 81.3% to 80.2% and 89.6% to 89.2% year-on-year, respectively. The average daily rate, on the other hand, saw an upward move and increased by 1.3% year-on-year to S$217  for serviced apartments and 1.1% year-on-year to S$157 for hotels. However, revenue per available unit (RevPAU) was a mixed bag with RevPAU remaining stable at S$174 for serviced apartments but improving by 0.7% to S$140 for hotels for the same reporting quarter.
  5. Lastly, the Trust’s net asset value (NAV) per unit stood at S$0.87.

The Road Ahead

Mr Gerald Lee, Chief Executive Officer of the REIT Manager commented:

“The hotels and serviced residences in our portfolio recorded a slight improvement in the average rate. The hotels continued to achieve high occupancies, although corporate demand was relatively softer as compared to the same period last year given the absence of major events such as the biennial Singapore Airshow. The increase in hotel room supply is expected to be moderate in the near future, providing some stability to facilitate a recovery in the sector.”

Far East Hospitality Trust’s share price closed at S$0.66 apiece yesterday, sporting a price-to-book ratio of 0.76 and an annualised yield of 5.0%.

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Motley Fool Singapore contributor Esjay contributed to this article. Esjay does not own shares in Far East Hospitality Trust.

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