The manager of Far East Hospitality Trust (FEHT) has reported a distribution per stapled security (DPS) of 1.53 cents for the 2HFY2021 ended December, 10.9% higher than the DPS of 1.38 cents in the corresponding period the year before.
This brings DPS for the FY2021 to 2.63 cents, 9.1% higher than the DPS of 2.41 cents in the FY2020.
2HFY2021 gross revenue grew 6.9% y-o-y to $41.7 million due to the serviced residences (SR) segment performing above the fixed rent. The master lease rental for the hotel segment remained at the fixed rent level during the half-year period.
The hotels’ average occupancy for the 2HFY2021 fell 11.4 percentage points y-o-y to 81.1% as the portfolio saw a reduction in room night volume from companies housing their foreign workers. This was partly mitigated by higher inbound travel and domestic staycations.
The average daily rate (ADR) for hotels grew 7.2% y-o-y to $74 thanks to higher rated leisure travellers and corporate business, and boosted by the introduction of the vaccinated travel lanes (VTLs) in the final quarter of 2021.
Revenue per available room (RevPAR) fell 6.3% y-o-y to $60.
FEHT’s SRs saw average occupancy fall 6.1 percentage points to 78.8% during the 2HFY2021, while the ADR for SRs grew 0.6% y-o-y.
Revenue per available unit (RevPAU) fell 6.5% y-o-y to $143.
According to the trust, the SRs performed above fixed rent due to the support from long-stay corporate sources, which helped to minimise the negative impact of the pandemic.
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Revenue from the retail and office spaces increased by 11.0% year-on-year to $7.7 million in 2HFY2021 due to lower rental rebates provided to retail and office tenants in during the period, and offset by lower occupancies.
As property expenses in the 2HFY2021 fell 50.1% y-o-y to $2.7 million, net property income (NPI) for the period grew 16.1% y-o-y to $39.0 million.
The amount for distribution to stapled securityholders grew 11.6% y-o-y to $30.3 million on the back of the higher NPI.
Finance costs for the 2HFY2021 fell 18.9% y-o-y mainly due to lower fixed interest rates on interest rate swap contracts.
The REIT manager’s fees increased by 4.1% y-o-y in the 2HFY2021 due to the higher value of the deposited property and higher distributable income.
As at end-December, cash and cash equivalents stood at $11.7 million.
The trust’s aggregate leverage stood at 38.3% as at end-December.
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Gerald Lee, CEO of the manager says, “Despite the continuing challenging market conditions, we are pleased to be able to increase our income available for distribution and DPS for the full year by 14.5% and 9.1% respectively”.
“While uncertainties exist in the near term, FEHT continues to be protected by the fixed rent component of the long-term master leases for all our properties that contributed about 80% of the gross revenue in FY2021. We are encouraged by the rising vaccination rates around the world, and the progress made by the Singapore government and other countries in transitioning towards the reopening of borders to facilitate international travel,” he adds.
Looking ahead, the trust says it is optimistic over the hospitality industry’s long-term prospects due to the Singapore government’s efforts to live with the pandemic, as well as the industry’s efforts to build Singapore into an attractive destination for investments, MICE and leisure.
“The divestment of Central Square [on Dec 2, 2021] will provide FEHT with a strengthened balance sheet and increased financial flexibility. The REIT manager will continue to explore various options to redeploy the proceeds to deliver optimal value for stapled securityholders,” says FEHT in its statement on Feb 15.
Units in FEHT closed flat at 57 cents on Feb 14.
