SINGAPORE (July 30): The manager of Far East Hospitality Trust (Far East H-Trust) reported a distribution per stapled security of 0.91 cent for 2Q19 ended June, 9.9% lower than a year ago on lower distributable income and with an enlarged base.
Gross revenue fell 2.1% to $27.9 million while net property income fell 2.4% to $25.1 million for 2Q19. Income available for distribution fell 7.4% to $17.6 million.
The manager of Far East H-Trust says average occupancy of the hotels stood at 88.1% in 2Q19, a decrease of 1.7ppt y-o-y. The average daily rate (ADR) was 2.6% lower year-on-year at $156. As a result, revenue per available room (RevPAR) declined by 4.5% to $137.
Revenue contribution from the hotels was lower due to the absence of major events in the quarter as compared to the previous year and softness in corporate demand amidst the economic slowdown.
“Unlike last year, where some hotels in Singapore benefitted from major events such as the Singapore Airshow, Food & Hotel Asia, and the North Korea-United States Singapore Summit, there were no major city-wide events in 1H19,” says the manager.
Serviced residences (SRs) continued to show overall improvement and a more stabilised performance this quarter. There was a growth in shorter-stay bookings at higher room rates. Although the average occupancy of the SRs decreased 1.6ppt to 81.9%, the ADR was higher by 5.0%. Correspondingly, revenue per available unit (RevPAU) of the SR portfolio grew 3.0% y-o-y to $174.
As at June 30 2019, total debt stood at $1,009.8 million, of which 75.0% was secured at fixed interest rates, up from 46.9% in the same period last year. The aggregate leverage was 39.8%, and the weighted average debt to maturity was 3.4 years. The average cost of debt was 2.9%. In March 2019, a term loan of $100 million due to mature in August 2019 was refinanced. There are no other term loans maturing this year.
In its outlook, Far East H-Trust’s manager expects arrivals to grow by 1% to 4% in 20191, against an increase of 1.9% -- or 1,275 new rooms -- in hotel room supply this year. The expected slower pace of increase in hotel room supply over the next few years will help support the recovery in the Singapore hotel sector. Meantime, the SR market also shows signs of turning around.
Units in Far East H-Trust closed at 70 cents on Monday.
