Far East Hospitality Trust posts 3.1% increase in 4Q DPU to 1.0 cent

The DPS for FY18 came in at 4.0 cents, 2.6% higher than 3.90 cents in FY17.

Gross revenue for the quarter was 12.4% higher at $28.9 million from $25.7 million last year, mainly due to the trust’s master lease rental being boosted by the improvement in the performance of the serviced residences and the addition of Oasia Hotel Downtown to its portfolio.

The trust’s hotels saw overall y-o-y improvement in 4Q18, with revenue per available room (RevPAR) from hotels increasing 7.5% y-o-y to $142, average daily rate (ADR) growing by 6.5% y-o-y and occupancy increasing by 0.8 percentage points (pp).

The services residences portfolio also saw improvement, with RevPAR growing 7.5% y-o-y to $179 and occupancy growing by 6.1pp, but ADR was slightly lower y-o-y by 0.3%.

Property expenses remained flat at $2.60 million, bringing net property income to $26.3 million, 13.9% higher than $23.1 million in the previous year.

Finance expenses increased by 45.9% y-o-y to $7.53 million.

Loss from share of results of joint venture increased significantly to $1.87 million from a loss of $36,000 a year ago.

During the quarter, the trust recorded a profit of $30.2 million in fair value change in investment properties, compared to a loss of $41.5 million in the same period last year.

On the outlook, the operating environment for hotels in Singapore continues to trend in a positive direction, benefitting from a better balance in demand and supply in the industry.

Nonetheless, with higher trade policy uncertainties and slowing economic growth in key markets, the hospitality sector could see a dampening in corporate demand. The serviced residences have shown signs of turning around but corporate demand is still expected to remain subdued.

Units in Far East H-Trust last traded at 64 cents on Tuesday.