The manager of Far East Hospitality Trust (FEHT) has reported a 40% surge in distribution per share (DPS) of 1.54 cents for the 1HFY2022 ended June, from the DPS of 1.10 cents in the 1HFY2021.
Distribution to the REIT’s stapled security holders increased by 41.0% y-o-y to $30.6 million, which includes other gains of $2.0 million, a portion of the divestment proceeds from Central Square.
On March 24, FEHT completed the divestment for a consideration of $313.2 million, 70.8% more than the $183.3 million it paid for in August 2012. Central Square was divested to City Developments Limited (CDL).
During the 1HFY2022, gross revenue fell by 1.4% y-o-y to $41.0 million mainly due to the divestment of Central Square.
Despite the disposal, net property income (NPI) increased by 3.5% y-o-y to $37.5 million. During the period, NPI margin increased by 4.3 percentage points to 91.4%.
Income available for distribution increased by 14.4% y-o-y to $29.0 million mainly due to the reduced financing costs following the repayment of loans from its divestment proceeds.
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In the 1HFY2022, FEHT’s average hotel occupancy fell 9.4 percentage points to 68.2% as a few hotels from the portfolio exited from contracts with the Singapore government.
The Elizabeth Hotel was also closed for renovation works.
The average daily rate (ADR), however, surged 50.0% y-o-y to $99 as there were more business and leisure guests from higher inbound traffic.
Correspondingly, revenue per average room (RevPAR) increased by 31.4% y-o-y to $67.
“While there were early signs of recovery, the hotels were still on the fixed rent component of the master leases,” says FEHT in its July 29 statement.
FEHT’s serviced residences, which continued to log a strong performance above the fixed rent component of the master leases, saw average occupancy increase by 12.3 percentage points to 88.5%.
The figures were supported by corporate groups and increased demand from professionals requiring long-stay accommodation.
ADR for the segment grew 13.8% to $206.
Consequently, revenue per average unit (RevPAU) increased by 31.9% y-o-y to $182.
Within the REIT’s commercial premises, revenue from FEHT’s retail and office spaces fell by 1.5% y-o-y to $7.3 million due to the disposal of Central Square.
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Excluding Central Square, revenue would have increase by 12.6% y-o-y on a like-for-like basis.
As at June 30, FEHT’s aggregate leverage fell by 5 percentage points to 33.3% with the repayment of loans and revolving credit facilities with proceeds from the divestment.
At the end of the period, cash and cash equivalents stood at $55.9 million.
Looking ahead, FEHT’s manager says it is “optimistic” over the longer-term prospects of the hospitality industry due to the continuing efforts of the government and the industry to build Singapore into an attractive destination.
Despite the ongoing uncertainties, it adds that the trust continues to be protected by the fixed rent component of the long-term master leases for all its properties.
Units in FEHT closed at 65 cents on July 28.
