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Frasers Hospitality Trust posts 10.2% drop in 3Q DPS to 1.0086 cents

Stanislaus Jude Chan
Stanislaus Jude Chan • 2 min read
Frasers Hospitality Trust posts 10.2% drop in 3Q DPS to 1.0086 cents
SINGAPORE (July 31): Frasers Hospitality Trust (FHT) has announced distribution per stapled security (DPS) of 1.0086 cents for the 3Q19 ended June, some 10.2% lower than DPS of 1.1226 cents a year ago.
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SINGAPORE (July 31): Frasers Hospitality Trust (FHT) has announced distribution per stapled security (DPS) of 1.0086 cents for the 3Q19 ended June, some 10.2% lower than DPS of 1.1226 cents a year ago.

Income available for distribution fell 9.0% to $19.2 million, from $21.1 million a year ago.

3Q19 gross revenue dropped 8.4% to $35.0 million, compared to $38.2 million in the corresponding quarter last year.

The decline was led by weaker performance of its Australian portfolio, with revenue per available room (RevPAR) falling 5.8% on the back of lower average daily rate and occupancy.

Property operating expenses dipped to $9.7 million during the quarter, just 0.7% lower than a year ago.

In 3Q19, FHT incurred higher staff costs across its Sydney properties and higher outsourced housekeeping costs at Sofitel Sydney Wentworth and Novotel Sydney Darling Square.

Consequently, net property income (NPI) fell 11.0% to $25.4 million in 3Q19, from $28.5 million a year ago.

In addition, FHT suffered from unfavourable foreign exchange rates during the quarter.

The foreign exchange impact of all functional currencies – the Australian dollar, British pound, Japanese yen, Malaysian ringgit and Euro – accounted for 32% and 20% of the decline in gross revenue and NPI, respectively.

As at end June, cash and cash equivalents stood at $69.4 million.

“While most of our country portfolios recorded better year-on-year performance in this quarter, our Australia portfolio reported weaker room revenue on the back of continued pressure on rates and lower occupancy,” says Colin Low, CEO of the managers.

“In Sydney, the trading environment has remained challenging and softer corporate demand has led to lower room revenue across our properties while in Melbourne, the performance of our property has been affected by fewer sporting events and concerts,” he adds.

Looking ahead, FHT is expected to see continued pressure on occupancy and hotel performance in Sydney, as room supply in the city is projected to grow by 29% over the next four years.

Meanwhile, in Melbourne, the supply pipeline is also cause for concern as more than 7,000 rooms are expected to be developed over the next four years.

The managers say future declines in RevPAR are to be expected if these projects come to fruition.

Units in FHT closed 1 cent lower, or down 1.4%, at 70.5 cents on Tuesday.

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