Far East Orchard has seen its attributable loss in its 9MFY2021 double y-o-y from $6.3 to $12.8 million as the Covid-19 pandemic continues to take its toll on the hospitality sector.
In an earnings release, FEOR said the hospitality business segment, particularly in Australia with its extended lockdowns in the third quarter, encumbered FEOR’s performance due to the resurgence of Covid-19.
The Australian dollar also weakened against the Singapore dollar during the quarter, resulting in an exchange loss of $5 million in 9MFY2021, compared to an exchange gain of $5.9 million in the same period a year before.
However, these losses were cushioned by operating profit from its purpose-built student accommodation (PBSA) business segment, rental income from medical suites, businesses from government isolation and restrictions in Singapore, as well as various support from government grants during the period.
With the ramp-up in vaccination rate in Australia, FEOR expects the country’s curbs are expected to ease progressively. However, with the lifting of restrictions and requirements for isolation hotels, demand is expected to dwindle in the months to come.
As at 30 September, FEOR maintained what it called a “healthy cash position” of $261.6 million, compared to $278.4 million as at 31 December 2020.
FEOR Group CEO Alan Tang said the disruptions caused by the pandemic has been “unprecedented” and FEOR continues to take active steps to minimise the impact.
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However, he warns, “even with the progressive easing of restrictions, recovery will be gradual and will take time. The two core pillars of the hospitality and PBSA in our lodging platform strategy continue to be effective in supporting our pursuit of the diversification strategy.”
In its 3QFY2021, FEOR’s hospitality arm, Far East Hospitality opened its fourth hotel, Oasia Resort Sentosa on Sentosa, marking its first foray into the spa resort category. FEOR highlighted that since its opening, Oasia Resort Sentosa is currently ranked #1 on TripAdvisor.com
Its joint venture in Australia, TFE Hotels also opened the Adina Apartment Hotel in Munich, Germany.
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The hotel, situated within a mixed-use development, will be the brand’s largest across the continent.
These new additions bring FEOR approximately to 18,000 rooms, a step closer to its so-called “FEOR 25” target – achieving 25,000 rooms by 2025.
Moving forward, FEOR also has new properties within its pipeline slated to open in markets like Germany, Japan, and Vietnam.
Separately, FEOR’s PBSA portfolio in the UK maintained an occupancy level of over 80% as at 30 September.
The UK’s Universities and Colleges Admissions Service (UCAS) reported a 12% increase in overall numbers of applications, driven by domestic students and international students mainly from China and India.
According to Knight Frank Research, it is projected that the PBSA market will have a strong outturn of investment in 2021, translating as a positive sign for the market.
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FEOR also remains confident of the PBSA demand and said it continues to pursue opportunities to expand this business segment.
Tang commented that FEOR has been able to remain “nimble and agile”, and have differentiated itself through “creating new propositions and experiences across our hospitality brands.”
Shares of FEOR closed at $1.12 on Nov 9, up one cent or 0.9% higher compared to its previous close.
