SINGAPORE - More hotel rooms available and weak corporate demand have affected room rates in the second quarter despite improved interest in rooms, said Far East Hospitality Trust.
Income available for distribution inched down 1.9 per cent to S$17.9 million for the three months to June 30.
Quarterly distribution per stapled security fell 4 per cent to 0.97 Singapore cents.
The trust is a hospitality stapled group that has 12 properties with 2,829 hotel rooms and serviced residence units, valued at about S$2.42 billion at Dec 31.
Gross revenue dipped 1 per cent to S$25.9 million for the quarter, while net property income was down 1.4 per cent at S$23.2 million.
Mr Gerald Lee, chief executive officer of the real estate investment trust (Reit) manager, said in a statement that the hospitality operating environment showed some improvement in the quarter, but was "still slightly softer than the same period last year".
"Demand was stronger in the leisure segment, and we expect the next few quarters to follow a similar trend," he added.
While the average occupancy rate of the hotel portfolio rose 1.9 percentage points to 87.1 per cent in the second quarter, the average daily rate fell 3.4 per cent, pushing the revenue per available room down by 1.3 per cent to S$134.
Demand for serviced residences was also muted, with weak corporate demand in the quarter, coming especially from project groups.
Average occupancy for the serviced residence portfolio fell 4.5 percentage points year on year while the average daily rate dipped 0.6 per cent. Revenue per available unit fell 5.7 per cent to S$177 in the quarter.
The retail and office spaces were the reliable contributors in the portfolio, as revenue remained stable at $5.8 million for the segment.
For the first six months of the year, net property income was 6 per cent lower at S$45.3 million on the back of a 5.3 per cent fall in gross revenue to S$50.6 million.
Income available for distribution fell 7.6 per cent to S$34.9 million, while distribution per stapled security fell 9.1 per cent to 1.9 cents. Net asset value per stapled security was 89.71 cents at June 30, compared with 90.9 cents at Dec 31.
The Reit manager said: "The operating environment is expected to remain competitive in the next few quarters as demand for accommodation from the corporate segment continues to be soft."
It expects its serviced residences, which mainly serve corporations, to be affected much more than the hotels.