Strong Sing dollar hits bottom line of Far East, Ascendas Hospitality Trusts

SINGAPORE - The strong Singapore dollar has hit the bottom line of both Far East Hospitality Trust and Ascendas Hospitality Trust.

Far East saw reduced spending by overseas visitors, who got fewer Singdollars for their home currencies. At Ascendas, foreign currency earnings fell.

The distribution per stapled security (DPS) at Far East Hospitality Trust fell 6.5 per cent to 1.16 cents for the three months ended June 30.

Income available for distribution was S$20.8 million, down 5.7 per cent, while net property income was S$26.0 million, down 2.3 per cent. Gross revenue fell 3 per cent to S$28.7 million.

"Demand for accommodation was muted, as firms stayed prudent in their corporate travel spending, and leisure travellers from some major markets were affected by the relatively strong Singdollar," said Mr Gerald Lee, the chief executive of FEO Hospitality Asset Management, which manages the real estate investment trust (Reit).

Gross revenue fell because of an influx of new hotel rooms and softer demand in the hotel and serviced residences market, said the trust.

Earnings per stapled security for the quarter came to 0.91 cent, up from 0.86 cent a year ago. Net asset value per stapled security was 96.55 cents at June 30, up from 96.97 cents at Dec 31.

Muted demand for corporate and leisure travel could persist, given economic uncertainties and the fairly strong Singdollar, said the trust.

Ascendas Hospitality Trust fared slightly better. Its DPS for the quarter was up 3.2 per cent from a year ago at 1.28 cents. Income available for distribution rose 9.5 per cent to S$15 million.

These increases came about in spite of a fall in earnings and were due to lower expenses and the absence of an unwinding cost that the trust had incurred in the previous year, the trust said.

Net property income was S$21.4 million, down 0.9 per cent, while gross revenue was $52.8 million, down 2.7 per cent.

The trust said that the underlying performance of the portfolio hotels outside China had improved by $3.1 million over the same quarter last year but this was more than offset by the weaker Australian dollar andYen against the Singdollar.

On the other hand, the weaker underlying performance of the China hotels was compensated by a stronger yuan against Singdollar, it said.

Earnings per stapled security for the three months rose to 1.09 cents from 0.86 cents the previous year. Net asset value per stapled security was $0.71 at June 30, down from $0.74 at March 31 this year.

The trust said the tourism sector in Australia is expected to remain healthy in the near term, a positive for its Australian portfolio. On the other hand, the China tourism sector is also likely to remain challenging as the austerity drive and increased competition would likely impede growth.

It also said that the Japan tourism sector would continue to benefit from pro-tourism government initiatives.

jkoh@sph.com.sg