Stronger Singdollar hits hospitality Reits

FAR EAST: Locally, its hotels include the Rendezvous (above) and the Quincy (top). ASCENDAS: In Australia, its properties include the Sebel Cairns Hotel.
FAR EAST: Locally, its hotels include the Rendezvous and the Quincy (above).PHOTOS: FAR EAST HOSPITALITY TRUST, LIM WUI LIANG
FAR EAST: Locally, its hotels include the Rendezvous (above) and the Quincy (top). ASCENDAS: In Australia, its properties include the Sebel Cairns Hotel.
FAR EAST: Locally, its hotels include the Rendezvous (above) and the Quincy.PHOTOS: FAR EAST HOSPITALITY TRUST, LIM WUI LIANG

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 dropped.

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 $20.8 million, down 5.7 per cent, while net property income was $26.0 million, down 2.3 per cent. Gross revenue fell 3 per cent to $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).

  • AT A GLANCE

  • REVENUE: $52.8 million (-2.7%)

    DISTRIBUTABLE INCOME: $15 million (+9.5%)

    DPU: 1.28 cents (+3.2%)

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

  • AT A GLANCE

  • REVENUE: $28.7 million (-3%)

    DISTRIBUTABLE INCOME: $20.8 million (-5.7%)

    DPU: 1.16 cents (-6.5%)

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, while income available for distribution rose 9.5 per cent to $15 million.

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

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

The trust said the underlying performance of its hotels outside China had improved by $3.1 million year on year, but this was more than offset by the weakening of the Australian dollar and yen against the Singdollar. In contrast, the weaker underlying performance of its China hotels was compensated for by the strengthening of the yuan against the Singdollar, it said.

Earnings per stapled security for the three months rose to 1.09 cents from 0.86 cent in 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 portfolio there. However, the China tourism sector is likely to remain challenging as the austerity drive there and increased competition were likely to impede growth.

The trust said the Japan tourism sector would continue to benefit from pro-tourism state initiatives.

A version of this article appeared in the print edition of The Straits Times on August 07, 2015, with the headline 'Stronger Singdollar hits hospitality Reits'. Print Edition | Subscribe