Weak travel markets take toll on FEHT's earnings

Far East Hospitality Trust's Village Residence Clarke Quay. The Reit manager said that while international visitor arrivals to Singapore fell 0.6 per cent for the first eight months of the year, there are signs of recovery, with positive year-on-year
Far East Hospitality Trust's Village Residence Clarke Quay. The Reit manager said that while international visitor arrivals to Singapore fell 0.6 per cent for the first eight months of the year, there are signs of recovery, with positive year-on-year growth in recent months.PHOTO: FAR EAST HOSPITALITY

Trust's hotel and serviced units turn in poorer performance as finance costs rise

Weak corporate and leisure travel markets hit third-quarter earnings at Far East Hospitality Trust (FEHT).

Income available for distribution for the three months to Sept 30 fell 8 per cent year on year to $21.6 million.

As well as a poorer performance across the trust's hotel and serviced apartments, a rise in short-term interest rates also took a toll on distributable income as finance costs rose 20.6 per cent to $5.2 million.

Distribution per stapled security fell 9.1 per cent to 1.2 cents for the period, to be paid on Dec 7.

FEHT is a hospitality stapled group that has 12 properties with a total of 2,829 hotel rooms and serviced residence units, valued at about $2.48 billion at Dec 31.

  • AT A GLANCE

  • Gross revenue:

    $29.7 million (-4.8%)

    Net property income:

    $26.9 million (-4.6%)

    Income available for distribution:

    $21.6 million (-8%)

    Distribution per stapled security:

    1.2 cents (-9.1%)

Gross revenue fell 4.8 per cent to $29.7 million for the quarter, while net property income was down 4.6 per cent at $26.9 million.

"Corporate and leisure demand was soft amidst the uncertain global economic climate, the strong Singapore currency and the outbreak of the haze," Mr Gerald Lee, chief executive officer of the real estate investment trust (Reit) manager, said in a statement.

While the occupancy rate of the hotel portfolio rose 0.3 percentage point to 87.4 per cent in the third quarter, the average daily rate fell 6 per cent, pushing the revenue per available room down by 5.6 per cent to $151.

With lower corporate travel bud-gets and weaker demand from project groups, demand for serviced residences was also muted.

Average occupancy for the serviced residence portfolio fell by 2 percentage points year on year while the average daily rate fell 7.2 per cent. Revenue per available unit fell 9.2 per cent to $209 in the quarter.

However, retail and office spaces were a bright spark in the portfolio, as revenue rose 3.8 per cent to $6.1 million for the segment.

For the first nine months of the year, net property income was 6.1 per cent lower at $77.4 million on the back of a 6.2 per cent fall in gross revenue to $85. 8 million.

Income available for distribution fell 10.3 per cent to $61.6 million, while distribution per stapled security was 11.1 per cent lower at 3.43 cents. Net asset value per stapled security was 96.49 cents at Sept 30, down from 96.97 cents at Dec 31.

The Reit manager said that while international visitor arrivals to Singapore fell 0.6 per cent for the first eight months of the year, there are signs of recovery with positive year- on-year growth in recent months.

"Continuing efforts by the Government and industry players to strengthen Singapore as a choice travel destination are expected to benefit inbound tourism," it added, citing upcoming events such as the Singapore Airshow, Food & Hotel Asia and World Rugby Sevens Series.

The trust's counter closed 0.5 cent higher at 67.5 cents yesterday.

A version of this article appeared in the print edition of The Straits Times on November 04, 2015, with the headline 'Weak travel markets take toll on FEHT's earnings'. Print Edition | Subscribe