Far East Hospitality Trust Q2 DPS falls 9.9% to 0.91 cent on lower hotel revenue

SINGAPORE - Far East Hospitality Trust (Far East H-Trust) on Tuesday (July 30) morning posted a 9.9 per cent drop in distribution per stapled security (DPS) to 0.91 cent for its second quarter ended June 30, down from 1.01 cents a year ago.

This came on the back of a 7.4 per cent decline in income available for distribution to $17.6 million for the quarter from $19 million in the previous year, as well as an enlarged base. There were some 1.92 million stapled securities in issue at the end of the quarter, up from 1.87 million stapled securities a year ago.

Net property income (NPI) shrank 2.4 per cent to $25.1 million from $25.7 million for the year-ago period, amid a 10.3 per cent increase in finance costs mainly due to higher interest rates.

Gross revenue fell 2.1 per cent year on year to $27.9 million from $28.5 million, mainly due to a decrease in master lease rental from hotels.

The lower revenue contribution from the hotels was due to an absence of large-scale events in the quarter compared to a year ago, and the softness in corporate demand amid the economic slowdown which weighed on business travel.

Serviced residences saw a growth in shorter-stay bookings at higher room rates, with its revenue per available unit growing 3 per cent from a year ago to $174 for the quarter.

Revenue from retail and office spaces declined 1.2 per cent to $5.5 million.

For the half year ended June 30, NPI grew 3 per cent to $50.2 million, while gross revenue rose 2.7 per cent to $55.7 million.

Income available for distribution for the half year dropped 4.5 per cent to some $35 million.

Far East H-Trust is a hospitality stapled group comprising Far East Hospitality Real Estate Investment Trust (Far East H-Reit) and Far East Hospitality Business Trust. The business trust is dormant, thus its financial information was not presented in the financial statements.

Gerald Lee, chief executive officer of the Reit manager, said on Tuesday: "Despite the short-term volatility, we remain positive about the prospects of the (hospitality) industry."

"The more moderate pace of hotel room supply in the coming years will provide opportunities for us to implement strategies to improve the performance of our properties and strengthen the portfolio," Mr Lee added.

Gearing for Far East H-Reit was 39.8 per cent as at June 30.

The DPS for Q2 will be paid on Sept 13, with books closure on Aug 7.

The counter for Far East H-Trust closed up 0.5 cent to 69.5 cents on Monday, before the results were released.