Eagle Hospitality Trust maiden DPU of 0.65 US cent beats forecast

SINGAPORE (Aug 14): The trustee-managers of Eagle Hospitality Trust (EHT) has declared a DPU of 0.650 US cent for the period from its May 24 listing date to June 30. This was 1.2% higher than the projected DPU of 0.642 US cent.

Total revenue came in 1.3% lower than projected at US$9.5 million due to the short time period for ramp-up following the completion of the broader portfolio's significant renovation programme, EHT’s trustee-manager said.

For the reporting period, the total portfolio of 18 assets achieved a RevPAR of US$98.3; however, the five Work-in-Progress hotels and 13 upgraded hotels generated RevPAR of US$77.3 and US$107.3, respectively.

Net property income (NPI) came in 1.8% lower at US$8 million while distributable income came in 1.2% higher at US$5.6 million primarily due to lower trust expenses arising from improvements in administrative costs and lower finance expenses, resulting from an easing interest rate environment.

In the reporting period, US$341 million of debt was hedged resulting in 93% fixed rate borrowings, reducing the REIT’s exposure to fluctuations in interest rates.

In addition, through the fixed rate swap transaction, the REIT will benefit from US$1.36 million of interest expense savings per annum, from July 1.

As of June 30, the REIT’s gearing ratio is 37.5%, well within the borrowing limit of 45%.

EHT has a portfolio of 18 full-service hotel properties in the United States, with a total of 5,420 rooms.

The REIT’s debt maturity profile is also staggered through 2024 with a weighted average term to maturity of 4.2 years.

Salvatore Takoushian, chief executive of the managers, says the REIT’s portfolio is about 6.8% better than at the time of IPO given RGI (revenue per available room index) for its portfolio was 104%, or 6.8% better than at the time of IPO.

In it outlook statement, the trustee-manager says the US macroeconomic backdrop continues to benefit lodging industry fundamentals.

“Future occupancy levels for its portfolio is projected to remain well above historical averages given lodging supply and demand growth projections of 2.0% and 1.9% respectively are expected to have a positive 10bps impact,” it adds.

As at 11.07am, EHT units are trading 0.5 US cent higher at 71 US cents.