Far East Hospitality Trust reports DPS of 1.73 cents for 2HFY2022, 13.1% higher y-o-y

Felicia Tan
6-min read

For the FY2022, DPS grew by 24.3% to 3.27 cents, up from the DPS of 2.63 cents in the FY2021.

Far East Hospitality Trust (FEHT) Q5T has reported a distribution per share (DPS) of 1.73 cents for the 2HFY2022 ended Dec 31, 2022, 13.1% higher than the DPS of 1.53 cents in the same period the year before.

For the FY2022, DPS grew by 24.3% to 3.27 cents, up from the DPS of 2.63 cents in the FY2021.

2HFY2022 gross revenue grew by 2.2% y-o-y to $42.6 million thanks to growth from both the trust’s hotel and serviced residences (SR) portfolio and offset by the decrease in revenue contribution from Village Residences Clarke Quay (VRCQ) following its divestment on March 24, 2022.

The master lease rental for the 2HFY2022 improved with more hotels performing above fixed rent. During the period, SRs also achieved higher variable rents.

On a like-for-like basis, with FEHT’s 12 properties excluding Central Square which was divested in March 2022, gross revenue would have grown by 10.7% y-o-y.

During the six-month period, FEHT’s average daily rate (ADR) of hotels grew by 98.6% y-o-y to $147 thanks to the higher number of travellers for leisure and business, as well as the return of high-profile events. The higher ADR was also attributable to the higher contracted rates from remaining government contracts and the launch of Vibe Hotel Singapore Orchard.

Average occupancy, however, fell by 2.0 percentage points y-o-y to 79.1% as a few hotels exited the government contracts at the end of 2021. The Elizabeth Hotel was also closed for renovation for part of the second half of 2022.

Revenue per available room (RevPAR) grew by 93.3% y-o-y to $116.

SRs also saw an improvement in its ADR with a 34.8% y-o-y growth to $244 due to a higher mix of short-stay guests with higher rates.

SRs’ average occupancy rose by 7.7 percentage points y-o-y to 86.5% while revenue per available unit (RevPAU) rose by 47.6% y-o-y to $211.

Revenue from FEHT’s retail and office spaces fell by 2.2% y-o-y to $7.5 million due to the divestment of VRCQ. Excluding VRCQ and rental rebates provided to tenants, revenue would have grown 8.8% y-o-y on the back of improving rental rates and occupancy rates.

2HFY2022 net property income increased by 2.3% y-o-y to $39.9 million but would have increased by 10.5% y-o-y on a same-store basis.

2HFY2022 income available for distribution fell by 8.5% y-o-y to $30.2 million as the amount in the 2HFY2021 included the release of $3.5 million of taxable income available for distribution. Excluding the release of the sum, income available for distribution would have increased by 2.3% y-o-y.

Distribution to stapled securityholders increased by 13.8% y-o-y to $34.4 million due to higher NPI and distribution of other gains from the divestment of VRCQ.

For the FY2022, gross revenue increased by 0.4% y-o-y to $83.6 million with growths from FEHT’s hotels and SR portfolio but offset by the loss in contribution from VRCQ following its divestment. On a like-for-like basis, excluding the effects of the divestment of Central Square, gross revenue would have improved by 7.0% y-o-y.

NPI rose by 2.9% y-o-y to $77.3 million. NPI would have been up by 9.0% y-o-y on a same-store basis.

Income available for distribution rose by 7.5% y-o-y to $59.0 million.

Distribution to stapled securityholders rose by 25.2% y-o-y to $65.0 million.

During the year, FEHT’s ADR for hotels grew by 78.6% y-o-y to $125 with “healthy demand” from corporate groups and improved pick-up from leisure travellers following the relaxation of border measures. Contracts with the government were also renewed at higher rates.

Hotels’ average occupancy fell by 5.7 percentage points y-o-y to 73.7% as some hotels exited the government contracts at the end of 2021. The Elizabeth Hotel was also closed for renovation for part of the 2HFY2022.

As such, RevPAR grew 64.3% y-o-y to $92.

The ADR for SRs grew by 23.2% y-o-y to $223, exceeding its FY2019 figures.

Average occupancy grew by 10 percentage points y-o-y to 87.5% while RevPAU increased by 39.3% y-o-y to $195 due to the tight supply and continued inflow of professionals and project groups.

Revenue from the retail and office spaces declined 1.9% y-o-y to $14.8 million due to the divestment of VRCQ which contained 21.3% of the commercial spaces in the portfolio. Excluding VRCQ and rental rebates provided to tenants in FY2021, revenue would have grown 4.8% y-o-y on the back of improving rental rates and occupancy rates.

As at Dec 31, 2022, cash and cash equivalents stood at $49.8 million. Aggregate leverage as at end-December fell by 6.3 percentage points y-o-y to 32.0% primarily due to the repayment of loans and revolving credit facilities with proceeds from the divestment of Central Square. Of FEHT’s total debt, 54.1% was secured at fixed interest rates as at Dec 31, 2022.

“2022 has been a year of recovery for the hospitality sector, with the lifting of Covid-19 restrictions across many countries leading to the resumption of international travel and MICE events,” says Gerald Lee, CEO of the REIT manager.

MICE refers to meetings, incentives, conventions and exhibitions.

“Far East H-Trust’s portfolio of hotels and serviced residences benefited from the increased flow of business and tourist traffic into Singapore, resulting in a significant improvement in operational performance. We remain optimistic about the continued recovery of the hospitality industry to pre-pandemic levels and will continue to seek yield accretive acquisitions to further enhance Far East H-Trust’s existing portfolio,” Lee adds.

In 2023, the REIT manager says it remains “optimistic” over the prospects of the hospitality sector and that the expected increase in visitor arrivals will enable more of the trust’s properties to perform above their fixed rents.

Units in FEHT closed flat at 66.5 cents on Feb 13.

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