FAR East Hospitality Trust : Q5T +2.46% (FEHT) posted a 24.1 per cent increase in distributable income to S$18.2 million for the first quarter of FY2023, from S$14.7 million the previous year.

 

This was driven mainly by a 20.1 per cent rise in gross revenue to S$25.2 million, from S$21 million previously. 

 

The higher gross revenue was led by growth from its hotel segment, which increased 29.6 per cent to S$18.5 million, said FEHT&rsquo s managers on Friday (Apr 28). 

 

Revenue from FEHT&rsquo s commercial premises segment was up 5.9 per cent on the year, while its serviced residences segment posted a 7.8 cent fall in revenue. 

 

Net property income grew 24.4 per cent to S$23.7 million, from S$19 million.

 

For FEHT&rsquo s hotel portfolio, average occupancy rose 14.2 percentage points to 81.9 per cent for Q1 on robust demand from leisure travellers, said its managers. 

 

The average daily rate (ADR) increased 89.3 per cent to S$165. 

 

&ldquo The newly rebranded Vibe Hotel Singapore Orchard and higher contracted rates for the remaining hotels contracted to the government also lifted ADR,&rdquo noted the managers. 

 

Consequently, the revenue per available room climbed 129.2 per cent to S$135.

 

The managers noted that its serviced residences continued to benefit from higher ADR across its portfolio, especially from the rebranded Adina Serviced Apartments Singapore Orchard. 

 

The average occupancy of the serviced residences increased marginally by 0.5 percentage point to 87.1 per cent, and ADR grew 27.8 per cent to S$257. 

 

The managers expect more properties within FEHT&rsquo s portfolio to perform above fixed rents and achieve variable rents on the back of further improvements to visitor arrivals into Singapore. 

 

In the medium term, the managers anticipate that new foreign investments will drive demand for accommodation from corporate travellers and project groups.

FAR East Hospitality Trust&rsquo s (FEHT) : Q5T +0.75% distribution per stapled security (DPS) for the second half (H2) of the financial year ended Dec 31, 2022 rose by 13.1 per cent to S$0.0173, compared with S$0.0153 in the same period last year.

 

On Tuesday (Feb 14), the trust&rsquo s manager declared a distribution of S$34.4 million for H2 FY2022, up 13.8 per cent year on year from S$30.3 million. 

 

The distribution will be paid out on Mar 22, after books closure on Feb 22.

 

The higher DPS was boosted by higher net property income, lower finance expenses and the sharing of divestment gains.

 

Gross revenue was up 2.2 per cent to S$42.6 million for the half-year period, from S$41.7 million a year ago.

 

Net property income (NPI) also grew 2.3 per cent on year to S$39.9 million for the half year, from S$39 million previously.

 

This was due to improved operational performance and a positive recovery outlook for the hospitality sector, the stapled group said.

 

Following Singapore&rsquo s easing of border measures in April 2022, the hotel portfolio experienced healthy demand from corporate groups and improved pickup from travellers. The group also renewed contracts with the government for isolation purposes at higher rates.

 

Despite a fall in average occupancy by 2 percentage points to 79.1 per cent as some hotels exited government contracts at end-2021, average daily rate (ADR) for the half year rose by 98.6 per cent to S$147 from S$74.

 

Revenue per available room grew 93.3 per cent to S$116 in H2 2022, from S$60 in the corresponding year-ago period.

 

The serviced residences segment recorded an increase in average occupancy for the half year, rising 7.7 percentage points to 86.5 per cent in H2 2022 from 78.8 per cent in H2 2021.

 

ADR increased 34.8 per cent to S$244 from S$181, while revenue per available unit rose to S$211, up 47.6 per cent from S$143.

 

The trust attributed this growth to tight supply and the continued inflow of professionals and project groups.

 

As for its retail and office spaces, revenue fell 2.2 per cent year on year to S$7.5 million in H2 FY2022 from S$7.7 million, due to the divestment of Central Square, which contained 21.3 per cent of FEHT&rsquo s commercial spaces.

 

Total income available for distribution also declined 8.5 per cent year on year to S$30.2 million, from S$33 million for the half-year period.

 

For the full year ended Dec 31, DPS was higher by 24.3 per cent at S$0.0327, versus S$0.0263 a year ago. Total income available for distribution grew 7.5 per cent to S$59 million from S$54.8 million.

 

Gross revenue grew by 0.4 per cent to S$83.6 million from S$83.2 million, while NPI rose 2.9 per cent to S$77.3 million from S$75.2 million for the full year.

 

Gerald Lee, chief executive of the trust&rsquo s manager, said the trust will continue to seek yield accretive acquisitions to further enhance FEHT&rsquo s existing portfolio.

 

FEHT comprises Far East Hospitality Real Estate Investment Trust and Far East Hospitality Business Trust.

 

With the recovery gathering pace, FEHT' s hotel RevPAR is expected to increase 51% to $135 in 2023 and 5% to $142 in 2024. 

 

UOB Kay Hian Research analyst Jonathan Koh has maintained his &ldquo buy&rdquo call for Far East Hospitality Trust (FEHT) with a target price (TP) of 71 cents.

 

In his report dated Nov 28, Koh says that FEHT is a pure play on the recovery of room rates in Singapore, with variable rent recovering to pre-pandemic levels. &ldquo FEHT will benefit from the reopening of Singapore&rsquo s international borders since April 2022 on a full-year basis in 2023. One of its nine hotels started to contribute variable rent in 3QFY2022, with a second hotel expected to do so in 4QFY2022,&rdquo says Koh.

 

Variable rent accounts for less than 5% of master lease rental income for FEHT&rsquo s hotels in 2022, compared to the pre-pandemic rate of 29% in 2019, as variable rent is assessed on an annual basis. With the recovery gathering pace, the analyst expects hotel revenue per available room (RevPAR) to increase 51% to $135 in 2023 and 5% to $142 in 2024.

 

As RevPAR recovery sustains into 2023 and 2024, Koh expects variable rent to normalise to 23% and 28% of its hotels&rsquo master lease rental income respectively. Meanwhile, he estimates that FEHT&rsquo s serviced residences, which have consistently contributed variable rents despite the Covid-19 pandemic, will account for 36% of its master lease rental income for its serviced residences due to high occupancy of 90.4% in 3QFY2022.

 

The analyst says that FEHT&rsquo s low aggregate leverage of 33.5% will enable it to weather an extended period of high interest rates.

 

With FEHT trading at 2023 distribution yield of 5.9% price-to-net asset value (P/NAV) of 0.73x, Koh says it is trading at an attractive valuation. His TP of 71 cents is based on a dividend discount model (DDM) with a 7.75% cost of equity and a terminal growth rate of 2.6%.

 

Also contributing is FEHT&rsquo s gains of $39.3 million for the divestment of Central Square, which was completed on March 24. Koh notes that FEHT intends to distribute a portion of the divestment gains at $8 million per year over three years based on the highest historical net profits interest (NPI) achieved by Central Square since its initial public offering (IPO). For FY2022, FEHT plans to dish out capital distribution of $6.2 million.

 

Meanwhile, Koh says Singapore&rsquo s economic reopening is driving recovery, although the occupancy rate for hotels dropped 3.1 percentage points (ppt) year-on-year (y-o-y) to 76.1% in 3QFY2022 due to fewer hotels under government contracts and the closure of Elizabeth Hotel for renovation. The average daily rate (ADR) increased 107.6% y-o-y to $137 due to the return of corporate guests and higher rates for the remaining four government contracts, while RevPAR recovered 101.9% y-o-y to $105 in 3QFY2022.

 

&ldquo Currently, FEHT has four out of its nine hotels on government contracts for isolation purposes till Dec 2022 or Jan 2023. These government contracts provide comparable revenue compared to the market but incur lower operating costs. FEHT would evaluate redeploying these four hotels to serve leisure and business travellers in early-2023 if the recovery in visitor arrivals continues to strengthen,&rdquo says Koh

 

Serviced residences have also displayed resilience from long-stay contracts with both fixed and variable rents. On a same-store basis, excluding Village Residence Clarke Quay, occupancy improved 12.1ppt y-o-y to 90.4% and ADR increased 24.4% y-o-y to $235 in 3QFY2022 due to strong demand from long-stay corporate guests, says Koh, adding that RevPAR expanded 43.7% y-o-y to $213 in 3QFY2022.

 

He has cut his 2023 distribution per unit (DPU) forecast by 8% due to higher cost of debts under the assumption that loans of $132 million or 18% of FEHT&rsquo s total borrowings will be refinanced at 4.5% sometime in mid-2023.

 

Koh&rsquo s share price catalysts include downside protection from fixed rents embedded in its master leases with sponsor Far East Organization (FEO), which owns 61% of FEHT, the continuing recovery in occupancy, ADR and RevPAR in 2023 and 2024, as well as the acquisition of the remaining 70% stake of three Sentosa hotels from FEO.

CGS-CIMB Research is reiterating its &ldquo add&rdquo recommendation on Far East Hospitality Trust (FEHT) but with a lowered target price of 73 cents from 80 cents previously, as analysts Lock Mun Yee and Natalie Ong factor in higher risk-free rates amid a rising interest rate environment.

 

Nonetheless, Lock and Ong have also kept FEHT its top pick within the hospitality sector.

 

Looking at the trust&rsquo s latest 3QFY2022/9MFY2022 ended September update, net property income was $19.7 million in 3QFY2022 (+7.8%) and $57.2 million in 9MFY2022 (+4.9%), both of which was in line with the analysts&rsquo estimates, as it formed 26.5% and 76.8% of their FY2022 estimates respectively.

 

Lock and Ong noted a strong recovery in the trust&rsquo s operations amid the resumption of travelling. Revenue for the third quarter grew 2.0% y-o-y to $21.2 million, despite the divestment of Central Square on Mar 24.

 

On a same-store basis, 3QFY2022/9MFY2022 revenue for hotels increased by 4.7%/1.6% y-o-y, as most hotels continue to be on minimum rent, while the trust&rsquo s serviced residences revenue gained 44.9%/22.2% y-o-y and revenue from commercial premises grew 19.1%/14.8% y-o-y. Hence, the analysts are in the view that the Central Square divestment is masking the revenue growth in both the serviced residences and commercial premises.

 

Meanwhile, gearing stayed low at 33.6%, but cost of debt up inched up q-o-q from 1.8% to 2.5%.

 

During the period, hotel revenue per average room (RevPAR) saw a significant increase, as it gained 107.8% y-o-y in 3QFY2022 to $137 and 53.8% y-o-y in 9MFY2022 to $80. However, this was still at 84% and 64%, respectively, of pre-Covid levels. This was mainly because of the closure of Vibe Hotel Singapore Orchard (formerly The Elizabeth Hotel) from February to August for renovations. Vibe Hotel represents 9.2% of hotel room inventory and has just reopened in early-November.

 

The analysts note that the rebranding initiative at Vibe Hotel has paid off, with average daily rate (ADR) increasing 33% from $150 to $200.

 

While FEHT&rsquo s hotels are not located along the Formula One (F1) circuit, its city hotels benefited from the uptick in F1 and meeting, incentive, convention, and exhibition (MICE) event travellers during the weeks surrounding the F1 event. &ldquo We understand that FEHT&rsquo s room rates were up to $100 higher during that period,&rdquo note Lock and Ong.

 

Meanwhile, the trust&rsquo s serviced residences continue to perform above pre-Covid levels, with RevPAR increasing 43.7%/25.7% y-o-y in 3QFY2022/9MFY2022, helped by strong residential rents which lifted the long-stay serviced residences.

 

On the other hand, the analysts like that four out of nine of FEHT&rsquo s hotels are on government contacts which will run until December 2022 to January 2023. These hotels were re-contracted in August this year at higher rates.

 

While the contracted rates are below pre-Covid-19 levels, these hotels were operating above minimum rent as gross operating profit was boosted by lower operating cost due to the low utilisation rate. While a few of its hotels, including the four government-booked hotels, were operating above minimum rent in 3QFY2022, only one hotel started generating variable income as variable rent is calculated on a yearly basis, and hotels would need to make up for the weaker operation pre-reopening in 1HFY2022.

 

&ldquo We understand that the ramp-up rate for hotels exiting government bookings has improved significantly compared to end-2021/early-2022. FEHT&rsquo s joint venture assets, The Outpost and Village Sentosa, were taken off government contracts in August and achieved 60% occupancy rate within one month,&rdquo note the analysts.

 

FAR East Hospitality Trust (FEHT) : Q5T +2.65% reported a 12 per cent year-on-year increase in its income available for distribution for Q3 2022, to S$15.1 million from S$13.5 million in Q3 2021, according to a business update provided via bourse filing on Thursday (Oct 27).

 

This increase comes on the back of lower real estate investment trust (Reit) manager fees and finance expenses, which contributed to net property income (NPI) rising 7.8 per cent year on year to S$19.7 million, from S$18.3 million in the same period last year. 

 

Gross revenue also rose marginally by 2 per cent to S$21.2 million for the quarter. The Reit&rsquo s manager noted that this increase was led by growth in the hotel segment, which hiked 4.7 per cent to S$14.9 million in Q3. 

 

Meanwhile, revenue from serviced residences (SR) and commercial premises slipped by 3.1 per cent to S$2.6 million and 4.3 per cent to S$3.7 million, respectively. 

 

This was due to the divestment of Central Square at 20 Havelock Road, which was completed in March 2022, said FEHT&rsquo s manager, without which revenue would have grown a respective 44.9 per cent and 19.1 per cent year on year. 

 

For its hotels portfolio, FEHT recorded a dip in average occupancy in Q3 2022 by 3.1 percentage points to 76.1 per cent &ndash mainly due to the exit of government contracts for some of the Reit&rsquo s hotels. The trust&rsquo s Elizabeth Hotel, located at Orchard Road, was also closed for renovation during that period but has since reopened as Vibe Hotel Singapore Orchard in September 2022. 

 

This comes despite the revenue per available room and average daily rate more than doubling by 101.9 per cent and 107.6 per cent year on year to stand at S$105 and S$137, respectively. 

 

FEHT&rsquo s SR portfolio, on the other hand, saw strong demand and support from long-stay corporate sources, highlighted its manager. Its average occupancy grew 18.4 percentage points to 90.4 per cent while its revenue per available unit surged by 66.7 per cent to S$214. Its average daily rate also increased 32.4 per cent to S$235. 

 

With the reopening of borders and return of tourism, the trust expects its hotel and SR portfolios to perform well for the rest of 2022. 

 

&ldquo (Our) high fixed rent component in the master leases provides downside protection for the gross revenue of the trust. The 20-year master leases on all portfolio assets are well-supported by Far East Organisation,&rdquo said its manager. 

 

FAR East Hospitality Trust (FEHT) : Q5T +2.65% reported a 12 per cent year-on-year increase in its income available for distribution for Q3 2022, to S$15.1 million from S$13.5 million in Q3 2021, according to a business update provided via bourse filing on Thursday (Oct 27).

 

This increase comes on the back of lower real estate investment trust (Reit) manager fees and finance expenses, which contributed to net property income (NPI) rising 7.8 per cent year on year to S$19.7 million, from S$18.3 million in the same period last year. 

 

Gross revenue also rose marginally by 2 per cent to S$21.2 million for the quarter. The Reit&rsquo s manager noted that this increase was led by growth in the hotel segment, which hiked 4.7 per cent to S$14.9 million in Q3. 

 

Meanwhile, revenue from serviced residences (SR) and commercial premises slipped by 3.1 per cent to S$2.6 million and 4.3 per cent to S$3.7 million, respectively. 

 

This was due to the divestment of Central Square at 20 Havelock Road, which was completed in March 2022, said FEHT&rsquo s manager, without which revenue would have grown a respective 44.9 per cent and 19.1 per cent year on year. 

 

For its hotels portfolio, FEHT recorded a dip in average occupancy in Q3 2022 by 3.1 percentage points to 76.1 per cent &ndash mainly due to the exit of government contracts for some of the Reit&rsquo s hotels. The trust&rsquo s Elizabeth Hotel, located at Orchard Road, was also closed for renovation during that period but has since reopened as Vibe Hotel Singapore Orchard in September 2022. 

 

This comes despite the revenue per available room and average daily rate more than doubling by 101.9 per cent and 107.6 per cent year on year to stand at S$105 and S$137, respectively. 

 

FEHT&rsquo s SR portfolio, on the other hand, saw strong demand and support from long-stay corporate sources, highlighted its manager. Its average occupancy grew 18.4 percentage points to 90.4 per cent while its revenue per available unit surged by 66.7 per cent to S$214. Its average daily rate also increased 32.4 per cent to S$235. 

 

With the reopening of borders and return of tourism, the trust expects its hotel and SR portfolios to perform well for the rest of 2022. 

 

&ldquo (Our) high fixed rent component in the master leases provides downside protection for the gross revenue of the trust. The 20-year master leases on all portfolio assets are well-supported by Far East Organisation,&rdquo said its manager. 

FAR East Hospitality Trust (Far East H-Trust) declared a distribution of S$30.6 million to stapled securityholders for its H1 2022 on Friday (Jul 29) &mdash which translates to a 40 per cent gain in distribution per stapled security (DPS) to S$0.0154 compared S$0.011 in H1 2021.

 

The manager attributed the higher distribution to a higher net property income contribution, lower finance cost and other gains distribution from the divestment of Village Residence Clarke Quay (VRCQ).

 

Gross revenue for the first half of FY2022 however, slid 1.4 per cent from S$41.6 million to S$41 million mainly due to the VRCQ divestment, it added.

 

&ldquo Excluding the effect of VRCQ, revenue from the retail and office spaces would have increased 12.6 per cent year on year on a same-store basis,&rdquo the manager added.

 

Following the disposal of Central Square, which comprises VRCQ as well as office and retail units, revenue from Far East H-Trust&rsquo s retail and office spaces declined 1.5 per cent to S$7.3 million for H1 2022.

 

Net property income for the stapled group also saw a growth of 3.5 per cent from S$36.2 million to S$37.5 million in H1 this year.

 

Income available for distribution rose 14.4 per cent year on year from S$25.3 million to S$29 million in H1 2022.

 

The DPS is due to be paid out on Sep 6, after books closure on Aug 8.

 

Average occupancy of the hotels under Far East H-Trust&rsquo s portfolio fell 68.2 per cent year on year as some hotels, previously used for Covid-19-related isolation, exited from contracts with the government, coupled with the fact that the Elizabeth Hotel was closed for renovation.

 

While there were early signs of recovery, the hotels were still on the fixed rent component of the master leases, said the stapled group&rsquo s manager.

 

Meanwhile, average occupancy for its serviced residences rose 12.3 percentage points to 88.5 per cent on stronger demand supported by corporate groups and from professionals requiring long-stay accommodation, they added.

 

The aggregate leverage for the trust also decreased from 38.3 per cent in December 2021 to 33.3 per cent in June 2022 after it repaid loans and revolving credit facilities with proceeds from the divestment of Central Square.

 

&ldquo We are encouraged by the increasing flow of leisure and business travel into Singapore and the progressive recovery of the hospitality industry,&rdquo said Gerald Lee, chief executive of the Reit manager.

 

&ldquo While there are macroeconomic headwinds and geopolitical risks in the near term, they will be mitigated by the expected improvement in operating performance of our hotels and serviced residences, as well as our plan to distribute a portion of the gains from the divestment of Central Square to stapled securityholders.&rdquo

FAR East Hospitality Trust' s (FEHT) Far East HTrust: Q5T +1.57% income available for distribution rose 12.5 per cent year on year to S$13.5 million for Q3 2021.

 

Net property income (NPI) for Q3 2021 was up by 2.6 per cent at S$18.3 million, said the stapled group' s managers in a business update on Friday (Oct 29) morning.

 

This is due to 18 per cent lower finance expenses owing to lower fixed rates from the newer interest rate swap contracts, as well as 0.9 per cent lower Reit (real estate investment trust) manager fees due to the lower value of the deposited property, the managers noted.

 

Gross revenue was also up by 0.7 per cent to S$20.8 million for the quarter.

 

While the master lease rental for the hotel segment was at the fixed rent level, the serviced residence segment experienced a decline in demand during the quarter but continued to perform above the fixed rent.

 

The higher revenue for the commercial premises was due to lower rental rebates provided in Q3 2021, the managers highlighted.

 

For the first nine months of 2021, income available for distribution went up by 3 per cent to S$38.8 million. This comes even as NPI weakens by 3.4 per cent for the first nine months, due to lower expenses for the group, the update added.

 

FEHT' s portfolio occupancy declined 18.1 percentage points year on year to 79.2 per cent for Q3 2021 as more companies that required accommodation for their Malaysian workers looked for alternative arrangements to reduce cost. The majority of the hotels continued to be contracted to the government for isolation purposes.

 

The average daily rate (ADR) was also 4.3 per cent lower year on year at S$66 due to lower rates from government contracts and companies requiring accommodation for their workers, said the managers.

 

As a result, revenue per available room (RevPAR) for Q3 2021 declined by 22.4 per cent year on year at S$52, from S$67 previously.

 

Serviced residences, meanwhile, were more resilient with the support from long-stay corporate sources throughout the pandemic, despite a decline in demand from companies requiring temporary accommodation for their foreign workers due to the border closures.

 

The average occupancy for serviced residences declined to 71.8 per cent, or 15.3 percentage points lower year on year for Q3 2021, as companies requiring accommodation for their workers sought alternative arrangements.

 

ADR for the segment consequentially also fell by 1.1 per cent to S$178, while RevPAU was 18.5 per cent lower at S$128.

 

" High vaccination rates in major economies could result in more bilateral travel arrangements between Singapore and other countries in the months ahead, paving the way for a gradual recovery. Global travel restrictions and local safe-distancing measures are expected to continue impacting inbound travel in the near term, with business largely supported by government and long-stay corporate contracts," the managers noted.