Far East Hospitality Trust’s 4Q18 net property income rose 14 percent amid hotel turnaround

Singapore five-dollar note Photo by Leslie Shaffer

Far East Hospitality Trust reported on Wednesday that its fourth quarter net property income increased 13.9 percent on-year to S$26.32 million, amid a turnaround in hotel performance. The results were in line with analyst forecasts.

Gross revenue for the quarter ended 31 December increased 12.4 percent on-year to S$28.92 million, it said in a filing to SGX before the market open on Wednesday.

Distribution per stapled security (DPS) was 1.00 Singapore cent, up 3.1 percent from 0.97 Singapore cent in the year-ago quarter, FEHT said.

Gerald Lee, CEO of the REIT’s manager, said the DPS has increased for four straight quarters this year.

“This is attributed to overall improvement in the operating performance of our hotel portfolio, supported by a boost from the addition of Oasia Hotel Downtown and the completion of the renovation of Orchard Rendezvous Hotel. Besides the hotels, our serviced residences have also shown a turnaround in performance for the quarter,” Lee said in the statement.

Average occupancy for the hotels was 86.2 percent in the fourth quarter, up from 85.4 percent in the year-ago quarter, while revenue per available room (RevPAR) was S$142, up 7.5 percent on-year from S$132, FEHT said.

Serviced residences’ average occupancy was 84.3 percent in the quarter, up from 78.2 percent in the year-ago period, while RevPAR was S$179, up 7.5 percent from S$166 in the year-ago quarter, it said.

For the full year, it reported net property income rose 10.3 percent on-year to S$102.76 million on gross revenue of S$113.68 million, up 9.5 percent on-year. DPS for the full year was 4.0 Singapore cents, up 2.6 percent from 3.9 Singapore cents the previous year, it said.

JPMorgan had forecast full-year net property income of S$103 million on revenue of S$114 million. DBS had forecast full-year net property income of S$102 million on gross revenue of S$114 million.

In its outlook, FEHT was positive on Singapore’s hospitality sector.

“The operating environment for hotels in Singapore continues to trend in a positive direction, benefiting from a better balance in demand and supply in the industry,” FEHT said.

It estimated the there were 1.1 percent new hotel rooms last year, moderating from CBRE data which showed 5.1 percent increases between 2013-2017. FEHT estimated room supply would increase by 2.2 percent this year.

In addition, it pointed to the 6.6 percent growth in visitor arrivals in the first 11 months of 2018, according to Singapore Tourism Board data.

“Contributing to this growth are developments such as the expansion of flight and cruise connectivities to key visitor markets and continued marketing and promotion efforts by the Singapore Tourism Board and the travel industry,” it said.

But it added that global trade uncertainties and slowing economic growth in some markets could weaken corporate demand for the hospitality sector.

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