Frasers Hospitality Trust reports fiscal 3Q net property income fell 11 percent

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Frasers Hospitality Trust reported Tuesday its fiscal third quarter net property income fell 11 percent on-year to S$25.4 million, mainly on a weaker performance from the Australia portfolio and on foreign-exchange effects.

Gross revenue for the quarter ended 30 June fell 8.4 percent on-year to S$35 million, the trust said in a filing to SGX.

The currency impact from the Australian dollar, the British pound, the Japanese yen, the Malaysian ringgit and the euro accounted for 32 percent of the decline in gross revenue and 20 percent of the drop in net property income, Frasers Hospitality Trust said.

The distribution per stapled security (DPS) was 1.0086 Singapore cents, down 10.2 percent from 1.1226 Singapore cents in the year-ago quarter, the filing said.

“While most of our country portfolios recorded better year-on-year performance in this quarter, our Australia portfolio reported weaker room revenue on the back of continued pressure on rates and lower occupancy,” Colin Low, CEO of the REIT’s manager, said in the statement.

“In Sydney, the trading environment has remained challenging and softer corporate demand has led to lower room revenue across our properties while in Melbourne, the performance of our property has been affected by fewer sporting events and concerts,” Low added.

The Australia portfolio’s gross operating revenue and gross operating profit fell 5.4 percent and 14.8 percent on-year, respectively, in the quarter, the filing said.

In its outlook, the trust was cautious.

FHT noted Tourism Australia has reported a 2.2 percent increase in international arrivals for the first five months of the year. But it added that in Sydney, revenue per available room (RevPAR) has been falling on lower occupancy and lower average daily rates.

“With the room supply in the city expected to grow by 29 percent over the next four years, this will continue to put pressure on occupancy and hotel performance. In Melbourne, the supply pipeline is cause for concern as more than 7,000 rooms are expected to be developed over the next four years,” the trust said, citing data from CBRE. “If all the projects come to fruition, future declines in RevPAR are to be expected.”

In the Singapore market, while international visitor arrivals have risen this year, global economic headwinds could deter leisure and corporate travel demand, FHT said.

For the nine-month period, Frasers Hospitality Trust reported net property income of S$81.6 million, down 6.9 percent on-year, on gross revenue of S$110.3 million, down 5.9 percent on-year. The DPS for the nine-month period was 3.2474 Singapore cents, down 8.4 percent from 3.5459 Singapore cents in the year-ago period, the filing said.

Frasers Hospitality Trust’s portfolio has 15 assets, comprising nine hotels and six serviced residences, in nine cities across Asia, Australia and Europe, the filing said.

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