UDPATE: Frasers Hospitality Trust reports fiscal 4Q net property income rose 2 percent

Fraser Residence in Singapore by Frasers HospitalityFraser Residence in Singapore by Frasers Hospitality

This article was originally published on Wednesday, 30 October 2019 at 8:51 A.M. SGT; it has since been updated to include more details.

Frasers Hospitality Trust reported Wednesday its fiscal fourth quarter net property income rose 2.3 percent on-year to S$30 million on better overall portfolio performance, offset by the impact of the weaker Australian dollar and British pound.

Gross revenue for the quarter ended 30 September increased 2.1 percent on-year to S$39.5 million, the trust said in a filing to SGX.

The distribution per stapled security (DPS) was 1.1655 Singapore cents, down 4.1 percent from 1.2154 Singapore cents in the year-ago period, Frasers Hospitality Trust said.

Colin Low, CEO of the REIT’s manager, said all country portfolios except Australia performed better.

“The Singapore portfolio recorded higher room rates at higher occupancy levels of above 90 percent, while the U.K. portfolio continued to benefit from the weaker pound which led to all properties recording healthy gains in revenue per available room (RevPAR). The Japan portfolio reported higher room and food and beverage (F&B) revenue, boosted by events including the Rugby World Cup 2019,” Low said in the statement.

“However, these were partially offset by the Australia portfolio which continued to report weaker performance due to the challenging trading environment in Sydney and Melbourne. We continue to work closely with our operators to drive revenue growth and operational efficiency,” Low added.

Australia

The Australia portfolio’s gross operating revenue and gross operating profit fell 1.6 percent and 2.8 percent on-year, respectively, in the quarter amid higher operating costs, the trust said.

Frasers Hospitality Trust had a cautious outlook on the Australia market despite growing hotel visitor nights as supply growth dampens occupancy and room rates.

“In Sydney, RevPAR has been declining on the back of lower occupancy and [average daily rates]. With about 2,000 rooms currently under
construction and a further 4,000 rooms having received development approval, the potential increase in overall stock levels would limit the ability of operators to increase rates,” the trust said.

“In Melbourne, over 5,000 rooms are expected to be added over the next few years. The new supply is substantial for a market that has
already seen limited growth over the last few years because of additions,” the trust added.

Singapore

The Singapore portfolio’s gross operating revenue and gross operating profit rose 5.1 percent and 11.1 percent, respectively, on-year in the quarter, the filing said. Gross operating profit rose more than revenue due to better operational efficiency and cost savings, the trust said.

In addition, both Singapore properties saw occupancy levels over 90 percent in the quarter on stronger leisure and corporate demand among independent travelers on short stay, the trust said.

“Overall, the outlook for Singapore’s tourism sector is positive and the hotel market is expected to benefit from the robust supply and demand fundamentals in the short to medium term,” the trust said.

“In the medium to longer term, the government’s infrastructure investments and new tourism initiatives including the expansion of Changi
Airport, a new eco-tourism hub in Mandai, a new integrated tourism development at Jurong Lake District and new attractions at the Greater Southern Waterfront, are expected to continue supporting Singapore as an attractive destination for tourism,” Frasers Hospitality Trust added.

In the U.K., while the number of overseas visitors in the first seven months of the year was unchanged on-year, economic and political uncertainty means the outlook for tourism is unclear, the trust said.

For the full fiscal year, Frasers Hospitality Trust reported net property income fell 4.6 percent on-year to S$111.7 million on gross revenue of S$149.8 million, down 3.9 percent on-year. The DPS for the full year was 4.4129 Singapore cents, down 7.3 percent from 4.7613 Singapore cents the previous year.

Frasers Hospitality Trust’s portfolio has 15 assets across nine cities in Asia, Australia and Europe.

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