Far East H-Trust posts 8% drop in Q3 DPS on softer performance in hotels, offices

A SOFTER performance by its hotel and office portfolios have led to a lower distribution per stapled security (DPS) of 1.03 Singapore cents for its third quarter ended Sept 30, said Far East Hospitality Trust (Far East H-Trust) on Thursday. Its DPS is down 8 per cent from 1.12 Singapore cents a year ago.

For the quarter, gross revenue slipped 2 per cent year on year to S$27.46 million on the back of lower master lease rental from the hotels and serviced residences and a softer performance from its retail and office spaces, Far East H-Trust said.

Its serviced residences portfolio was hit by a decline in the average daily rate, which fell to S$159 for third-quarter 2017 from S$161 for third-quarter 2016. Revenue per available unit of its serviced residences portfolio also fell 3.4 per cent year on year to S$196 for the the quarter.

Net property income slipped 2.3 per cent to S$24.77 million. Meanwhile, income available for distribution slumped 5.4 per cent to S$19.17 million, in line with lower revenue.

Gerald Lee, chief executive of the Reit manager said: "While the rest of the year is likely to remain challenging due to the increased hotel supply coupled with a continuing soft corporate demand, we expect the situation to improve in the near future."

Mr Lee said that the trust will continue with its asset enhancement initiatives and drive portfolio performance through accretive investments.

Far East H-Trust's DPS is due to be paid on Dec 15, with the books closure date set on Nov 10.

OCBC Investment Research on Thursday maintained a "hold" rating on the trust, noting that its DPS for the quarter were within expectations.

OCBC said: "Pending further details from the analyst briefing, we maintain 'hold', but place our fair value estimate of S$0.66 under review."

The trust was trading flat at S$0.715 as at noon on Thursday.