Far East H-Trust reports 9.9% dip in Q4 DPS to 1.28 cents

WEIGHED by the softer performance of hotels and serviced residences, Far East Hospitality Trust (Far East H-Trust) reported a 9.9 per cent year-on-year slip in distribution per stapled security (DPS) to 1.28 cents for the fourth quarter ended Dec 31, 2014.

Net property income slipped 9.2 per cent to S$27.65 million, while gross revenue fell 9.8 per cent to S$30.28 million.

But retail and office spaces helped to cushion the lower contribution from hotels and serviced residences. Revenue from the excluded commercial premises (ie retail and office spaces) grew 4.8 per cent year on year to S$5.8 million in the fourth quarter.

For the full year, Far East H-Trust's DPS slipped 8.9 per cent to 5.14 cents, translating to a yield of 6.3 per cent.

"2014 was a challenging year as the demand for corporate and leisure travel was impacted by a confluence of macroeconomic, regional and market factors," explained Gerald Lee, chief executive officer of the Reit manager. "While the operating environment remains competitive, the hospitality sector may potentially benefit from new international events and the opening of some attractions this year."

Due to softer demand from corporate travellers, the hotel portfolio's average occupancy was 3.6 percentage points lower year on year at 82.4 per cent in the fourth quarter and its average daily rate (ADR) was 4 per cent lower at S$186 in Q4. Revenue per available room (RevPAR) slipped 8 per cent year on year to S$153.

The serviced residences portfolio saw a 6.3 percentage point drop in average occupancy in the fourth quarter to 83.2 per cent due to the completion of renovation at Regency House and a 0.8 per cent dip in average room rate to S$250. Revenue per available unit was 7.8 per cent lower at S$208 than in the year-ago period.

An estimated 3,000 new hotel rooms are expected to come on-stream in 2015. The upcoming new hotel room supply alongside the potential softness in demand are likely to perpetuate the competitive landscape and compress room rates, Far East H-Trust said.