Frasers Hospitality Trust Q3 DPS falls 9.3% on weakness in Australia, Malaysia

FRASERS Hospitality Trust's third-quarter distribution per staple security declined 9.3 per cent year-on-year to 1.1226 Singapore cents on weakness in its Australia and Malaysia properties, the global hotel and serviced residence trust announced Thursday evening.

Net property income slipped 2.8 per cent to S$28.5 million for the quarter ended June 30 as gross revenue shrank 1.8 per cent to S$38.2 million.

For the nine-month period, net property income decreased by 1.2 per cent to S$87.7 million as gross revenue stayed mostly flat at S$117.2 million. Nine-month distribution per stapled security declined 5.9 per cent to 3.5459 Singapore cents.

Gross operating profit from Malaysia fell 35.7 per cent to RM4.8 million for the real estate investment trust (Reit) portion of the stapled security as the country's general election led to a significant reduction in business and government activities that hit room and food and beverage revenue at The Westin Kuala Lumpur, the trust said.

Australian gross operating profit for the Reit increased 0.3 per cent to A$8.9 million, but the business trust portion fell 17.8 per cent to A$3.8 million. The trust attributed the soft performance in the Australian portfolio to a more competitive trading environment in Sydney. The Novotel Sydney Darling Square performed better year-on-year, however, as it enjoyed the return of its full room inventory following the completion of renovations.

The trust expects stable occupancy and increases in average daily rates to support revenue per available room growth in Sydney, but sees a glut of new supply in 2018 and 2019 muting expectations for the Melbourne market.

Kuala Lumpur hotel room rates are expected to remain stagnant in the near future due to new supply.

"Amidst the challenges in these markets, we will continue to work very closely with the respective property operators to strengthen our competitiveness and drive revenue growth. We remain focused on pursuing acquisition opportunities to support earnings growth and create value for our stapled securityholders," said Eu Chin Fen, chief executive of the trust manager.