ARA US Hospitality Trust (ARA H-Trust) on Friday posted a gross operating profit of US$8.1 million for its first quarter, falling 47.8 per cent short of its initial public offering (IPO) forecast of US$15.5 million, the trust's managers said in a business update.

The stapled group also recorded gross revenue of US$31.7 million and net property income of US$3.6 million for the three months ended March 31, 2020, the managers said. Both missed IPO forecasts by 24.5 per cent and 68.2 per cent respectively.

The occupancy rate of the trust's portfolio stood at 54.8 per cent, with a gross operating profit margin of 25.5 per cent.

The managers said drastic containment measures to combat the Covid-19 outbreak in the US had resulted in an "an extraordinary drop in demand and occupancies" in the hotel industry, resulting in the trust performing below expectations despite its portfolio displaying initial signs of growth in January and February.

The trust has not defaulted on any payments under its loan facilities, and remained in compliance with all loan covenants as at March 31, they added.

The Singapore-based banks that provided the financing for ARA H-Trust's IPO and its acquisition of three Marriott-branded hotels have granted waivers on the financial covenants under both loan facilities from April 1, 2020 to March 31, 2021.

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The chief executive officer of ARA H-Trust's managers, Lee Jin Yong, said the managers believed the trust had adequate liquidity to tide it over the current period.

ARA H-Trust had a cash balance of US$22 million as at March 31, 2020 compared to US$45.2 million as at Dec 31, 2019.

Since the end of March, the trust's managers had also initiated action plans to protect and preserve its financial position, including temporarily suspending or consolidating the operations of 28 hotels with low occupancies, which account for 65 per cent of its portfolio, they said.

The managers are also monitoring market conditions and activity where each of the trust's 41 hotels is located, in order to gauge demand and decide when to resume or ramp up operations. Twelve hotels resumed operations in the final week of April as certain US states gradually loosened their Covid-19 containment measures.

Other capital management measures reported included identifying new sales opportunities, and cost savings of US$143,000 per month from reduced management fees, property insurance charges, and shuttle services.

The managers are ARA Trust Management (the manager of ARA US Hospitality Property Trust) and ARA Business Trust Management (the trustee-manager of ARA US Hospitality Management Trust).

Stapled securities of ARA H-Trust were trading at 40 US cents as at 11.08 am on Friday after the announcement, down 1.5 cents or 3.6 per cent.