Far East H-Trust posts 5% drop in Q4 DPS to 0.95 S cent

FAR East Hospitality Trust's (Far East H-Trust) distribution per stapled security (DPS) fell by 5 per cent to 0.95 Singapore cent for its fourth quarter ended Dec 31, from one Singapore cent a year ago.

This was due to an enlarged base mainly from implementing a distribution reinvestment plan in the last four quarters, the hospitality stapled group said on Friday morning in a regulatory update.

Gross revenue was up 0.1 per cent to S$28.95 million for the quarter from S$28.92 million a year ago.

Net property income (NPI) fell 1 per cent on the year to S$26.1 million for the quarter from S$26.3 million.

Income available for distribution declined 1.7 per cent year on year to S$18.8 million from S$19.1 million.

The distribution will be paid out on March 27, after books closure on Feb 24.

For the full year ended Dec 31, DPS was 4.8 per cent lower at 3.81 Singapore cents, versus four Singapore cents a year ago, income available for distribution fell 2 per cent to S$73.9 million. Gross revenue was 1.6 per cent higher at S$115.5 million, while NPI rose 1.5 per cent to S$104.3 million for the full year.

Gerald Lee, chief executive of the real estate investment trust's manager, said the performance of hotels and serviced residences improved in the second half of 2019, after experiencing some softness in the first half.

The momentum continued into fiscal 2020 with strong forward bookings, before being disrupted by cancellations due to the Covid-19 virus outbreak, he added.

"The decline in demand is felt more acutely by our hotels compared to our serviced residences and commercial spaces, which have so far not been significantly affected," Mr Lee said.

He added that the gross revenue for the trust is protected by the fixed rent component of the master leases for Far East H-Trust's hotels and serviced residences, which formed about 72 per cent of the master lease rental in FY2019. 

The fixed component and its minimum rental payment provide downside protection for unitholders and help mitigate the impact of volatility experienced during adverse economic or environmental circumstances. 

On outlook, Far East H-Trust said demand for travel by both leisure and corporate segments would be impacted by Covid-19 virus concerns in the coming months.

It added that a mitigating factor for its hotel portfolio amid the uncertainty is its diversified geographic mix of source markets, with each property comprising less than a tenth of the portfolio's revenue.

As the bulk of the business from serviced residences is from long-staying corporate guests, the segment is not significantly impacted by cancellations of stays, it said.

Stapled securities of Far East H-Trust fell 0.5 Singapore cent or 0.8 per cent to S$0.675 on Thursday.