Far East Hospitality Trust’s distributable income rises 12% in Q3

FAR East Hospitality Trust (FEHT) reported a 12 per cent year-on-year increase in its income available for distribution for Q3 2022, to S$15.1 million from S$13.5 million in Q3 2021, according to a business update provided via bourse filing on Thursday (Oct 27).

This increase comes on the back of lower real estate investment trust (Reit) manager fees and finance expenses, which contributed to net property income (NPI) rising 7.8 per cent year on year to S$19.7 million, from S$18.3 million in the same period last year. 

Gross revenue also rose marginally by 2 per cent to S$21.2 million for the quarter. The Reit’s manager noted that this increase was led by growth in the hotel segment, which hiked 4.7 per cent to S$14.9 million in Q3. 

Meanwhile, revenue from serviced residences (SR) and commercial premises slipped by 3.1 per cent to S$2.6 million and 4.3 per cent to S$3.7 million, respectively. 

This was due to the divestment of Central Square at 20 Havelock Road, which was completed in March 2022, said FEHT’s manager, without which revenue would have grown a respective 44.9 per cent and 19.1 per cent year on year. 

For its hotels portfolio, FEHT recorded a dip in average occupancy in Q3 2022 by 3.1 percentage points to 76.1 per cent – mainly due to the exit of government contracts for some of the Reit’s hotels. The trust’s Elizabeth Hotel, located at Orchard Road, was also closed for renovation during that period but has since reopened as Vibe Hotel Singapore Orchard in September 2022. 

This comes despite the revenue per available room and average daily rate more than doubling by 101.9 per cent and 107.6 per cent year on year to stand at S$105 and S$137, respectively. 

FEHT’s SR portfolio, on the other hand, saw strong demand and support from long-stay corporate sources, highlighted its manager. Its average occupancy grew 18.4 percentage points to 90.4 per cent while its revenue per available unit surged by 66.7 per cent to S$214. Its average daily rate also increased 32.4 per cent to S$235. 

With the reopening of borders and return of tourism, the trust expects its hotel and SR portfolios to perform well for the rest of 2022. 

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“(Our) high fixed rent component in the master leases provides downside protection for the gross revenue of the trust. The 20-year master leases on all portfolio assets are well-supported by Far East Organisation,” said its manager. 

Units for FEHT closed Wednesday 6.6 per cent or S$0.035 higher at S$0.565.