Far East Hospitality Trust's distributable income rises 12.5% for Q3

FAR East Hospitality Trust's (FEHT) Q5T : Q5T 0%income available for distribution rose 12.5 per cent year on year to S$13.5 million for Q3 2021.

Net property income (NPI) for Q3 2021 was up by 2.6 per cent at S$18.3 million, said the stapled group's managers in a business update on Friday (Oct 29) morning.

This is due to 18 per cent lower finance expenses owing to lower fixed rates from the newer interest rate swap contracts, as well as 0.9 per cent lower Reit (real estate investment trust) manager fees due to the lower value of the deposited property, the managers noted.

Gross revenue was also up by 0.7 per cent to S$20.8 million for the quarter.

While the master lease rental for the hotel segment was at the fixed rent level, the serviced residence segment experienced a decline in demand during the quarter but continued to perform above the fixed rent.

The higher revenue for the commercial premises was due to lower rental rebates provided in Q3 2021, the managers highlighted.

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For the first nine months of 2021, income available for distribution went up by 3 per cent to S$38.8 million. This comes even as NPI weakens by 3.4 per cent for the first nine months, due to lower expenses for the group, the update added.

FEHT's portfolio occupancy declined 18.1 percentage points year on year to 79.2 per cent for Q3 2021 as more companies that required accommodation for their Malaysian workers looked for alternative arrangements to reduce cost. The majority of the hotels continued to be contracted to the government for isolation purposes.

The average daily rate (ADR) was also 4.3 per cent lower year on year at S$66 due to lower rates from government contracts and companies requiring accommodation for their workers, said the managers.

As a result, revenue per available room (RevPAR) for Q3 2021 declined by 22.4 per cent year on year at S$52, from S$67 previously.

Serviced residences, meanwhile, were more resilient with the support from long-stay corporate sources throughout the pandemic, despite a decline in demand from companies requiring temporary accommodation for their foreign workers due to the border closures.

The average occupancy for serviced residences declined to 71.8 per cent, or 15.3 percentage points lower year on year for Q3 2021, as companies requiring accommodation for their workers sought alternative arrangements.

ADR for the segment consequentially also fell by 1.1 per cent to S$178, while RevPAU was 18.5 per cent lower at S$128.

"High vaccination rates in major economies could result in more bilateral travel arrangements between Singapore and other countries in the months ahead, paving the way for a gradual recovery. Global travel restrictions and local safe-distancing measures are expected to continue impacting inbound travel in the near term, with business largely supported by government and long-stay corporate contracts," the managers noted.

The counter rose by S$0.01 to S$0.645 on Oct 28 when market closed.

Read more: 

• Time for change: Arthur Kiong, CEO, Far East Hospitality

• Hospitality S-Reits taking off with more travel lanes