Far East Hospitality Trust’s H1 DPS up 2.1% to S$0.0196
All segments of FEHT’s portfolio grew in the latest half-year period on leisure demand and the return of international visitors
FAR East Hospitality Trust (FEHT) posted a 2.1 per cent increase in distribution per stapled security (DPS) to S$0.0196 for the first half ended Jun 30, from S$0.0192 in the year-ago period.
Distribution to stapled security holders grew 2.7 per cent year on year to S$39.5 million. This came on the back of higher net property income (NPI) and the distribution of other gains from the trust’s divestment of Central Square, its manager said on Tuesday (Jul 30).
The distribution also includes a pay-out of S$2.2 million related to an additional payment of S$18 million, which the stapled group received last year as an incentive fee for its Central Square divestment.
The distribution will be paid out on Sep 5, after books closure on Aug 7.
FEHT’s NPI over the first half was up slightly by 1 per cent to S$49.5 million from S$49 million in H1 2023. Its manager noted that gains in NPI were partially offset by higher property taxes.
Gross revenue for the half-year period grew 3.4 per cent year on year to S$53.8 million from S$52 million. This top line growth was mainly driven by higher contributions from the hotel segment.
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Meanwhile, income available for distribution for the first half fell 9.3 per cent year on year to S$33.9 million from S$37.4 million, mainly due to higher interest expense.
Income available for distribution would have been 4.7 per cent higher at S$35.5 million if not for the change in proportion of the manager’s fees paid or payable from 90 per cent to 60 per cent.
Gerald Lee, chief executive officer of the manager, noted that all segments of FEHT’s portfolio grew in the latest half-year period, led by leisure demand and the return of international visitor arrivals.
Average daily rates (ADRs) rose 3.7 per cent in the hotel segment to S$176 from S$169 in H1 FY2023, and 4.9 per cent for serviced residences to S$266 from S$253 previously.
This was largely attributed to demand derived from major events and large-scale performances, as well as a higher proportion of short-stay leisure travellers booking at higher rates.
Coupled with increased average occupancy, hotel revenue per available room grew 6.4 per cent year on year to S$141.
While average occupancy in serviced residences dipped 3.2 percentage points for the latest half-year period, revenue per available unit in this segment inched up 1 per cent to S$226.
FEHT’s total debt stood at S$717.7 million as at end-June after the prepayment of S$23.6 million in term loans. Aggregate leverage also improved to 30.8 per cent compared to Dec 31, 2023.
Its average cost of debt rose to 4.1 per cent per annum, driven by higher interest rates compared to the year before. As at Jul 30, some 35.9 per cent of total debt was secured at fixed interest rates. This figure was set at a lower percentage as expectations of interest rate cuts rise, said the manager.
Looking ahead, Lee is positive on the future prospects of the hospitality industry.
“With the various strategic portfolio enhancements and prudent capital management, the trust is well-positioned to ride on the growth of the Singapore hospitality sector, notwithstanding the potential impact of the strong Singapore dollar which may moderate the expected pace of growth,” he added.
Stapled securities of FEHT closed Monday 1.6 per cent or S$0.01 higher at S$0.635.
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