Far East Hospitality Trust's net property income falls 36.4% for Q3

FAR East Hospitality Trust's (FEHT) net property income (NPI) slumped 36.4 per cent on the year to S$17.9 million for the third quarter ended Sept 30.

Gross revenue was down 33.2 per cent to S$20.6 million, said the stapled group's managers in a business update on Friday morning.

While the master lease rental for the hotel segment came in at the fixed-rent level, the serviced residence segment continued to perform above the fixed rent.

For the first nine months of this year, income available for distribution fell by 31.9 per cent to S$37.7 million, from S$55.4 million for the year-ago period.

This came as NPI dropped 27.8 per cent year on year to S$56.5 million for the nine months.

Gross revenue from its hotels, serviced residences and commercial premises shrank by 25.1 per cent to S$64.9 million for the three quarters, mainly due to a decline in master lease rental from hotels amid the Covid-19 outbreak.

A NEWSLETTER FOR YOU

Tuesday, 12 pm

Property Insights

Get an exclusive analysis of real estate and property news in Singapore and beyond.

Sign Up

FEHT's portfolio occupancy improved five percentage points year on year, to 97.3 per cent in the third quarter of this year.

This was because the hotels secured contracts from companies that required their workers to stay in Singapore during Malaysia's movement control order (MCO), as well as from the government for isolation purposes.

But the average daily rate (ADR) at the hotels fell 58.1 per cent year on year to S$69 during the latest quarter. This reflected the lower ADRs associated with the MCO-related accounts and government contracts.

As a result, revenue per available room (RevPAR) at hotels declined by 55.8 per cent to S$67 for the quarter, from S$152 a year ago.

Serviced residences, meanwhile, were more resilient despite the challenging market conditions and lack of inbound travel.

Long-stay corporate sources helped to soften the blow from the coronavirus pandemic, the managers said.

The average occupancy for FEHT's serviced residences edged down by 1.1 percentage points year on year to 87.1 per cent in the third quarter.

ADR for the segment fell by 19 per cent to S$180 due to the curtailment of higher-rated short-stay business. Revenue per available unit (RevPAU) at serviced residences was thus 20.1 per cent lower at S$157.

"FEHT continues to benefit from stable master leases signed with well-capitalised companies of the sponsor. The high fixed-rent component of the master leases provides downside protection for the gross revenue of the trust," the managers noted on Friday.

Stapled securities of FEHT were trading at 56 Singapore cents as at 9.12am on Friday, down 0.5 cent or 0.9 per cent.