FEHT Q1 net property income falls 8.4% on lower gross revenue

IN a business update on Friday, Far East Hospitality Trusts (FEHT) said it posted a 6.9 per cent decline in gross revenue to S$21.3 million for Q1 2021. This was down from S$22.9 million in Q1 2020.

Net property income also fell 8.4 per cent to S$18.2 million in the first quarter of 2021, from S$19.9 million in the same period last year.

This was due to lower occupancies in the serviced residences (SR) and rental assistance provided to tenants at the commercial premises. It added that while the master lease rental for the hotel segment was at the fixed rent level, the SR segment continued to perform above the fixed rent.

Noting that its finance expenses were 21.4 per cent lower largely due to short-term interest rates, the Reit manager said income available for distribution was S$12.5 million.

For its hotels portfolio, it recorded an increase in average occupancy in Q1 2021 by 10.8 percentage points to 76.1 per cent due to its hotels securing contracts from companies needing to house their workers as well as from the government for isolation purposes amid the ongoing pandemic. Its revenue per available room (RevPAR) for hotels declined 45.7 per cent year on year to stand at S$51.

As for its SR portfolio, there was a fall in average occupancy by 8.9 percentage points to 74.7 per cent due to a lack of inbound travel into Singapore. Nonetheless, the trust added that support from long-stay corporate sources helped to minimise the negative effect of the pandemic, keeping the SRs performing above fixed rent.

FEHT said that its average debt maturity stands at 2.6 years. It refinanced its term loan of S$215 million due in March 2021 with a sustainability-linked loan facility for a term of five years. The trust added that discussions with lenders for the refinancing of the S$100 million term loan due in December 2021 are ongoing.

Stating its outlook for 2021, the Reit manager said it expects to see "muted" average new room supply of 1,842 rooms annually from 2021 to 2024 compared to an average of 2,400 annually from 2015 to 2019.

Yet, it shared that upward trends in vaccine rollouts and the possibility of international travel recovering in the second half of 2021 continue to remain bright spots.

Units of FEHT closed 0.8 per cent or 0.5 Singapore cent lower at S$0.63 on Friday.