Frasers Hospitality beats forecasts in maiden results

Singapore

FRASERS Hospitality Trust announced a distribution income of S$35.7 million for the period July 14 (its listing date) to Dec 31, 2014, and an illustrative distribution per unit of 2.97 cents, both of which are 5.3 per cent above forecast.

Both figures include the foreign-sourced income from Japan, which will be remitted after completion of statutory audit and tax filing, Frasers said. This revenue is expected to be received once a year in May or June and will be included for distribution for the financial period ending Sept 30.

The forecast distribution income and distribution per unit also excluded income top-up from InterContinental Singapore and Fraser Suites Singapore for comparative purposes.

The trust comprises Frasers Hospitality Real Estate Investment Trust and Frasers Hospitality Business Trust, and is the first global hotel and serviced residence trust that was listed in Singapore. Its portfolio consists of 12 assets across Asia, Australia and the United Kingdom.

Gross revenue over the same period was S$50.2 million, on par with forecast as gross revenue from InterContinental Singapore, as well as its Japanese, Australian and UK properties registered strong performances.

Gains, however, were offset by weaker performances from Fraser Suites Singapore, which is in line with the weakening trend in Singapore's rental market, and The Westin Kuala Lumpur, due to softening corporate and leisure market in Kuala Lumpur, following Malaysia Airlines' (MAS) aviation incidents.

Frasers' net property income for the period was S$41.8 million, 2.3 per cent above expectations.

Eu Chin Fen, CEO of Frasers Hospitality Asset Management, Frasers' Reit manager, said that the trust will commence its asset enhancement plans for InterContinental Singapore in April this year and expect to complete all renovation works around early 2016.

Singapore's hospitality industry is facing headwinds with the increasing supply of hotel rooms, and the city is expected to have 60,000 hotel rooms by the end of this year, Frasers said. "While hotel rates could face certain pressure, tourist arrivals to Singapore is expected to grow between five to seven per cent, and may help to support occupancy levels," it added.

While Malaysia's tourism arrivals and hospitality industry are affected by the MAS incidents, Frasers said that the Malaysian government has launched a new MyFest 2015 campaign, which is expected to target 29.4 million tourist arrivals and 89 billion ringgit in tourist receipts. The trust also expects its Japanese, Australian and UK properties to benefit from higher tourist arrivals.

No distribution was declared for the period. The first distribution will be paid on or before June 29 this year. On Thursday, Frasers' counter closed up 0.56 per cent at S$0.90.