Frasers: Hospitality portfolio tested by pandemic headwinds; investment and residential portfolios are resilient

FRASERS Property's hospitality portfolio remains challenged by pandemic headwinds, the company said in a first-quarter business update late on Wednesday (Feb 9), even as it reported higher revenue per average room (RevPAR) across its Asia-Pacific (ex-North Asia) and Europe portfolios.

"(The) emergence of the Omicron variant from December 2021 and subsequent surge in infections pose a setback to recovery trajectory," Frasers Property said.

RevPAR for its hospitality portfolio in North Asia fell 36.9 per cent for the quarter to S$42.50, down from S$67.40 in the year-ago period. Average occupancy rate across this portfolio fell 4.7 percentage points to 48.2 per cent.

The company attributed its performance in North Asia to the emergence of the Omicron variant; it also noted that China has continued to uphold its zero-Covid-19 policy.

Still, the company plans to expand in the region by adding 950 operational units this year.

RevPAR for its hospitality portfolio in other parts of the Asia-Pacific was up 9.1 per cent from S$99 to S$108. Average occupancy rate for the quarter in the region inched up 0.2 percentage points to 75.9 per cent.

Frasers Property said it saw pent-up demand for hospitality properties in Singapore, with the opening up of vaccinated travel lanes; over in Australia, high vaccination rates underpin the reopening of domestic travel between majority of states.

The company is preparing for entry into Cambodia and has signed three management contracts in Q1 FY2022 for properties in the country, the first of which will open in Phnom Penh in Q3.

Over in Europe, RevPAR surged 240 per cent to S$184.80 from S$54.30. Average occupancy rate jumped 40.5 percentage points to 69.9 per cent. For this region, the company expects governments to lift certain restrictions, such as pre-arrival testing, which will boost travel and hospitality industries in the mid-term.

Office portfolio occupancy remains supported by "healthy demand", Frasers Property said. In Singapore, average occupancy rate for its commercial portfolio went down 1.9 percentage points to 91 per cent, while that for its retail portfolio went up 0.1 percentage points to 94.5 per cent.

Its industrial and logistics portfolio also continues to be buoyed by strong demand, the company said. It added 5 development projects to the pipeline in Q1 FY2022, expecting to total S$1 billion in gross development value.

Frasers noted steady progress for its residential projects in Singapore. Its residential portfolio in Australia remains resilient due to supportive economic conditions, but the company "remains vigilant" about the impact of higher interest rates there.

The company's net debt as at Dec 31, 2021 stood at S$14 billion; its net debt-to-equity ratio was 76.2 per cent. Total debt excluding real estate investment trusts amounted to S$11.9 billion.

The company said it is well-positioned to repay or refinance debt due in FY2022 and will continue to extend debt maturities with a focus on green and/or sustainable financing.

Frasers Property's shares ended Wednesday up 0.9 per cent or S$0.01 at S$1.12.