Frasers Property 9M RevPAR a fraction of last year's levels; says recovery 'hinges' on vaccination progress

FRASERS Property reported lower revenue per average room (RevPAR) across its global hospitality portfolio from the start of the financial year to end-June, the company said in a third-quarter business update on Friday.

Its hotel operating performance continued to be impacted by the Covid-19 pandemic and tightened curbs, it said. However, performance across China "remains robust with a possibility of uptick in business" amid a nation-wide vaccination programme.

In a business update on Friday, it noted that RevPAR fell most significantly for its Europe portfolio, dropping 44.1 per cent from S$99.7 million in 2020 to S$55.7 million. RevPAR for properties on the other side of the world slipped downwards too.

For North Asia, RevPAR dipped 22.9 per cent to S$55.9 million. Meanwhile, other parts of the Asia-Pacific had a RevPAR of S$101.1 million, down 22.4 per cent from a year earlier.

Frasers Property registered a lower average occupancy rate (AOR) in North Asia and Europe, where it fell 9.9 and 23.4 percentage points respectively. However, its portfolio in the Asia-Pacific apart from North Asia had a 4.6 percentage point uptick in AOR.

Reasons cited include more "relaxed government restrictions" in Singapore within the third quarter, which translated to an increase in activity and occupancy for its properties in the city-state. There is also an increase in domestic demand in Australia and the United Kingdom despite the continued pandemic impact, the company noted.

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However, the company said that recent emergency curbs across Indonesia, Malaysia and Thailand have continued to affect the properties "negatively" as travel remains impacted.

Recovery will hinge on vaccination progress, said the company, adding that the group will "remain focused" on effectively managing operational challenges amid prolonged uncertainties.

The global economic activity recovery has been impacted by "start-stop lockdowns" in countries facing fresh Covid-19 outbreaks, as well as uneven vaccination progress across Frasers Property's key markets, it said.

Total debt excluding real estate investment trusts (Reits) was S$12.5 billion, with an average debt maturity of 2.4 years as at June 30.

Net debt as at June 30 stood at S$14.4 billion, while net debt to equity ratio was 80.8 per cent.

Meanwhile, its retail and commercial portfolio metrics in Singapore also remained resilient, improving from the same period last year, said the company. In the nine months ended June 30, retail occupancy stood at 93.9 per cent, while commercial occupancy was 93.5 per cent.

For its industrial and logistics business portfolio, the company saw "strong" portfolio metrics in Australia and Europe, driven by robust leasing activity and renewals in both markets. The Australian portfolio is fully occupied, while Europe's portfolio has a AOR of 97 per cent for the nine months. These have helped to offset some of the pandemic's impact on the group's hospitality business.

Its industrial and logistics business unit is currently developing 13 projects totalling S$847 million gross development value with approximately 384,000 square metres across Australia and Europe, which are planned for completion in FY21 and FY22. (see amendment note)

Frasers Property shares closed at S$1.13 on Friday, up one Singapore cent or 0.89 per cent.

Amendment note: The article above has been edited for clarity.