Frasers Hospitality Trust Review @ 5 May 2021

Basic Profile & Key Statistics

Frasers Hospitality Trust (FHT) invests in hotels and serviced residence units which currently owns 15 properties across 7 countries.

Performance Highlight

Gross revenue, NPI, DI and DPS decreased YoY by 36.2%, 40.9%, 72.7% and 45.5% respectively due to the COVID-19 pandemic. Comparing to 2H FY2020, gross revenue and NPI improved by 53.8% and 83.5%.

Comparing to 2H FY2020, REVPAR has improved slightly for all countries, besides Germany.

Related Parties Shareholding

• REIT sponsor's shareholding is moderate at 25.86%
• REIT manager's shareholding is moderate at 1%
• Directors of REIT manager's shareholding is high at 36.75%

Lease Profile

• WALE is long at 13.2 years
• Highest lease expiry within 5 years is low at 12.6% which falls in 2024
• Weighted average land lease expiry is long at 87.47 years 

Debt Profile

• Gearing ratio is moderate at 37.7%
• Cost of debt is low at 2.2%
• Fixed rate debt % is moderate at 74.6%
• Unsecured debt % is high at 96.3%
• WADM is slightly long at 3.12 years
• Highest debt maturity within 5 years is slightly low at 28.2% which falls in 2024
• Interest coverage ratio is low at 1.5 times
• Preferred/Perpetual securities over debt is slightly high at 10.1%

Diversification Profile

• Top geographical contribution is low at 22.5%
• Top property contribution is high at 21%
• Top 5 properties contribution is high at 62.1%
• Top tenant contribution is high at 15% 
• Top 10 tenants contribution is high at 93.9% 
• Top 3 countries contribution is from Australia, Singapore and England which contribute more than 70% of GRI

Key Financial Metrics

• Property yield is low at 1.8% 
• Management fees over distribution is high at 32.1% in which unitholders receive S$ 3.12 for every dollar paid 
• Distribution on capital is low at 1.1%
• Distribution margin is low at 36.5%

Include retention, management fees over distribution, distribution on capital and distribution margin would be 23.9%, 1.4% and 48.9% respectively.

Trends

• Downtrend - DPU, NAV per Unit, Interest Coverage Ratio, Property Yield, Distribution on Capital, Distribution Margin

Relative Valuation

• Dividend Yield - Past 4 quarters DPU @ 1.2485 cents / average yield @ 6.14% = S$ 0.205. Include retention, DPU @ 1.6742 which translate into S$ 0.275.
• Price/NAV - NAV @ S$ 0.66 x average P/NAV @ 0.89 = S$ 0.585

Author's Opinion

Favorable	Less Favorable
High directors of REIT manager's shareholding	Low Interest Coverage Ratio
Long WALE	High Top Property & Top 5 Properties Contributions
Well Spread Lease Expiry	High Top Tenant & Top 10 Tenants Contributions
Long Weighted Average Land Lease Expiry	Low Property Yield
Low Cost of Debt	Non-Competitive Management Fees
High Unsecured Debt %	Low Distribution on Capital
Low Top Geographical Contribution	DPU Downtrend
	NAV per Unit Downtrend
	Interest Coverage Ratio Downtrend
	Property Yield Downtrend
	Distribution on Capital Downtrend
	Distribution Margin Downtrend

FHT performance is improved as compared to the past 6 months but continues to be impacted by the COVID-19 situation. With the uncertainty, the manager has retained another S$ 5.2 million of distributable income, which totals up to S$ 8.2 million retentions.

For more information, you could refer to:

SREITs Dashboard - Detailed information on individual Singapore REIT

SREITs Data - Overview and Detail of Singapore REIT

REIT Analysis - List of previous REIT analysis posts

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*Disclaimer: Materials in this blog are based on my research and opinion which I don't guarantee accuracy, completeness, and reliability. It should not be taken as financial advice or a statement of fact. I shall not be held liable for errors, omissions and loss or damage as a result of the use of the material in this blog. Under no circumstances does the information presented on this blog represent a buy, sell, or hold recommendation on any security, please always do your own due diligence before any decision is made.