Far East Hospitality Trust Review @ 15 August 2022

Basic Profile & Key Statistics

• Main Sector(s): Hospitality, Retil & Office
• Country(s) with Assets: Singapore
  
• No. of Properties (exclude development/associate/fund): 12

Key Indicators

Performance Highlight

Gross revenue declined slightly due to the divestment of Central Square on 24 March 2022, but NPI improved due to lower property tax and the absence of impairment loss. Subsequently, income available for distribution improved due to improved NPI and lower finance costs. For the divestment gain of Central Square, FEHT intends to distribute approximately S$8 million per year over three years.

Revenue Per Available Room

Both REVPAR for hotel and serviced residences have improved yoy.

Asset Enhancement Initiative

Refurbishment Regency House is completed and rebranded to Adina Serviced Apartments Singapore Orchard on 7 July. 

Related Parties Shareholding

• REIT sponsor's shareholding: Above median for more than 20%
• REIT manager's shareholding: Above median for more than 20%
• Directors of REIT manager's shareholding: Above median for more than 10%

Lease Profile

• WALE: Above median for more than 20%
• Highest lease expiry within 5 years: Below median for more than 20%; Falls in this year
• Weighted average land lease expiry: Below median for more than 10%

Debt Profile

• Gearing ratio: Below median for more than 10%
• Cost of debt: Below median for more than 20%
• Fixed rate debt %: Below median for more than 20%
• Unsecured debt %: 100%
• WADM: ± 10% from median
• Highest debt maturity within 5 years: ± 10% from median; Falls in 2024
• Interest coverage ratio: ± 10% from median

Diversification Profile

• Top geographical contribution: 100%
• Top property contribution: ± 10% from median
• Top 5 properties' contribution: ± 10% from median
• Top tenant contribution: Above median for more than 20%
• Top 10 tenants' contribution: Above median for more than 20%

Key Financial Metrics

• Property yield: Below median for more than 20%
• Management fees over distribution: ± 10% from median; $6.49 distribution for every dollar paid 
• Distribution on capital: Below median for more than 20%
• Distribution margin: Above median for more than 20%

Trends

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

Relative Valuation

• P/NAV: Average for 1y, 3y & 5y
• Dividend Yield: Above +1SD for 1y; Average for 3y & 5y

Author's Opinion

Favorable	Less Favorable
Diversified Sector	Low Fixed Rate Debt %
High REIT Sponsor's Shareholding	High Top Geographical Contribution
High REIT Manager's Shareholding	High Top Tenant & Top 10 Tenants Contributions
Long WALE	Low Property Yield
No Major Lease Expiry within 5 Years	Low Distribution on Capital
Low Gearing Ratio	DPU Downtrend
Low Cost of Debt	Interest Coverage Ratio Downtrend
100% Unsecured Debt	Property Yield Downtrend
High Distribution Margin	Distribution on Capital Downtrend

With the further easing of border measures starting 26 April, REVPAR for FEHT has improved further in the 2Q. The increasing number of meetings, incentives, conventions and exhibitions events which to be held in 2H 2022 should benefits FEHT as well.

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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 due to 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.