Far East Hospitality Trust Review @ 23 February 2023

Basic Profile & Key Statistics

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

Key Indicators

Performance Highlight

Despite the divestment of Central Square on 24 March 2022, gross revenue, NPI and the income available for distribution increased yoy mainly due to higher income from the hotels' segment.

Revenue per Available Room

REVPAR has been improving for both hotels and serviced residences where REVPAR for hotels has recovered to 90% of the 2019 level and REVPAR for serviced residences has surpassed the 2019 level.

Asset Enhancement Initiative

AEI for Orchard Rendezvous Hotel has been completed forecourt and outdoor refreshment area as well as enhancement and repainting of the facade.

Distribution Breakdown

• Distributable Income Breakdown:
• 77.6% from Operation
• 13% from Fees Payable/Paid in Units
• 9.4% from Proceeds from Divestment
• Distribution = 99.5% of Distributable Income

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 20%

Lease Profile

• WALE: Above median for more than 20%
• Highest Lease Expiry within 5 Years: Below median for more than 20%; Falls in 2023
• 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: Below median for more than 10%; 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; $6.90 distribution for every dollar paid 
• Distribution on Capital: Below median for more than 20%
• Distribution Margin: Above median for more than 20%

Trends

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

Relative Valuation

• P/NAV: Average for 1y, 3y & 5y
• Dividend Yield: Average for 1y, 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
High Directors of REIT Manager's Shareholding	Low Property Yield
Long WALE	Low Distribution on Capital
No Major Lease Expiry within 5 Years	DPU Downtrend
Low Gearing Ratio	Property Yield Downtrend
Low Cost of Debt	Distribution on Capital Downtrend
100% Unsecured Debt
Well Spread Debt Maturity
High Distribution Margin
Distribution Margin Uptrend

Since the border opening on April 1st, 2022, there has been a consistent improvement in performance. As visitor arrivals are expected to increase this year, the recovery is expected to further benefit FEHT's performance going forward.

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*Disclaimer: The information presented on this blog is for educational and informational purposes only. The materials, including research and opinions, are based solely on my findings and should not be considered professional financial advice or a definitive statement of fact. I cannot guarantee the accuracy, completeness, or reliability of the information provided. I shall not be held liable for any errors, omissions, or losses that may occur as a result of using the information presented on this blog. It should be noted that the information presented on this blog does not constitute a buy, sell, or hold recommendation for any security. It is crucial to conduct your own thorough research and due diligence before making any investment decisions.