Far East Hospitality Trust's 1H FY24 Result Review

Basic Profile & Key Statistics

Key Indicators

Performance Highlight

Gross revenue and NPI have improved slightly due to better performance from existing properties. Despite a significant increase in finance expenses, the distribution and DPS have increased YoY mainly due to lower distribution retention and an additional S$2.2 million distribution related to the divestment of Central Square.

Revenue per Available Room

RevPAR for both hotels and serviced residences has improved YoY.

 

Asset Enhancement Initiatives

In 2Q, FEHT completed AEIs for Orchard Rendezvous Hotel and the 5th floor of Orchard Rendezvous Hotel.

Related Parties Shareholding

REIT sponsor, manager and directors of the REIT manager hold a relatively high proportion of shares.

Lease Profile

WALE is long with no major lease expiries in the next 4 years. However, the weighted average land lease expiry is relatively short.

Debt Profile

Overall, the debt profile is favorable, though there is a low proportion of fixed-rate debt.

Diversification Profile

The portfolio is concentrated in terms of geography and tenants.

Key Financial Metrics

The operating distributable income margin is high, but property yield, operating distributable income on capital, and operating distribution proportion are relatively low.

DPU Breakdown

• TTM Distributable Income Breakdown:
• 76.6% from Operation
• 12.6% from Divestment Proceeds
• 9.7% from Management Fees Paid in Units
• 1.1%  from Retention Release

Trends (Up to 10 Years)

• Slight Downtrend: NAV per Unit, Operating Distributable Income Margin
• Downtrend: DPU from Operation, Adjusted Interest Coverage Ratio, Property Yield, Operating Distributable Income over Manager's Fees, Operating Distributable Income on Capital, Operating, Operating Distribution Proportion

Price Range & Relative Valuation Metrics

• Dividend Yield - Above +1SD for 1y, 3y & 5y; Average for 10y; 
• P/NAV - Average for 1y, 5y & 10y; Below -1SD for 3y

Author's Opinion

Compared to the previous half-year, gross revenue has declined slightly, but NPI remains similar due to lower property expenses. Distribution and DPS have also declined due to higher finance expenses, lower management fees payable in units, and the absence of retention release. There is no refinancing requirement for debt in 2024, with 22% of debt maturing in 2025.

Visitor arrivals for 1H have improved YoY, reaching more than 85% of the 2019 average.

For more information, check out:

SREITs Dashboard - Detailed information on individual Singapore REIT

SREITs Data - Overview and details of Singapore REIT

REIT Review - List of previous REIT review posts

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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.