Distributable income drops 18.2% to S$32.7 million

 

THE manager of Far East Hospitality Trust : Q5T 0% (FEHT) on Wednesday (Feb 12) posted a distribution per stapled security (DPS) of S$0.0208 for the second half ended December, down 4.1 per cent from S$0.0217 in the previous corresponding period.

 

This brings total DPS for FY2024 to S$0.0404, 1.2 per cent lower year on year (yoy).

 

The distribution for H2 will be paid on Mar 20, after books closure on Feb 20.

 

Distributable income fell 18.2 per cent to S$32.7 million for the half-year period, from S$40 million in the same period the year before.

 

Distribution to stapled securityholders decreased 3.6 per cent to S$41.9 million, mainly due to higher finance costs and a change in the proportion of manager&rsquo s fee paid or payable in the form of stapled securities. This was offset by the higher distribution of other gains from the divestment of Central Square, said the manager.

 

The proportion of manager&rsquo s fee paid or payable in the form of stapled securities was reduced from 90 per cent to 60 per cent from Jan 1, 2024.

 

If not for the change in the proportion of the manager&rsquo s fee, distributable income for H2 2024 would have been 4.9 per cent higher at S$34.3 million.

 

Net property income (NPI) grew 0.2 per cent to S$49.9 million for H2, from S$49.8 million the year before.

 

Revenue for H2 2024 increased 0.2 per cent yoy to S$54.9 million, despite the absence of non-recurring revenue from hotels contracted for isolation purpose since Q3 of the prior year.

Excluding the effect of the one-off revenue in the prior year, the hotels segment would have posted an increase, and revenue would have risen by 4.1 per cent for H2 2024.

 

Revenue from the hotels segment fell 0.9 per cent on the year to S$40.6 million, and serviced residences revenue was down 1.6 per cent at S$5.6 million.

 

By segment

The hotels segment recorded a 5.2 per cent increase in average daily rate (ADR) to S$180.

 

Average occupancy was slightly lower by 0.2 percentage point at 81.5 per cent, driven mainly by the transition from government contracts with full occupancy to market-driven performance.

 

Revenue per available room (RevPAR) of the hotels segment for H2 increased by 5 per cent to S$147.

 

For the serviced residences segment, ADR rose 3.2 per cent to S$276.

 

But its average occupancy eased to 83.2 per cent in the half-year period. This was caused mainly by lift upgrading works at one of the apartment blocks in Robertson Quay, which affected accessibility during the last quarter of 2024, said the manager.

 

As a result, revenue per available unit (RevPAU) of the serviced residences segment fell 1.6 per cent to S$230.

 

Meanwhile, retail and office spaces in FEHT&rsquo s portfolio &ldquo performed well&rdquo , said the manager. Revenue from commercial premises was up 7.4 per cent yoy at S$8.7 million.

 

&ldquo The retail segment saw stronger performance, supported by better leasing activities and demand, while office spaces maintained high occupancy levels overall, underpinned by steady lease renewals,&rdquo the manager noted.

 

For the full year, FEHT&rsquo s revenue rose 1.8 per cent on the year to S$108.7 million, while NPI was 0.6 per cent higher at S$99.3 million.

 

FY2024 hotel RevPAR was up 5.7 per cent yoy at S$144, with average occupancy up 0.9 percentage point at 81 per cent, and ADR rising 4.5 per cent to S$178.

 

RevPAU for serviced residences was stable at S$228 for FY2024, while average occupancy remained at 84.2 per cent &ndash comparable to the pre-pandemic level of 83.5 per cent.

 

ADR for the serviced residences segment rose 4 per cent to S$271, supported by favourable pricing trends and a higher proportion of short-stay leisure bookings.

 

Income available for distribution for the full year was down 11.3 per cent at S$66.6 million.

 

To mitigate higher finance costs in 2024, the manager said it is issuing S$5.1 million to cushion the impact, and S$3 million to negate the effect of change in proportion of manager&rsquo s fee.

 

FEHT is a stapled hospitality group comprising a real estate investment trust (Reit) and a business trust, which has been dormant since FEHT&rsquo s listing.

 

Outlook

Gerald Lee, chief executive of the Reit manager, said FEHT&rsquo s portfolio &ldquo remained resilient&rdquo amid improving leisure demand and major events.

 

&ldquo Looking ahead, our prudent capital management has sustained distributions, while providing the flexibility of further expansion,&rdquo he added.

 

&ldquo We remain focused on enhancing our properties, managing costs effectively, and actively seeking opportunities to grow FEHT.&rdquo

 

As at end-December 2024, the stapled group&rsquo s investment property portfolio valuation was S$2.52 billion, up 0.2 per cent from S$2.51 billion in the prior year.

 

Its total debt as at Dec 31, 2024, stood at S$718.1 million, of which 57.9 per cent were on fixed interest rates. Aggregate leverage improved to 30.8 per cent, down 0.5 percentage point from a year earlier.

 

Its weighted average debt to maturity was 3.7 years as at end-December, and weighted average cost of debt remains stable at 4.1 per cent.