FAR East Hospitality Trust (FEHT) posted a net property income of S$26.2 million for the third quarter ended Sep 30, down 6.8 per cent from S$28.1 million in the previous corresponding period.
This comes amid higher property taxes and lower revenue for the quarter mainly due to an absence of a one-off contribution from the hotels contracted for isolation purposes in 2023, said the managers on Wednesday (Oct 30).
Gross revenue for Q3 fell by 4.8 per cent on the year to S$28.7 million. The hotel segment recorded an 8.2 per cent decrease in revenue to S$21.4 million from S$23.3 million.
Excluding the one-off contribution in 2023, the hotel segment would have recorded a growth, and gross revenue would have risen 3.9 per cent year on year, said the managers.
Given the absence of the government contracts, average occupancy for the hotel portfolio fell by 1.2 percentage points to 85.5 per cent from 86.7 per cent. Average daily rates rose, however, rose 4.2 per cent to S$180 as the portfolio “enjoyed greater pricing flexibility”.
This translated to a 2.8 per cent improvement in revenue per available room to S$154 from S$150 in the same quarter a year ago.
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The stapled group’s serviced residences and commercial premises segments reported revenue growth for the quarter, posting on the year growth of 3 per cent to S$3 million and 9.9 per cent to S$4.3 million, respectively.
For the year to date ending September 2024, gross revenue inched up 0.4 per cent on the year to S$82.6 million from S$82.2 million, while net property income fell 1.8 per cent to S$75.7 million from S$77.1 million in the previous comparative period.
As at end-September, FEHT’s average leverage stood at 30.8 per cent. Its weighted average debt to maturity was about 3.1 years.
The managers noted that the trust is well-positioned to benefit from future rate cuts with “relatively low” proportion of fixed rate borrowings.
The managers are positive on the tourism and macroeconomic environment outlook.
They noted that global economic growth is expected to remain stable and Singapore continues to appeal as an attractive business hub, given that in the first half of 2024, Singapore attracted S$5.4 billion in fixed asset investments – on par to meet the S$8 to S$10 billion target set by the Economic Development Board.
Furthermore, the managers are also expecting more visitors to Singapore – buoyed by new attractions opening in 2025, such as Minion Land at Universal Studios, as well as the expansion of integrated resorts in the coming years.
Stapled securities of FEHT closed flat at S$0.625 on Tuesday.
