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Monday, May 10, 2021

Far East Hospitality Trust Review @ 10 May 2021

Basic Profile & Key Statistics

Far East Hospitality Trust (FEHT) is a stapled group that owns 13 properties in Singapore. Some of the properties have space for retail and office.

Performance Highlight

Gross revenue, NPI and distributable income decreased YoY by 6.9%, 8.4% and 1% due to lower occupancies in the SRs and rental assistance given to tenants at the commercial premises. 
REVPAR decreased YoY for both hotels and serviced residences, which is expected due to the COVID-19 pandemic.
So far there is no update for the redevelopment of Central Square (Village Residence Clarke Quay). 

Related Parties Shareholding

  • REIT sponsor's shareholding is high at 59.92%
  • REIT manager's shareholding is high at 5.05%
  • Directors of REIT manager's shareholding is high at 0.22%

Lease Profile

  • WALE is long at 9.77 years
  • Highest lease expiry within 5 years is low at 8.4% which falls in this year.
  • Weighted average land lease expiry is moderate at 62.08 years 

Debt Profile

  • Gearing ratio is high at 41.6%
  • Cost of debt is low at 2.2%
  • Fixed rate debt % is low at 54.3%
  • All debts are unsecured debts
  • WADM is slightly short at 2.6 years
  • Highest debt maturity within 5 years is low at 22.3% which falls in 2024
  • Interest coverage ratio is low at 2.7 times

Diversification Profile

  • All properties are located in Singapore
  • Top property contribution is moderate at 18.6%
  • Top 5 properties contribution is slightly low at 55.4%
  • Top tenant contribution is high at 14.8% 
  • Top 10 tenants contribution is high at 77.4% 

Key Financial Metrics

  • Property yield is low at 2.7% 
  • Management fees over distribution is high at 18.5% in which unitholders receive S$ 5.41 for every dollar paid 
  • Distribution on capital is low at 1.9%
  • Distribution margin is high at 61.8%

Trends

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

Relative Valuation

  • Dividend Yield - Latest 4 quarters DPU @ 2.54 cents / average yield @ 5.96% = S$ 0.425. 
  • Price/NAV - NAV @ S$ 0.79 x average P/NAV @ 0.72 = S$ 0.57


Author's Opinion

 Favorable  Less Favorable
Diversified SectorHigh Gearing Ratio
High REIT Sponsor's ShareholdingLow Fixed Rate Debt %
High REIT Manager's ShareholdingLow Interest Coverage Ratio
High Directors of REIT Manager's ShareholdingHigh Top Geographical Contribution
Long WALEHigh Top Tenant & Top 10 Tenants Contritbuions
No Major Lease Expiry within 5 YearsLow Property Yield
Low Cost of DebtNon-Competitive Management Fees
100% Unsecured DebtLow Distribution on Capital
Well Spread Debt MaturityDPU Downtrend
High Distribution MarginNAV per Unit Downtrend
 Property Yield Downtrend
 Interest Coverage Ratio Downtrend
 Distribution on Capital Downtrend
 Distribution Margin Downtrend

FEHT performance has improved as compared to the past 2 quarters. Hopefully, the recent restriction could reduce the community cases and would not delay the travel bubble arrangement with Hong Kong which starting on 26 May 2021.


For more information, you could refer to:

SREITs Dashboard - Detailed information on individual Singapore REIT

SREITs Data - Overview and Detail of Singapore REIT

REIT Analysis - List of previous REIT analysis posts

REIT-TIREMENT Patreon - Support as a Patron and get SREITs Dashboard PDF or Data Excel

REIT-TIREMENT Facebook Page - Support by liking my Facebook Page

REIT Investing Community - Facebook Group where members share and discuss REIT topic


*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 as a result of 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.

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