REIT-TIREMENT - REITs Investing & Personal Finance

REITs investment & personal finance


Friday, August 13, 2021

Far East Hospitality Trust Review @ 13 August 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 income available for distribution have decreased YoY due to rental rebates and weaker demand for serviced residences and commercial premises. FEHT has retained S$3.5 million due to COVID-19 uncertainties.

REVPAU decreased YoY for both hotels and serviced residences, which is expected due to the COVID-19 pandemic.

Related Parties Shareholding

  • REIT sponsor's shareholding is high at 52.6%
  • REIT manager's shareholding is high at 5.43%
  • Directors of REIT manager's shareholding is moderate at 0.16%

Lease Profile

  • WALE is long at 9.52 years
  • Highest lease expiry within 5 years is low at 7.6% which falls in this year
  • Weighted average land lease expiry is moderate at 61.83 years

Debt Profile

  • Gearing ratio is high at 41.3%
  • Cost of debt is low at 2.1%
  • Fixed rate debt % is low at 68.2%
  • All debts are unsecured debts
  • WADM is short at 2.4 years
  • Highest debt maturity within 5 years is low at 22.5% which falls in 2024
  • Interest coverage ratio is low at 2.8 times

Diversification Profile

  • All properties are located in Singapore
  • Top property contribution is moderate at 18.6% 
  • Top 5 properties contribution is low at 55.4% 
  • Top tenant contribution is high at 15% 
  • Top 10 tenants contribution is high at 78.4%

Key Financial Metrics

  • Property yield is low at 2.7% 
  • Management fees over distribution is high at 18.8% in which unitholders receive S$ 5.32 for every dollar paid 
  • Distribution on capital is low at 1.9%
  • Distribution margin is high at 61%
  • Include retention, management fees over distribution, distribution on capital and distribution margin is at 17.6% (high), 2% (low) and 65.4% (high) respectively.

Trends

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

Relative Valuation

  • P/NAV - Average for 1y, 3y and 5y
  • Dividend Yield - Average for 1y; Below -1SD for 3y and 5y

Author's Opinion

 Favorable Less Favorable
Diversified SectorHigh Gearing Ratio
High REIT Sponsor's ShareholdingLow Fixed Rate Debt %
High REIT Manager's ShareholdingShort WADE
Long WALELow Interest Coverage Ratio
No Major Lease Expiry within 5 YearsHigh Top Geographical Contribution
Low Cost of DebtHigh Top Tenant & Top 10 Tenants Contributions
100% Unsecured DebtLow Property Yield
Well Spread Debt MaturityNon-Competitive Management Fees
Low Top 5 Properties ContributionLow Distribution on Capital
High Distribution MarginDPU Downtrend
 NAV per Unit Downtrend
 Interest Coverage Ratio Downtrend
 Property Yield Downtrend
 Distribution on Capital Downtrend
 Distribution Margin Downtrend

FEHT performance continues supported by a high proportion of fixed rent from its master lease. Singapore is expecting 80% of the population would be fully vaccinated in September, and looking to allow quarantine-free travel for those who are fully vaccinated by the time. Hopefully, this could go as planned so that improvement in hospitality and retail sectors can be seen by this year end.


Join REIT-TIREMENT Patreon for patron-exclusive posts that cover more detail on fundamental analysis and valuation. You could also refer below for more information:

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 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.

No comments:

Post a Comment