Far East Hospitality Trust Review @ 15 May 2023

Basic Profile & Key Statistics

• Main Sector(s): Hospitality, Retail & Office
• Country(s) with Assets: Singapore
• No. of Properties (exclude development/associate/fund): 12

Key Indicators

Performance Highlight

Gross revenue, NPI and the income available for distribution increased YoY mainly due to higher income from the hotels' segment.

Revenue per Available Room

REVPAR has been improving for both hotels and serviced residences where REVPAR for hotels has recovered to 95% of the 2019 level and REVPAR for serviced residences has surpassed the 2019 level.

Asset Enhancement Initiative

Renovation of Public Restrooms for Rendezvous Hotel Singapore has been completed.

Related Parties Shareholding

• REIT Sponsor's Shareholding: Above median by 20% or more
• REIT Manager's Shareholding: Above median by 20% or more
• Directors of REIT Manager's Shareholding: ± 10% from median

Lease Profile

• WALE: Above median by 20% or more
• Highest Lease Expiry within 5 Years: Below median by 20% or more; Falls in 2023
• Weighted Average Land Lease Expiry: Below median by 10% or more

Debt Profile

• Gearing Ratio: Below median by 10% or more
• Cost of Debt: ± 10% from median
• Fixed Rate Debt %: Below median by 20% or more
• Unsecured Debt %: 100%
• WADM: Above median by 20% or more
• Highest Debt Maturity within 5 Years: Below median by 20% or more; Falls in 2025
• Interest Coverage Ratio: ± 10% from median

Diversification Profile

• Top Geographical Contribution: 100%
• Top Property Contribution: ± 10% from median
• Top 5 Properties' Contribution: ± 10% from median
• Top Tenant Contribution: Above median by 20% or more
• Top 10 Tenants' Contribution: Above median by 20% or more

Key Financial Metrics

• Property Yield: Below median by 20% or more
• Management Fees over Operating Distributable Income: Above median by 10% or more; $5.52 distribution for every dollar paid 
• Operating Distributable Income on Capital: Below median by 20% or more
• Operating Distributable Income Margin: Above median by 20% or more
• Operating Distribution Proportion: Below median by 10% or more

DPU Breakdown

• TTM DPU Breakdown:
• 76% from Operation
• 12.4% from Management Fees Paid in Units
• 11.6% from Proceeds from Divestment
• TTM DPU = 99.8% of Distributable Income

Trends

• Uptrend: Interest Coverage Ratio, Operating Distributable Income Margin
• Flat: NAV per Unit
• Downtrend: DPU from Operation, Property Yield, Operating Distributable Income on Capital

Relative Valuation

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

Author's Opinion

Favorable	Less Favorable
Diversified Sector	Low Fixed Rate Debt %
High REIT Sponsor's Shareholding	High Top Geographical Contribution
High REIT Manager's Shareholding	High Top Tenant & Top 10 Tenants' Contributions
Long WALE	Low Property Yield
No Major Lease Expiry within 5 Years	Non Competitive Management Fees
Low Gearing Ratio	Low Operating Distributable Income on Capital
100% Unsecured Debt	Low Operating Distribution Proportion
Long WADM	DPU from Operation Downtrend
Well Spread Debt Maturity	Property Yield Downtrend
High Operating Distributable Income Margin	Operating Distributable Income on Capital Downtrend
Interest Coverage Ratio Uptrend	High Distribution from Divestment Proceeds
Operating Distributable Income Margin Uptrend

Compared to the previous quarter, there has been a decent improvement in performance due to the recovery of the hospitality sector. Debt refinancing won't be required this year, however, the proportion of fixed-rate debt remains low at 47.3%. Visitor arrivals to Singapore are on the rise, with the Singapore Tourism Board predicting 12 to 14 million arrivals this year and a full recovery by 2024. The MICE industry (meetings, incentives, conventions, and exhibitions) is also seeing an increase, and The Singapore Association of Convention and Exhibition Organisers and Suppliers expects a full recovery by 2024. As a result, FEHT is expected to benefit from these developments going forward.

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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.