Far East Hospitality Trust Review @ 10 August 2023

Basic Profile & Key Statistics

• Main Sector(s): Hospitality & Retail
• Country(s) with Assets: Singapore
• No. of Properties (exclude 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 is 8.2% below FY2019 average level and REVPAR for serviced residences has surpassed the 2019 level.

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: Above median by 20% or more

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: Below median by 10% or more
• 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: ± 10% from median; $5.88 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:
• 76.4% from Operation
• 12.4% from Management Fees Paid in Units
• 11.2% from Proceeds from Divestment
• TTM DPU = 96.1% of Distributable Income

Trends

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

Relative Valuation

• Dividend Yield: Average for 1y & 5y; Above +1SD for 3y
• P/NAV: Average for 1y, 3y & 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
High Directors of REIT Manager's Shareholding	Low Property Yield
Long WALE	Low Operating Distributable Income on Capital
No Majority Lease Expiry within 5 Years	Low Operating Distribution Proportion
Low Gearing Ratio	DPU from Operation Downtrend
Low Cost of Debt	Property Yield Downtrend
100% Unsecured Debt	High Distribution from Divestment Proceeds
Long WADM
Well Spread Debt Maturity
High Operating Distributable Income Margin
Interest Coverage Ratio Uptrend
Operating Distributable Income Margin Uptrend

Compared to the previous quarter, the performance has improved. The next debt refinancing requirement is scheduled for March 2024. However, it's worth mentioning that the fixed-rate debt proportion remains low at 47.2%. Nonetheless, there are positive prospects moving forward as FEHT is expected to benefit from the increasing visitor arrivals. So far, there has been 6.3 million visitor arrivals year to date, and it is on track to meet the Singapore Tourism Board's target of 12 million to 14 million for this year.

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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.