Far East Hospitality Trust - DBS Research 2022-10-28: Variable Hotel Rents Re-emerge!

Far East Hospitality Trust - Variable Hotel Rents Re-emerge!

  • Far East Hospitality Trust (SGX:Q5T) reported 3Q22 gross revenue of S$21.2m (+2.0% y-o-y). This was led by higher contribution from the hotels segment which increased 4.7% y-o-y to S$14.9m to partially offset the y-o-y decline in income from Serviced Residence (SR) and commercial premises from the divestment of Central Square (completed in 1Q22).
  • - Read this at SGinvestors.io -
  • Correspondingly 3Q22 distributable income rose 12.0% y-o-y to S$15.14m, on interest savings due to ~S$260m repayment of debt in conjunction with Central Square’s divestment.
  • On a year-to-date basis, gross revenue of S$62.2m was flat y-o-y.
  • Far East Hospitality Trust's 9M22 distributable income of S$44.1m (+14% y-o-y) made up 76% of our full year forecast (excluding the calculation of capital gains, which will not be paid evenly across the financial year).
  • - Read this at SGinvestors.io -

Hotel segment saw variable rent contribution in 3Q22

  • Average daily rate (ADR) and revenue per available room (RevPAR) continue to see q-o-q improvements for both the hotel and SR segments of Far East Hospitality Trust.
  • For the quarter, hotel ADR at S$137 (+108% y-o-y) and RevPAR of S$105 (+102% y-o-y) was an improvement from 1H22 levels of S$99 and S$67 respectively.
  • Hotel occupancy in 3Q22 at 76% was flat y-o-y and was an improvement from 68% reported in 1H22. This was due to the exit of some portfolio hotels from the government booking scheme and the temporary closure of Elizabeth Hotel which was undergoing renovation and has since reopened as the rebranded Vibe Hotel in early Sep’22 with higher room rates.
  • Four portfolio hotels are currently under the government booking scheme on rates comparable to market rates, with expiries between end-22 – Jan-23.
  • We note that the hotels segment saw the first inflow of variable rents this quarter at S$14.9m, above the quarterly fixed rent of S$14.25m, which we suspect is led by portfolio winners situated within the central business district area.
  • On a 9M22 basis for the hotels, the corporate segment continues to make up the bulk of room demand, contributing 70.6% of revenue by demand source. Top source countries of demand were guests from Southeast Asia (42%), Europe (19%) and North Asia (15%); Far East Hospitality Trust’s top 3 markets contributed 75% of total revenue.

Serviced Residences seeing strong demand from long-stay corporate sources

  • Read more at SGinvestors.io.

Above is the excerpt from report by DBS Group Research.
Clients of DBS may access the full report in PDF @ https://www.dbs.com/insightsdirect/.

Geraldine WONG DBS Group Research | Derek TAN DBS Research | https://www.dbs.com/insightsdirect/ 2022-10-28

Read also DBS's most recent report:
2023-02-15 Far East Hospitality Trust - Full DPU Recovery To Drive Share Price Higher.

Price targets by 4 other brokers at Far East Hospitality Trust Target Prices.

Listing of research reports at Far East Hospitality Trust Analyst Reports.

Relevant links:
Far East Hospitality Trust Share Price History,
Far East Hospitality Trust Announcements,
Far East Hospitality Trust Dividends & Corporate Actions,
Far East Hospitality Trust News Articles


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