- Far East Hospitality Trust (SGX:Q5T) reported full-year gross revenue of S$108.7mil, a 1.8% y-o-y increase due to higher top-line revenue across all three operating segments:
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- serviced residences (+0.2% y-o-y), and
- commercial premises (+7.3% y-o-y).
FY24 DPU slightly miss our estimates.
- NPI rose 0.6% y-o-y to S$99.3mil, while distributable income declined 11.3% y-o-y to S$66.6mil due to a higher proportion of management fees paid in cash (increased from 10% in FY23 to 40% in FY24), and high financing cost.
- Distributable income was flat y-o-y at S$81.4mil due to higher capital gains top-ups of S$16mil (including S$8mil in divestment top-ups associated with the Central Square divestment that was pre-committed). As such, full-year Far East Hospitality Trust's DPU saw a marginal decline of 1.2% y-o-y to 4.04 cents, ~4% below our estimate of 4.2 cents.
Mid-tier hotel portfolio more resilient in a landscape of higher upcoming supply.
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- Far East Hospitality Trust’s hotel performance was in line with our thesis that its recent asset enhancement works would be completed in time to capture the return of Chinese demand to Singapore in 2024, and that its portfolio, positioned within the mid-tier to upscale segments, would be a net beneficiary of this trend.
- Serviced residences RevPAR declined 1.6% y-o-y in 2H24, primarily from a 4.2ppt y-o-y decline in the occupancy rate to ~83%. This also took into account suppressed room inventory due to lift upgrading work at Village Residence Robertson Quay, which affected room inventory in 4Q24. Year-end portfolio valuations rose 0.2% y-o-y to S$2.52bn.
Awaiting favourable interest cost to fire acquisition gunpower.
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