Far East Hospitality Trust's 2H FY24 Result Review

$Far East HTrust(Q5T.SI)$

Basic Profile & Key Statistics

Key Indicators

Performance Highlight

Gross revenue and NPI remained stable YoY. However, income available for distribution saw a significant decline, primarily due to higher finance expenses, lower management fees being paid in units, and a substantially lower retention release compared to 2H 2023. Despite this, the impact on distribution to stapled security holders and DPS was mitigated by a higher distribution from divestment proceeds of VRCQ.

Revenue per Available Room

For FY24, RevPAU for hotels improved by 5.7%, reflecting stronger demand, while serviced residences saw a 1.6% decline.

Related Parties Shareholding

• REIT Sponsor's Shareholding: Favorable

• REIT Manager's Shareholding: Favorable

• Directors of REIT Manager's Shareholding: Favorable

Lease Profile

• Highest Annual Lease Expiry in 4 Years: Favorable

• WALE: Favorable

• Weighted Average Land Lease Expiry: Less Favorable

Debt Profile

• Adjusted Interest Coverage Ratio: Moderate

• Cost of Debt: Moderate

• Gearing Ratio: Favorable

• Fixed Rate Debt Proportion: Less Favorable

• Unsecured Debt Proportion: Favorable

• Highest Annual Debt Maturity in 4 Years: Favorable

• WADM: Favorable

Diversification Profile

• Top Geographical Weightage: Less Favorable

• Top Property Weightage: Moderate

• Top 5 Properties' Weightage: Moderate

• Top Tenant Weightage: Moderate

• Top 10 Tenants' Weightage: Less Favorable

Key Financial Metrics

• Property Yield: Less Favorable

• Operating Distributable Income over Manager's Fees: Moderate

• Operating Distributable Income on Capital: Less Favorable

• Operating Distributable Income Margin: Favorable

• Operating Distribution Proportion: Less Favorable

DPU Breakdown

• TTM Distribution Breakdown:71.2% from Operation7.7% from Management Fees Paid in Units19.5% from Divestment Proceeds1.6% being Retained

Trends (Up to 10 Years)

• Uptrend: None

• Slight Uptrend: Top 10 Tenants' Weightage

• Flat: Operating Distributable Income over Manager's Fees

• Slight Downtrend: NAV per Unit, Top 5 Properties' Weightage, Operating Distributable Income Margin

• Downtrend: DPU from Operations, RevPAU, Adjusted Interest Coverage Ratio, Property Yield, Operating Distributable Income on Capital, Operating Distribution Proportion

Price Range & Relative Valuation Metrics

• Dividend Yield: Above +2SD for 1y; Above +1SD for 3y, 5y & 10y

• P/NAV: Below -2SD for 1y; Below -1SD for 3y, 5y & 10y

Author's Opinion

Compared to the previous half-year, gross revenue has improved, but NPI remained stable due to higher property expenses, particularly property tax. Distribution and DPS increased due to a higher distribution from divestment proceeds. On the debt front, there are no refinancing requirements in 2025.

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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 own findings and should not be considered as 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 decision.