SINGAPORE (July 27): The managers of Frasers Hospitality Trust (FHT) have declared a distribution per stapled security (DPS) of 1.2374 cent for the third quarter ended June, down 18.2% from its DPS of 1.5126 in the same quarter a year ago.

This was due to an increase in the number of stapled securities to 1.8551 billion following the trust’s rights issue in Oct 2016, where about 441.5 million rights stapled securities were issued at 60.3 cents per stapled security.

Gross revenue for the quarter grew 22.6% to $38.9 million compared to a year ago, boosted mainly by the addition of Novotel Melbourne on Collins as well as better performance of the stapled group’s Australia, Japan and Malaysia portfolios.

Notably, all portfolios reported a better performance except for the Singapore portfolio.

Although the Singapore portfolio reported gross operating revenue (GOR) growth of 0.5% over the quarter due to higher occupancy and RevPAR recorded at both InterContinental Singapore and Fraser Suites Singapore, it registered a y-o-y decline of 1.6% in gross operating profit (GOP) mainly due to the hotel’s higher operating costs.

Net property income (NPI) grew 8.5% to $29.3 million from $27 million in the previous year, although NPI margin for the quarter was 9.9 percentage points down at 75.3%, averaged down by the lower NPI margin of Novotel Melbourne on Collins.

Distribution income nevertheless grew 9.6% to $23 million compared to $21 million a year ago.

In a press release on Thursday, the manager explains that the Melbourne hotel’s NPI margin is computed after taking into account the hotel’s operating costs, which in the other properties would have been borne by the master lessees, as the hotel is not master leased.

As at end June, FHT’s total debt was $810.2 million, with gearing at 34.1% and the weighted average years to maturity at 1.59 years.

Citing figures from the Singapore Tourism Board (STB) for the first four months of 2017, the managers of FHT highlight a 4.4% y-o-y growth in visitor arrivals, and note that Singapore continues to grow its pipeline of MICE events.

Despite this, the managers believe the large hotel supply pipeline, increasing regional competition and ongoing global economic uncertainty may continue to impact hotel trading performance in Singapore.

Units in FHT closed 0.7% lower at 74 cents.

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