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Frasers Hospitality Trust reports 29.7% lower FY2021 DPS of 0.9831 cents

Felicia Tan
Felicia Tan • 5 min read
Frasers Hospitality Trust reports 29.7% lower FY2021 DPS of 0.9831 cents
Unitholders will be receiving their distributions on Dec 29.
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Frasers Hospitality Trust (FHT), a stapled group comprising Frasers Hospitality Real Estate Investment Trust (FH-REIT) and Frasers Hospitality Business Trust (FH-BT), has reported distribution per stapled security (DPS) of 0.8041 cents for the 2HFY2021 ended September.

The DPS for the 2HFY2021 is a 24.8% y-o-y drop from DPS of 1.0695 cents in the same period the year before.

2HFY2021 gross revenue improved by 75.6% y-o-y to $45.6 million, while net property income (NPI) more than doubled to $30.9 million from the $14.6 million reported in the 2HFY2020.

The surge in gross revenue, NPI and distributable income was due to the impact of the Covid-19 pandemic seen in the 2HFY2020. During that time, FHT had six properties in the UK closed from April to June 2020. The Westin Kuala Lumpur in Malaysia was also shut temporarily from May to December 2020.

The higher gross revenue and lower operating cost due to cost management, also boosted FHT’s NPI for the 2HFY2021.

See: Frasers Property to divest Sofitel Sydney Wentworth for $309.1 mil

Distributable income for the 2HFY2021 stood at $12.4 million, from the negative $1.7 million in the 2HFY2020. The negative sum in the 2HFY2020 was due to the variable rent recognised in the 1HFY2020 reversed to cover the shortfall in fixed rent in 2HFY2020.

2HFY2021 distribution to stapled securityholders, however, fell by 24.8% y-o-y to $15.5 million. The figure includes some $4.3 million of the $5.2 million of distributable income retained in the 1HFY2021, in comparison to the $22.3 million of the $25.3 million distributable income retained in the 1HFY2020.

The lower retained distributable income in the 2HFY2021 also led to the lower DPS for the period.

For the FY2021, DPS stood 29.7% lower y-o-y at 0.9831.

Gross revenue for the FY2021 fell 3.4% y-o-y to $85.5 million, while FY 2021 NPI fell 3.7% y-o-y to $57.6 million.

The declines were due to the better performance posted in the first five months of the FY2020, while the performance in the FY2021 continued to be impacted by the Covid-19 pandemic.

Distributable income fell 29.7% y-o-y to $21.0 million as the trust’s managers’ fees have been paid in cash since the 4QFY2020.

As such, distribution to stapled securityholders also fell 29.7% y-o-y to $18.9 million.

Some 10% of distributable income has also been retained to conserve cash for the trust’s working capital purposes.

As at end-September, the trust reported lower portfolio occupancy of 79.1% in the 2HFY2021, 1.0 percentage point lower than the 80.1% occupancy in the 2HFY2020.

The trust’s pre-Covid-19 occupancy in the 2HFY2019 stood at 88.6%.

Revenue per average room (RevPAR) stood at $129 for the 2HFY2021, compared to 2HFY2020’s $110 and 2HFY2019’s $252.

As at end-September, FHT has a weighted average lease expiry (WALE) of 12.8 years.

Cash and cash equivalents as at Sept 30 stood at $78.2 million.

“FY2021 was another challenging year for FHT, as the tourism industry continued to be besieged by concerns over new coronavirus variants. Nonetheless, there are encouraging signs of gradual recovery for global travel in recent months, compared to a year ago and we see rising vaccination rates and progressive easing of border restrictions in the countries where we are operating,” says Eu Chin Fen, CEO of the managers.

“In the second half of FY2021, all country portfolios’ gross operating revenue saw better year-on-year performance. As governments gradually re-open their economies, we expect domestic tourism to rebound first and this will benefit our assets in Australia, Japan and the UK which have sizeable domestic tourism markets,” she adds.

“Although the risk from a resurgence in Covid-19 infections remains a threat to the industry, we believe FHT is well placed to capture the upside when the market recovers, with its portfolio of quality assets.”

In its portfolio update for the 2HFY2021, FHT’s Singapore portfolio recorded a higher average daily rate (ADR) y-o-y, lifting its RevPAR to 17.4%.

Its Australian portfolio saw RevPAR surge 91.7% y-o-y amid higher portfolio occupancy of 69.5% and higher ADR.

FHT’s UK portfolio saw gross operating revenue (GOR) and RevPAR tripling y-o-y with all its properties back to full operations since mid-May 2021 after more than four months of lockdown.

Its Japan portfolio saw RevPAR for the ANA Crowne Plaza Kobe increase by 41.1% y-o-y as its performance in the 2HFY2020 was impacted by the low occupancies during the initial stage of the Covid-19 pandemic.

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The Westin Kuala Lumpur in Malaysia saw RevPAR in the 2HFY2021 improving y-o-y despite the repeated lockdowns in the country since the beginning of 2021.

Finally, FHT’s portfolio in Germany reported a 3.9% increase in GOR thanks to the reopening of the adjoining International Congress Centre.

Looking ahead, FHT says it continues to have sufficient liquidity to ride through the pandemic, adding that its master lease structure for its properties have helped to mitigate the adverse impact of the pandemic.

Unitholders will be receiving their distributions on Dec 29.

Units in FHT closed 1.5 cents lower or 2.97% down at 49 cents on Oct 28.

Photo: FHT

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