Wednesday, April 25, 2018

Far East Hospitality Trust Q1 FY18 - Results Review and Thoughts

Far East Hospitality Trust (FEHT) released their first quarter results for FY18 this morning which I thought I'll give a quick review on it since I made the purchase earlier this month.

You can find the link to that article here.



FEHT posted a 3.8% increase in the gross revenue and 4% increase in the NPI which sees a stronger hotel performance this quarter due to the better reversion of the master leases.

This is in line with the thesis that I have.

From the result, we also see that hotel performance has bottomed in the previous quarter and it is starting to reverse for a turnaround starting this quarter. Demand for the hotel segment increased through higher occupany from 88.1% to 89.6% while both the Average Daily Rate and Revpar have also increased by 1.6% and 3.3% respectively. 

That is certainly a positive sign boosted by the higher demand and the lower supply.

Special demand such as the Biennial Singapore airshow in Feb 2018 will also definitely help.


There was also some encouragement with the service residence number, while they are not as good as I expected.

Previously, there were a couple of hospitality Reits which has reported lower service residence number so I was mostly worried about this segment of the business.

Still, it was good to see the year on year improvement on the occupancy rate and Revpar as the segment performed better in this quarter. ADR is still dropping though and the company continues to cite the lower corporate demand as companies continue to cut their costs.

In terms of capital management, the company has a gearing of about 35.1%, after the acquisition of Oasia downtown which will contribute starting 2 April 2018. The average costs of debt remained low at 2.5% and the spread between the fixed and floating rates were at 40.8% and 59.2%.

Overall, I am very satisfied with the performance of the Reits in this quarter and the thesis should play out nicely that we will see a growing performance in the years to come both organically and inorganically.

The company will distribute 0.94 cents / share which will go xd on the 3rd May and payable on the 12th Jun.


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  2. Hi, I too invested in this reits and believe its turning a corner as comfirmed by the ceo during the agm. Outgoing chairman kbh said growth in dpu would come from acquisition. Many believe 2019 will be exciting and positivewhen investment thru BT with parent cpy start 1st phase operation fm 2nd half onwards. Whats your view.

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    1. Hi iwimsasl

      Agree, I think we'll see a very decent growth both organic and inorganically in this and next year to come.

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