Far East Hospitality Trust

Far East Hospitality Trust: Far East Hospitality Trust (FHT) 4Q14 distributable income dropped 8.8% y/y to $22.9m, while DPU declined 9.9% to 1.28¢, bringing FY14 DPU to 5.14¢ (-8.9%), weighed by a weak operating environment.

For the quarter, gross revenue and NPI slipped 9.8% and 9.2% to $30.3m and $27.7m, respectively, from softer average daily rate (-4% to $186) and lower occupancy (-3.6ppt to 82.4%) in its hotel portfolio (67% revenue), due to weak corporate business demand and an increase in hotel room supply.

Meanwhile, the serviced residences portfolio (14% revenue) saw average occupancy tumble 6.3ppt to 83.2% largely due to the completion of the renovation of the studio units at Regency House.

Across 2015, FHT remains on track to complete its asset enhancement plans for four of its properties- Village Residence Robertson Quay, Village Hotel Changi, Regency House and Village Hotel Albert Court.

Competitive pressures are still expected to remain this year, from an uneven global economic recovery and tight labour market, low unemployment and rising vacancy rates in the hospitality sector.

Aggregate leverage remained at 31.4%, while debt-to-maturity lengthened from 2.8 years to 3.5 years, with debt cost remaining at 2.2%.

At $0.86, FEHT is valued at 0.89x P/B and has an indicative yield of 6.0%, compared to hospitality peers' average of 1x P/B and 6.9% yield.