Singapore-listed hotel business trust Far East Hospitality Trust (Far East H-Trust)(SGX:Q5T) closed its financial year 2013 with a 6.2% miss in gross revenue of SGD122.4 million instead of the projected SGD130 million. Accordingly distribution per stapled security (DPS) for investors for the year missed the mark by 3.1% at 5.64 cents instead of the projected 5.82 cents.

Far East HospitalityTrust has attributed the miss in revenue to challenging hotel operating conditions.

For the full year ended 31 December 2013, the DPS translates into an annualized yield of 6.7% based on the closing price of SGD0.84 on the date. Units of Far East H-Trust have since slipped to SGD0.79 at the close of the trading day.

Data from the Singapore Tourism board shows that in 2013, the hospitality industry saw a 6.4% increase in new room supply which was
matched by the 6.7% growth in tourist arrivals. As such, upscale and mid-tier hotels in Singapore maintained high occupancy of 86% and 87% respectively.

Far East H-Trust has said that it expects hotel operating conditions to remain challenging. In the course of 2014, approximately 3,100 new hotel rooms are expected to come on to the Singapore market representing a 5.9% increase in total hotel room inventory. The trust expects biennial events such as the Singapore Airshow to help absorb some of this growth.

For 2014, the trust expects to pursue asset enhancement initiatives with renovations planned at several hotels such as the Village Hotel Albert Court and the The Elizabeth Hotel.

By Ridzwan Rahmat

Ridzwan has been analysing REITs and business trusts since 2008, and personally manages a portfolio comprising mainly of SGX-listed REITs. He founded REITsWeek in 2013.