Sydney Sofitel (Google Maps)Sydney Sofitel (Google Maps)

Data from Frasers Hospitality Trust’s latest disclosure has been incorporated into the Singapore REITs table.

Frasers Hospitality Trust (FHT) has announced the divestment of Sofitel Sydney Wentworth amid challenging business conditions in the city.

The trust also disclosed on 29 October that its distribution per stapled security (DPS) for 2H FY2021 was 0.8041 cents.

This is a fall of close to 25% compared to 2H FY2020 DPS of 1.0695 cents.

FHT recorded distributable income of SGD12.4 million in 2H FY2021 compared to negative distributable income of SGD1.7 million in 2H FY2020.

Gross revenue improved 75.6% year-on-year to SGD45.6 million and net property income more than doubled over the same period to SGD30.9 million.

“FHT saw improvements in its operating environment in 2H FY2021, compared to the same period a year ago, when the initial impact of the COVID-19 pandemic had caused huge disruptions to global travel”, the trust said.

Amid these developments, FHT disclosed that it is divesting Sofitel Sydney Wentworth “at an optimal stage of the property’s life cycle”.

Sydney is expected to be facing a significant increase in room supply, particularly in the upper upscale and luxury segments which will be direct competition for the property just as the market is gradually recovering from the COVID-19 pandemic, said the trust.

The asset is being divested at about 12% above valuation.

FHT expects to realise net proceeds of AUD282.5 million (SGD277 million) from the divestment.

“The transaction will also enhance FHT’s financial flexibility if the net proceeds from the divestment were used to repay outstanding loans”.

“The enhanced debt headroom post-divestment could help fund future acquisitions when the opportunity arises”, it added.

Once divested, FHT’s SGD1.98 billion portfolio will comprise 14 hospitality properties across Singapore (40%), Australia (23%), UK (16%), Japan (10%), Malaysia (6%) and Germany (5%).

FHT was last done on the SGX at SGD0.49, which presently implies a distribution yield of 3.28% according to data on the Singapore REITs table.

By Shariffa Al-Habshee

Shariffa joined REITsWeek in 2017, and monitors Asia-Pacific REITs for the publication.