Far East Hospitality's S$26m net property income misses forecast

Corporate travel growth also slowed down.

According to OCBC Investment Research, compared to forecast numbers in its prospectus, Far East Hospitality Trust's (FEHT) 1Q13 gross revenue at S$28.1m was 4.2% lower. NPI at S$26.0m was also 1.7% lower than the forecast. 

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Income available for distribution at S$22.1m, however, was 2.0% higher than forecast, chiefly due to lower finance costs and other trust expenses. DPU of 1.38 S cents is 3.0% higher than the 1.34 S cents forecasted and forms 23% of our FY13 estimate of 6.0 S cents.

1Q13 hotel RevPAR at S$161 was comparable to 1Q12 (S$162) but missed the forecast by 6.9% due to weak ADR. Upscale hotels Quincy and Orchard Parade Hotel continue to face more pressure than the midtier hotels.

Corporate travel grew slower than expected, although management is seeing a pick-up for late 2Q13. FEHT's hotels performed reasonably well given the soft 1Q13 for the industry, which saw RevPAR fall 3%. For the serviced residences, RevPAU of S$219 was comparable to forecast of S$221, and on a YoY basis, actually grew 6.3% YoY.

The upgrade of rooms at Landmark Village Hotel and Orchard Parade Hotel has been recently completed and management sees the ADR of newly renovated rooms growing by S$15-20 a night.

There are upgrades planned for Albert Court Village Hotel and Regency House. Changi Village Hotel, which is experiencing weakness from new competition in the vicinity, is undergoing soft refurbishment. Furthermore, FEHT is expected to complete the acquisition of Grand Hotel Rendezvous by Aug 2013.