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Unaudited Financial Statements Announcement For the first quarter ended 31 March 2018

Financials Archive

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Statements of Total Return of Far East H-REIT and Far East H-Trust


NM denotes Not Meaningful

  1. The share of results of joint venture relates to the equity accounting of Fontaine Investment Pte Ltd’s (“FIPL”) results.
  2. This relates to net change in fair value of interest rate swap contracts entered to hedge against the interest rate exposure of Far East H-REIT. This is a non-tax chargeable / deductible item and has no impact on the taxable income and distributable income to the Stapled Securityholders.
  3. Included in the net tax adjustments are the following:

  4. Notes:

    NM - Not Meaningful

    1. This represents 90% of REIT Manager’s fees paid/payable in Stapled Securities.

  5. The rollover adjustment for 1Q 2018 relates to the difference between the taxable income previously distributed and the quantum finally agreed with the Inland Revenue Authority of Singapore (“IRAS”) for the Year of Assessment 2016.

Balance Sheets as at 31 March 2018 Far East H-REIT and Far East H-Trust


  1. This relates to the 30% joint venture interest in FIPL.
  2. Prepayment included transaction costs of S$6.8 million in relation to the acquisition of Oasia Hotel Downtown which was completed on 2 April 2018. These costs will be transferred to and capitalised as cost of investment properties in the next quarter.
  3. This includes a shareholders’ loan and accrued interest due from FIPL of S$26.4 million. The amount is used to finance the development of a new hotel site located at Artillery Avenue, Sentosa.
  4. This relates to the fair value of interest rate swap contracts entered to hedge against interest rate risk exposure of Far East H-REIT.
  5. The net movement in borrowings was due to the drawdown of revolving credit facility (“RCF”) of S$14.7 million during the quarter. The current borrowings relate to term loans of S$232.2 million due to mature in August and December 2018 and RCF of S$31.7 million which is payable on demand. Far East H-REIT has refinanced the term loan of S$67.2 million to a seven-year term loan on 28 March 2018 and S$65.0 million to a five-year term loan on 12 April 2018. Both term loans amounting to S$132.2 million was drawndown in April 2018 to early prepay the expiring term loans. For the term loan of S$100.0 million due to mature in December 2018, the REIT Manager is working with its lenders to assess refinancing options. Please refer to the details of aggregate amount of borrowings in section 1(b)(ii).

Review of the performance of fourth quarter and year ended 31 March 2018

1Q 2018 vs 1Q 2017

Gross revenue grew 3.8% to $25.7 million in 1Q 2018 mainly due to an increase in master lease rental from the hotels and SRs.

Revenue per available room (“RevPAR”) of the hotel portfolio grew 3.3% to S$139 in 1Q 2018 due to an increase in average occupancy and average daily rate (“ADR”) of 1.5pp and 1.6% respectively. Despite the ongoing room renovation at Orchard Parade Hotel, the performance of the hotel portfolio improved due to a pick-up in overall demand. In addition, there was some uplift from the biennial Singapore Airshow in February 2018.

The SRs showed a year-on-year improvement in performance in 1Q 2018. The average occupancy of the SRs improved 10.1pp and the ADR was 5.8% lower. Correspondingly, revenue per available unit (“RevPAU”) of the SR portfolio grew 7.6% to S$174 in 1Q 2018. Although there was an increase in group bookings, corporate demand remained subdued.

A snapshot of the hotel and SR performance in 1Q 2018 is set out below.

Revenue from the retail and office spaces declined 3.9% year-on-year to S$5.5 million in 1Q 2018 mainly due to lower rental rates.

Net property income was higher by 4.0% at S$23.0 million. Finance costs were stable year-on-year at about S$5.0 million.

Income available for distribution was S$17.6 million or 4.2% higher year-on-year. Distribution per Stapled Security was 1.1% higher at 0.94 Singapore cents.

Commentary On Current Year Prospects

Far East H-Trust’s performance is expected to stabilise, largely due to improvement in the hotel portfolio.

The Singapore Tourism Board forecasts international tourist arrivals to grow 1% to 4% in 2018. Compared to the previous years, when new hotel supply grew at a compounded annual growth rate of about 4.9%1, the increase of 1.1% (or 750 rooms)2 in 2018 is significantly lower. As such, demand and supply is expected to balance out.

Major MICE and biennial events should provide some uplift to the performance of the hotel portfolio, which generates two-thirds of the REIT’s revenue. In addition, the completion of the renovation of Orchard Parade Hotel as well as the acquisition of Oasia Hotel Downtown will contribute positively to the REIT’s performance.

Demand for SRs, on the other hand, is expected to lag behind that of hotels. As corporate and relocation activities remain muted, the operating environment for SRs continues to be competitive in the near term.

The operating environment for retail and office leasing is also competitive, as companies exercise prudence in their cost management.

1For the period 2013 to 2017
2CBRE report issued as at February 2018 and Far East H-Trust’s compilation