Investor Relations

Financial Information

Unaudited Financial Statements Announcement For the half year and full year ended 31 December 2023

Financials Archive

 

Statements of Total Return and Distribution Statements

The Manager resolved to distribute S$43.5 million to Stapled Securityholders for 2H 2023, comprising taxable income of S$39.3 million; and other gains of S$4.2 million from the divestment of VRCQ. Far East H-REIT's distribution policy is to distribute at least 90.0% of its taxable income for the full financial year. For FY2023, the Manager has resolved to distribute 100.0% of its taxable income available for distribution to the Stapled Securityholders.

Notes:
NM - Not meaningful

  1. Refer to section 8 on "Review of performance" for the explanation of variances.
  2. The increase in property tax expense is due to higher annual values upon finalisation of assessment by Inland Revenue Authority of Singapore ("IRAS") for all properties.
  3. Higher interest and other income arose from higher interest rates on the shareholder loan due from Fontaine Investment Pte Ltd ("FIPL") and interest income earned on fixed deposits placement.
  4. Higher finance expenses are mainly due to higher interest rates on the floating rate loans.
  5. The share of results of joint venture relates to the equity accounting of FIPL's results. The share of losses has exceeded the carrying amount of the investment since December 2021.
  6. The unrealised foreign exchange gain arose from exchange difference on the US dollar denominated term loan. A cross currency swap ("CCS") has been entered into to hedge against any foreign exchange exposure on the principal and interest payments. This is a non-tax chargeable / deductible item and has no impact on the taxable income and distributable income to the Stapled Securityholders.
  7. This relates to net change in fair value of interest rate swap and cross currency swap contracts entered to hedge against the interest rate and foreign currency 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.
  8. The fair value change in investment properties of S$59.2 million for FY2023 arose from the revaluation of 9 hotels and 3 SRs as at 31 December 2023. The independent valuations of the investment properties were carried out by Savills Valuation And Professional Services (S) Pte. Ltd. and CBRE Pte. Ltd. Please refer to Note 1(e)(3) Investment properties for more details. This is a non-tax chargeable / deductible item and has no impact on the taxable income and distributable income to the Stapled Securityholders.
  9. The gain on disposal of investment property pertains to the incentive fee received on 24 March 2023 for the divestment of VRCQ which was completed in March 2022.
  10. Included in the net distribution adjustments are the following:

    Notes:
    NM - Not meaningful

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

  11. The rollover adjustment for FY 2023 relates to the difference between the taxable income previously distributed and the quantum finally agreed with the IRAS for the Year of Assessment ("YA") 2021 and 2022.
  12. For 2H 2023, this relates to the release of the S$2.3 million of taxable income available for distribution to Stapled Securityholders that was not distributed in 1H 2023. For 2H 2022, this relates to taxable income that was undistributed in 1H 2022 due to rounding.
  13. Other adjustments for Far East H-Trust pertains primarily to the net accounting results of Far East H-BT.

Balance Sheets as at 31 December 2023

Notes:
  1. The increase in investment properties was mainly attributable to the fair value change in investment properties of S$59.2 million and capital expenditure capitalised for Orchard Rendezvous Hotel, Vibe Hotel Singapore Orchard, Village Hotel Changi and Rendezvous Hotel Singapore. Please refer to the details in Note 1(e)(3) Investment properties.
  2. This relates to the 30% joint venture interest in FIPL, for which the share of losses exceeded the carrying value of investment as at 31 December 2023.
  3. This relates to the fair value of interest rate swap and CCS contracts entered to hedge against interest rate risk and foreign exchange exposure of Far East H-REIT.
  4. Cash and cash equivalents comprise cash at bank of S$4.9 million and fixed deposits of S$58.2 million. The increase in cash and cash equivalents is mainly due to the incentive fee received from divestment of VRCQ.
  5. This includes a shareholders' loan and accrued interest due from FIPL of S$38.0 million. The amount is used to finance the development of Village Hotel Sentosa, The Outpost Hotel Sentosa and The Barracks Hotel Sentosa which commenced hotel operations in 2019. The increase in trade and other receivables is mainly due to higher trade receivables and interest receivables from FIPL.
  6. The increase in trade and other payables is mainly due to higher GST payable arising from higher lease billings in the fourth quarter
  7. The total gross borrowings as at 31 December 2023 of S$738.6 million. The decrease from the balances as at 31 December 2022 is due to unrealised foreign exchange gain on the US dollar denominated term loan.

    On 31 March 2023, a new facility with an option for either US or Singapore dollar denomination was drawn down to early refinance the existing S$100.0 million term loan ahead of its maturity on 28 March 2024.

    On 29 December 2023, two new facilities of S$62.5 million each were drawn down to early refinance $125.0 million term loans due to mature on 30 March 2024.

    As at 31 December 2023, Far East H-REIT has undrawn and uncommitted revolving credit facilities ("RCF") of S$275.0 million with 3 banks to fulfill its liabilities as and when they fall due.

    Please refer to the details of aggregate amount of borrowings as disclosed in Note 1(e)(4) Borrowings.
  8. The decrease in accruals is mainly due to lower interest expense and capital expenditure accrued as at 31 December 2023 as compared to preceding year.

Review of the performance of half year and full year ended 31 December 2023

2H 2023 vs 2H 2022

Gross revenue for 2H 2023 grew 28.6% YoY to S$54.8 million, driven by higher master lease rental from the hotels and SRs, as well as higher revenue from the retail and office spaces.

For the period, average daily rate ("ADR") of the hotels grew 16.1% to S$171 as demand from both leisure and corporate travellers improved with the recovery. Average occupancy grew 2.6 pp to 81.7% even though some hotels in the portfolio were ramping up after exiting the government contracts during the year. Consequently, revenue per available room ("RevPAR") grew 19.9% to S$140.

Demand for the SRs remained strong as average occupancy grew 0.9 pp to 87.4% and ADR increased 9.5% to S$267. Correspondingly, revenue per available unit ("RevPAU") registered a 10.7% YoY increase to S$234, reaching an all-time high since initial public offering.

A snapshot of the hotel and SR performance in 2H 2023 is set out below.

Revenue from the retail and office spaces grew 7.5% YoY to S$8.1 million on the back of improving rents and occupancy rates.

Net property income for 2H 2023 stood at S$49.8 million, 24.8% higher than 2H 2022. Finance expenses were higher by S$2.8 million as compared to 2H 2022 due mainly to higher interest rates on the floating rate loans.

Distribution to Stapled Securityholders for 2H 2023 grew 26.3% to S$43.5 million as a result of higher net property income. This translates to a higher distribution per Stapled Security of 2.17 cents compared to 1.73 cents for the preceding period.

FY 2023 vs FY 2022

Gross revenue for FY 2023 increased 27.8% YoY to S$106.8 million, driven by higher master lease rental from the hotels and SRs, as well as higher revenue from the retail and office spaces. All properties on the master lease rental in the portfolio performed above the minimum fixed rent, achieving variable rents similar to that of 2019.

During the year, the hotels experienced a healthy recovery of leisure travellers with revenue contribution growing 2.7 times as compared to the year before. Demand from corporate groups also continued to strengthen. As a result, ADR grew 36.1% to S$170 and average occupancy grew 6.3 pp to 80.1%. Correspondingly, RevPAR grew 47.8% to S$136.

The SRs performed very well during the year, with RevPAU registering a 17.0% YoY growth to S$229, an all- time high since the initial public offering of the Trust. Buoyed by continued inflow of professionals and project groups, average occupancy for the full year grew 0.3 pp to 87.8% and ADR increased 16.6% to S$260.

A snapshot of the hotel and SRs performance for FY 2023 is set out below.

Revenue from the retail and office spaces increased 9.2% YoY to S$16.2 million on the back of improving rents and occupancy rates. More retail spaces were leased out at the hotels which exited the government contracts for isolation purposes.

Net property income grew 27.7% YoY to S$98.7 million as a result of higher revenue. Finance expenses increased 36.5% YoY to S$25.2 million mainly due to higher interest rates on the floating rate loans.

Distribution to Stapled Securityholders for FY 2023 grew 26.0% to S$81.9 million as a result of higher net property income as well as distribution of some of the gains from the divestment of Central Square (also known as Village Residence Clarke Quay). This translates to a higher distribution per Stapled Security of 4.09 cents compared to 3.27 cents for the preceding period.

Commentary on the competitive conditions of the industry in which the group operates and any known factors or events that may affect the group in the next reporting period and the next 12 months.

In 2023, international tourism recovered to 88%3 of pre-pandemic levels. In Singapore, visitor arrivals reached 71% of pre-pandemic levels or 13.6 million arrivals.

For 2024, the United Nations Tourism ("UN Tourism4") expects a full recovery of international tourism, supported by pent-up demand, increased air connectivity and a stronger recovery of Asian markets and destinations. For Singapore, the Singapore Tourism Board expects 15 million to 16 million visitor arrivals by the end of 2024. While lower than 2019, it still represents an increase from the 13.6 million arrivals recorded in 2023.

Economic growth in 2024 is expected to drive the recovery in travel and hospitality, especially in corporate travel. Global economic growth for 2024 is projected to reach 3.1%5, while China and the ASEAN-5 (Indonesia, Malaysia, Philippines, Singapore, Thailand) region are also expected to grow at a higher rate of 4.6%5 and 4.7%5 respectively. The International Monetary Fund also expects the Federal Reserve, the European Central Bank and the Bank of England to hold policy rates steady until the second half of the year.

Notwithstanding the above, recovery may be moderated by geopolitical tensions and slower rebound in visitor arrivals from some key markets. In addition, leisure inbound into Singapore may also be affected by the relative strength of the Singapore dollar.

In summary, the REIT Manager remains optimistic for the year ahead, underpinned by a healthy pipeline of MICE (Meetings, incentives, conferences and exhibitions) events, large-scale performances, and positive policy changes such as further expansion of air services into Singapore and the 30-day visa-waiver for Chinese travellers (Singapore's largest source market of tourists in 2019).

Notes:
  1. On a same-store basis, excluding VRCQ for FY 2022, average occupancy for FY 2023 would have decreased 0.5pp YoY from 88.3% to 87.8% while ADR would have grown 15.3% from S$226 to S$260. Correspondingly, RevPAU would have grown 14.7% YoY from S$199 to S$229.
  2. World Tourism Barometer (United Nations Tourism), 18 January 2024.
  3. Previously known as the United Nations World Tourism Organization.
  4. World Economic Outlook Update (International Monetary Fund), 30 January 2024.