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Financial Information

Unaudited Financial Statements Announcement For the half-year ended 30 June 2024

Financials Archive
Financial Statement (464 KB)
Press Release (175 KB)
Presentation Slides (2601 KB)

 

Statements of Total Return and Distribution Statements

The Manager resolved to distribute S$39.4 million to Stapled Securityholders for 1H 2024, comprising taxable income of S$33.2 million; and other gains of S$6.2 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 1H 2024, the Manager has resolved to distribute 99.9% 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 value assessments by Inland Revenue Authority of Singapore for all properties.
  3. Higher finance expenses are mainly due to higher interest rates on the floating rate loans.
  4. 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.
  5. The unrealised foreign exchange loss 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.
  6. 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.
  7. For 1H 2023, 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.
  8. Included in the net distribution adjustments are the following

    Notes:

    NM - Not meaningful

    1. This represents 60% (1H 2023: 90%) of REIT Manager's fees paid/payable in Stapled Securities.

  9. Other adjustments for Far East H-Trust pertains primarily to the net accounting results of Far East H-BT.
  10. Income available for distribution for 1H 2024 would be 4.7% higher at S$35.5 million if not for the change in proportion of REIT Manager's fee paid/payable in the form of Stapled Securities from 90% to 60%.

Balance Sheets as at 30 June 2024

Notes:

  1. The increase in investment properties was mainly attributable to capital expenditure capitalised for Village Hotel Albert Court, Vibe Hotel Singapore Orchard and Village Residences Robertson Quay. 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 30 June 2024.
  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$4.5 million and fixed deposits of S$24.0 million. The decrease in cash and cash equivalents is mainly due to the prepayment of term loan of $23.6 million.
  5. This includes a shareholders' loan and accrued interest due from Fontaine Investment Pte Ltd ("FIPL") of S$37.2 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.
  6. The increase in trade and other payables is mainly due to higher trade payables for capital expenditure.
  7. The total gross borrowings as at 30 June 2024 of S$717.7 million was S$20.9 million lower compared to balances as at 31 December 2023 due to prepayment of term loan of S$23.6 million in June 2024 from the proceeds of the divestment of VRCQ, and partially offset by unrealised foreign exchange loss on the US dollar denominated term loan.

    The current borrowings relate to term loans amounting to S$107.2 million which are due to mature in April 2025. The REIT Manager is evaluating and assessing the refinancing options with its lenders for the term loans.

    As at 30 June 2024, 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 payment of property tax accrued as at 31 December 2023.

Review of the performance of half year ended 30 June 2024

1H 2024 vs 1H 2023

Gross revenue for 1H 2024 grew 3.4% YoY to S$53.8 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 hotels, average occupancy improved 2.1 pp as more hotels continued to ramp up after having exited the government contracts in 2023. The average daily rate ("ADR") also grew 3.7% to S$176, supported by major events and large-scale performances in the first quarter of 2024. Overall, revenue per available room ("RevPAR") increased by 6.4% to S$141.

For the SRs, the ADR registered a healthy increase of 4.9% to S$266, partly boosted by a higher proportion of short-stay leisure travellers booking at higher rates. Average occupancy dipped to 85.1% due to some unexpected group departures early in the year. It subsequently picked up and improved 3.5 pp quarter-on-quarter to 86.8%. Overall, revenue per available unit ("RevPAU") registered a 1.0% YoY increase to S$226.

A snapshot of the hotel and SR performance in 1H 2024 is set out below.

Revenue from the retail and office spaces reached S$8.6 million, marking a 7.3% increase from the previous year. Both the office and retail spaces experienced higher average occupancies and rental rates, with retail spaces experiencing stronger growth with continued improvement in average occupancy. The exit of Rendezvous Hotel Singapore and Village Hotel Changi from government contracts facilitated the better leasing performance of the Retail premises within the hotels.

Net property income for 1H 2024 increased to S$49.5 million, improving from the same period in 2023. Finance expenses were higher by S$3.1 million as compared to 1H 2023 mainly due to higher interest rates on the floating rate loans.

Distribution to Stapled Securityholders for 1H 2024 grew 2.7% to S$39.4 million as a result of higher net property income contribution (partially offset by the change in proportion of REIT Manager's fee paid/payable in Stapled Securities) and distribution of other gains from the divestment of Central Square. This translates to a higher distribution per Stapled Security of 1.96 cents compared to 1.92 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 the first half of 2024, international visitor arrivals to Singapore continued to recover, reaching 8.2 million (or 88% of the same period in 2019), bolstered by a robust lineup of events and large-scale performances. With new major events such as the World Aquatics Swimming World Cup and World Chess Championship to be held later this year, visitor arrivals are expected to achieve the Singapore Tourism Board's target of 15.0 to 16.5 million visitors for 2024.

On a macroeconomic front, global economies continue to display resilience, with growth holding steady and inflation declining. Expectations for further interest rate cuts are also on the horizon. The World Tourism Organisation anticipates that international tourism will fully recover to pre-pandemic levels in 2024, contingent on the pace of recovery in Asia and the evolving world economic and geopolitical risks.

The REIT Manager remains positive about the future prospects of the hospitality industry. Continued commitment by the Government, such as the S$300 million Tourism Development Fund and the S$165 million Major Sports Event Fund, will enhance tourism offerings, improve existing infrastructure, and further bolster Singapore's appeal as a premier business and leisure destination in the years ahead.