Far East Hospitality Trust (FEHT) posted results that were within expectations albeit on the lower end. 1Q19 gross revenue increased 8.0% to S$27.8m while NPI grew 9.0% to S$25.0m, mainly due to the contribution from Oasis Hotel Downtown (OHD).

Income available for distribution was down 1.2% to S$17.4m. The decline was due to an increase in finance costs, which was in turn a result of additional debt being drawn to find the OHD acquisition as well as higher short term interest rates.

With an enlarged base, DPU was down 3.2% to 0.91 S cents or 22.4% of our full-year forecast – as reference, 1Q18 DPU contributed 23.5% to the full-year DPU. Hotel RevPAR was up 0.7% while Serviced Residences RevPAU was flat YoY.

We noted in our last report that we expected YoY RevPAR growth this quarter to be soft. We maintain HOLD for now but place our fair value of S$0.68 under review pending further details from this morning's conference call.

Source: OCBC Research - 25 Apr 2019