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FAR East Orchard recorded S$6.9 million in net profit for the first three months ended March, up 46.8 per cent from S$4.7 million in the year-ago period.
The improvement in operating profit came mainly from the group’s purpose-built student accommodation (PBSA) business, the real estate group said on Tuesday (May 7).
Revenue rose 10.4 per cent to S$50.9 million from S$46.1 million the year before.
Far East Orchard said the increase was driven notably by rental growth and the addition of a PBSA property to the group’s portfolio in June 2023.
The group’s hospitality segment continued to provide stable contributions, and its property development joint venture, Woods Square, also delivered higher sales and leasing income.
In March, in line with Far East Orchard’s strategy to enlarge and diversify its student accommodation portfolio into key student cities in the United Kingdom, the group acquired a site in Central Glasgow together with Woh Hup to develop a 273-bed PBSA property.
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“This marks the group’s first entry into Glasgow and the development is expected to be completed in 2026,” Far East Orchard said.
As at Mar 31, the group’s PBSA property in the UK had close to 86 per cent reservations for the academic year beginning in September.
Far East Orchard said: “Rental growth continues to hold strong in cities with supply-demand imbalances.”
“Despite the surge in student enrolments, the existing bed capacity struggles to keep up with the demand, which has allowed the group’s operational portfolio to continue to achieve a near-full occupancy consistently since 2022.”
In April 2024, Far East Orchard announced it acquired a 49 per cent stake in Homes For Students Ltd, UK’s largest independent PBSA operator with over 40,000 beds under management.
“Enhancing the group’s operating management capabilities, the lodging platform will contribute to a sustainable and recurring income stream,” it said.
Looking ahead, Far East Orchard’s group chief executive officer Alan Tang said: “While the global economy is projected to see a steady recovery this year, it is constrained by cost headwinds and present challenges such as escalating geopolitical tensions and the higher-for-longer interest rate environment.”
In April, the group, through its joint venture Toga Far East Hotels, began operating a 273-key hotel in April 2024. The group has two more hotel openings slated for the second half of 2024.
The group is navigating towards being asset-light and will continue to explore working with like-minded capital partners, it said.
Shares of Far East Orchard closed flat at S$1.02 on Tuesday, before the announcement.
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