Eagle Hospitality Trust Announced Disastrous Quarter 4 Results- Distribution Per Unit Slashed by Whopping 24%

Eagle Hospitality Trust (“EHT”) delivered a set of extremely disappointing Q4 FY2019 earnings which represented a significant decline of 14.7% of their net property income against IPO projection. Consequently, EHT also slashed their dividend distribution by a whopping 24.4%. relative to IPO forecast. The first announcement I came across was an "Improvement to the Master Lease Agreement" which allows EHT to receive more rent from any outperforming properties that produce excess cashflow. 80% of the excess cashflow can then be applied against shortfalls from underperforming properties. To me, this seems nothing more than an appeasement policy to pacify unit holders. True enough, when I opened up the main results announcement, I was shocked beyond words against the disastrous results. 

Reasons for the poor performance

1. Displacement from its largest asset, Holiday Inn Resort Orlando Suites ("OHIR"). OHIR is currently still undergoing roof repair works on the heels of a cateogry 5 hurriance in 2nd half of FY2019.

2. Softening US market.  This is a major concern to watch out especially in the face of the COVID-19. Good thing is the virus has not spread extensively in US. 

Summary

Despite management claiming that they did better than competitors and performs well amidst market headwinds, I think otherwise and that EHT performed badly.  I believe the disappointing results against IPO forecast speak for itself. Fundamentals in the US hospitality sector seems to be worsening. With the slashing of distribution per unit by 24.4% in Q4 FY2019, annualised dividend yield has dropped to 10.9% based on unit price of US$0.525 per unit.