Distribution Dips at CDL Hospitality Trust

CDL Trust logoThe first hotel real estate investment trust to be listed in Asia (excluding Japan), CDL Hospitality Trusts (SGX: J85), or CDLHT, saw its gross revenue decline 0.5% year-on-year to S$148.8 million for Full Year 2013 (FY 2013). Net property income was down 1.4% year-on-year to S$137.4 million and income to be distributed per unit was 10.97 cents in FY 2013, down 3.1% year-on-year.

The dip in gross revenue of 0.5% was mainly due to “reduced contribution from its portfolio of Singapore Hotels on an overall weaker performance and lower fixed rent contribution from its Australia Hotels due to the weakened Australian dollar”. Furthermore, Orchard Hotel Shopping Arcade (OHSA) was closed for asset enhancement initiative (AEI) last month and this caused lower revenue to be posted for the mall.

The decline in the Singapore and Australia markets was mitigated by the strong contribution by the Maldives resort, Angsana Velavaru, which was acquired on 31 January 2013. The resort registered a year-on-year room revenue per available room (RevPAR) growth of 22.3% (RevPAR is obtained by multiplying the average daily room rate by its occupancy rate).

AEI for OHSA will be completed by end of this year and is expected to deliver a return on investment of more than 8%. Once AEI is completed, the incremental rental income will be more than S$2 million on an annualised basis. CDLHT also announced that OHSA will be renamed as Claymore Link with a new tagline, “more for everyone”. The mall will be repositioned as a family-friendly mall with enhanced retail offerings.

In Singapore, due to the influx of new hotel rooms and an overall weaker corporate demand environment, the average occupancy rate for FY 2013 slipped 1.3 percentage points (pp) to 87.4% and the average daily rate decreased 5.6% year-on-year to S$218. RevPAR was down 6.8% to S$191 for the year, due to competition from new hotels.

As of 31st December 2013, the gearing ratio for CDLHT was 29.7%, with a weighted average maturity period of around 2.6 years. Net asset value (NAV) per unit was S$1.63, a rise of 1.2% year-on-year.

Mr Vincent Yeo, Chief Executive Officer of the manager of CDLHT, said “While Singapore’s hospitality industry remains competitive due to the new hotel rooms supply, demand is expected to be supported by more large-scale corporate and sporting events slated to be held in Singapore this year as compared to 2013. These include the Singapore Airshow in February, Food & Hotel Asia in April and the Women’s Tennis Association Championships in October, amongst others”.

CDLHT closed at $1.59 on Tuesday. The historical price-to-book is at 0.98, based on the NAV of S$1.63 and the distribution yield is at 6.9%, based on the distribution of 10.97 cents per unit.

Click here now for your FREE subscription to Take Stock Singapore, The Motley Fool’s free investing newsletter. Written by David Kuo, Take Stock Singapore tells you exactly what’s happening in today’s markets, and shows how you can GROW your wealth in the years ahead.  

Like us on Facebook  to keep up-to-date with our latest news and articles. The Motley Fool’s purpose is to help the world invest, better.

The information provided is for general information purposes only and is not intended to be personalised investment or financial advice. Motley Fool Singapore contributor Sudhan P doesn’t own shares in any companies mentioned.