Three Things To Like About CDL Hospitality Trusts

Have you ever been inside the Grand Copthorne Waterfront Hotel? What a magnificent hotel. That is the first thing to like about CDL Hospitality Trusts (SGX: J85) – the quality of its assets.

The stapled group, which comprises CDL Hospitality REIT and CDL Hospitality Business Trust, owns a portfolio of hotels that also includes Orchard Hotel in Singapore’s prime tourist area and Novotel Singapore in Clarke Quay.

It also owns the Ibis in Brisbane, Rendezvous in Auckland and the Angsana Velavaru in the Maldives. That is the second thing to like about CDL Hospitality Trusts – its geographic spread. Around 60% of the company’s revenues are generated in Singapore; about 15% from Australia and New Zealand and the rest from the Maldives.

Through a one-stop-shop investors could gain exposure to four separate tourist hotspots.

Over the last five years, revenues have grown from S$92m to about S$159m, which represents a growth rate of 11%. Profits have increased at around 13%, though the distribution has grown approximately 4% a year.

Currently CDL Hospitality Trusts is yielding 6.3%, which is the third thing to like about the company. Its payout is one of the highest amongst Singapore’s Real Estate Investment Trusts. And with a Return on Equity of 7.8% and a Retention Ratio of 14%, it would suggest that the hotel owner has the potential to grow its payout to shareholders at a fairly decent rate too.

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