5 Things You Need To Know About CDL Hospitality Trusts’ Latest Results

CDL Hospitality Trusts (SGX: J85) is one of the few hospitality trusts listed in Singapore. The stapled trust currently owns 15 hotels and 2 resorts in Singapore, Australia, Japan, New Zealand, United Kingdom (UK) and Maldives. The trust announced its third quarter result this week.

Here are 5 things you need to know about the most recent results.

1. It does not look good

Unfortunately, the hospitality trust recorded a decline in its net income as well as its distribution per unit despite a slight increase in gross revenue. For the third quarter, CDL Hospitality Trust saw a 2.4% increase in gross revenue year on year to S$41.1 million. However, in terms of net property income, the trust saw a 2.2% drop year on year to S$33.1 million.

2. Operations in Singapore, Australia and New Zealand led the decline

Its operations in Singapore experienced a drop due to weaker demand. Visitor arrivals to Singapore year-to-date (August 2015) had declined 0.6%, compared to the same period a year ago. Revenue from Australia and New Zealand also declined due to currency depreciation against the Singapore dollar. These declines were slightly offset by its acquisition of hotels in Japan at the end of 2014.

3. Net income fell

Overall, CDL Hospitality Trust recorded a 10.9% year on year decline in its net income to finish the quarter with just S$21.6 million. For the first nine months of the year, net income for the trust experienced a 10.5% decline year on year and ended at S$67.6 million.

4. Distribution per unit fell too

The fall in net income, in turn, affected its distribution. For the third quarter of 2015, its distribution per unit (DPU) fell 9.7% year on year to S$0.0236 per unit. For the first three quarters this year, its DPU also declined 10.3% year on year to S$0.0705 per unit.

5. What does the future hold?

Despite the fall in visitor arrivals in Singapore so far, the Singapore Tourism Board is still expecting a 3.0% to 4.0% growth in visitor arrivals this year. However, supply of hotel rooms appear to be increasing at a faster rate, going up by 7.6% year to date. This has certainly put pressure on hotel room rates in Singapore. Maldives is experiencing a similar slowdown from tourist visits from China. Meanwhile, Australia and New Zealand are mainly pressured by currency depreciation.

The trust continues to expect strong growth from its Japan operations. Furthermore, its newly acquired Cambridge City hotel in UK should provide a positive contribution to the trust. The operations in UK and Japan might offset some of the weakness felt by the other markets.

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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 writer Stanley Lim does not own any companies mentioned above.