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CDL Hospitality Trust Posts 4.8% Lower DPU

CDL Hospitality Trust (CDL-HT) (SGX: J85) reported lower distributions per unit (DPU) yesterday evening. The lower distribution was due to multiple reasons, ranging from divestments and a drop in contribution due to ongoing renovations.

The latest report was for the stapled trust’s third-quarter earnings results for the year ending 31 December 2018. CDL-HT is one of Asia’s leading hospitality trusts with a portfolio of 15 hotels and two resorts comprising a total of 5,002 rooms and a retail mall. These properties are geographically spread across the world, from Singapore to Australia, Japan, New Zealand, United Kingdom, Germany, and the Maldives.

Let’s take a quick look at the quarter’s results.

  1. Gross revenue dropped by 8.8% year-on-year to S$50.0 million while net property income decreased  10.20% to S$36.2 million. The steep decline in net property income was attributed to the divestment of two hotels in Australia. At the same time, renovations at the trust’s resort in Maldives and Singapore led to lower contributions.
  2. The pullback in revenue and net property income resulted in a decline in distributable income by 3.9% to S$26.3 million compared to the same period a year ago. The trust’s distribution per unit (DPU) fell 4.8% to 2.18 cents as a result.
  3. Next, let’s look at CDL-HT’s debt profile. As of 30 September 2018, the Trust’s gearing stood at 33.8%, an increase from the gearing of 33.2% recorded three months ago. The trust’s weighted average annualized interest rate stood at 2.4% with an average debt duration of 2.9 years. Around 66% of the REIT’s debt was on fixed-rate loans.
  4. Moving on, we look at the hospitality owner’s operational statistics. The trusts’ portfolio had an average occupancy rate of 90.8% at the end of the quarter, increase from 88.7% year on year. The average daily rate and revenue per available room came in at S$182 and S$165, a decline of 2.6% and 0.3% year-on-year, respectively.
  5. CDL-HT’s net asset value (NAV) declined by 2% compared to the previous quarter coming in at S$1.48.

The Road Ahead

Mr. Vincent Yeo, Chief Executive Officer of CDLHT’s managers, commented on the quarter and outlook,

“We are experiencing a transitionary period as we are conducting significant refurbishment works for two of our properties and seeking opportunities to recycle capital from our earlier divestment. Looking ahead, our core portfolio in Singapore is poised to benefit from the recovery in the hotel sector. We will continue to focus on executing asset enhancement opportunities to maximize the long-term potential of our hotels. For instance, Orchard Hotel, which is the largest hotel in our Singapore portfolio, will see a significantly improved product offering when the asset enhancement works are completed.”

Units of CDL-HT are currently trading at S$1.47, sporting a price-to-book ratio of around 0.99 and a yield of 6.4%.

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The Motley Fool Singapore contributor Esjay contributed to this article. Esjay does not own any of the shares mentioned.

The information provided is for general information purposes only and is not intended to be personalized investment or financial advice. Motley Fool Singapore writer Chin Hui Leong does not own any of the shares mentioned.