Net property income rises 5.9% to S$66.5 million

 

CDL Hospitality Trusts : J85 -1.03%&rsquo (CDLHT) net property income (NPI) for the first half ended Jun 30, 2024, rose 5.9 per cent to S$66.5 million, from S$62.9 million in the year-ago period.

 

On Tuesday (Jul 30), the managers of the stapled group reported an unchanged H1 distribution per stapled security (DPS) of S$0.0251, which was affected by higher interest costs. 

 

Total distribution to stapled securityholders after retention was up 0.7 per cent year on year to S$31.4 million, from S$31.2 million. The distribution will be paid on Aug 30, after the closure of books on Aug 7. 

 

The stapled group also reported a 6.8 per cent higher revenue of S$127.3 million, from S$119.2 million. 

 

The managers noted that NPI increased in tandem with the rise in gross revenue, with the former posting an improvement in almost all of its portfolio markets.

 

However, NPI in its New Zealand market was down 13.9 per cent to S$3.1 million, from S$3.7 million in H1 FY2023.

 

NPI in its UK market remained almost unchanged at S$6.2 million.

 

Interest costs for H1 FY2024 increased mainly due to higher funding costs on floating rate loans and interest rate expenses from additional amounts drawn. 

 

Revenue per available room (RevPAR) growth was recorded across all of the group&rsquo s portfolio markets, even as pent-up demand post-pandemic tapered off in most markets. 

 

The managers noted a 7.7 per cent increase in its Singapore hotels&rsquo RevPAR to S$193, from S$179 in H1 FY2023. This comes as the average occupancy rate rose 9.2 percentage points to 78.4 per cent. 

 

NPI for its Singapore portfolio increased 6.8 per cent to S$41.3 million in H1 FY2024.

 

The managers said that RevPAR for its Singapore portfolio &ndash which represents a core market for the stapled group &ndash was driven by an increase in occupancy.

 

First-quarter performance was boosted by Singapore&rsquo s concert calendar and the start of visa-free travel between China and Singapore.

 

However, this was weighed down in the second quarter by falling demand. This came after several weekday public holidays, an increase in hotel supply and the recent oil spill near Sentosa, among others.

 

Chief executive officer of CDLHT&rsquo s managers Vincent Yeo said: &ldquo As there is still a gap of visitor arrivals to pre-pandemic levels, there is still a runway for growth ahead.&rdquo

 

Among the stapled group&rsquo s various geographical segments, the Japan market recorded one of the more notable performances with 17.7 million visitors in H1 FY2024. This marks a 65.9 per cent year-on-year increase.

 

NPI in the Japan market also rose 24.1 per cent on the year to S$2.2 million, while RevPAR increased 25.4 per cent to 10,410 yen (S$90).

 

The managers expect positive trends in the country&rsquo s tourism sector to continue this year, supported by its appeal as a tourism destination and weaker currency.

 

They noted that international tourism is on its recovery path towards pre-Covid level as flights continue to be restored.

 

&ldquo Eventual widespread return of the Chinese visitors will be a key determinant of the recovery trajectory,&rdquo the managers added.

 

As at Jun 30, CDLHT&rsquo s gearing ratio was 37.7 per cent. It had a debt headroom of S$783.3 million, with cash reserves of S$64.9 million and S$648.5 million of credit facilities. 

 

The group posted a weighted average cost of debt of 4.2 per cent and an interest coverage ratio of 2.66 times at the end of the first half of FY2024.

 

Yeo said: &ldquo With ample debt headroom, we will continue to rejuvenate our portfolio hotels to strengthen their positions in the marketplace for the medium to long term.&rdquo

Gross revenue rises 7.3 per cent to S$65.3 million

 

CDL Hospitality Trusts&rsquo (CDLHT) net property income (NPI) for the first quarter ended Mar 31, 2024, rose 6.8 per cent to S$34.9 million, from S$32.7 million in the year-ago period.

 

This came on the back of a 7.3 per cent higher gross revenue of S$65.3 million, based on the stapled group&rsquo s business update on Tuesday (Apr 30).

 

The managers of the group, comprising CDL Hospitality Real Estate Investment Trust and CDL Hospitality Business Trust, highlighted higher revenue per available room (RevPAR) across all geographical markets, largely driven by increased occupancies.

 

NPI of the group&rsquo s core market in Singapore improved by 12.8 per cent on the year to about S$22.1 million. RevPAR for the Singapore hotels was up 16.6 per cent at S$205, led by a 14.2 percentage-point increase in occupancy.

 

&ldquo Q1 2024 saw the return of significant demand drivers from a robust concert calendar, as well as a 30-day mutual visa exemption agreement between China and Singapore that commenced from Feb 9, 2024,&rdquo said the managers, adding that a &ldquo volume strategy&rdquo was adopted for the seasonally weaker quarter for the Singapore hotels.

 

Meanwhile, an earlier Easter this year tampered demand during the last week of the quarter, compromising performances of both Singapore and overseas properties.

 

The stapled group&rsquo s properties in New Zealand, Australia, the UK and Germany all registered lower NPI despite higher RevPAR.

 

The New Zealand property &ndash Grand Millennium Auckland &ndash posted a marginal RevPAR increase of 0.8 per cent year on year, with food and beverage revenues affected by the closure of its ballroom for refurbishments in Q1.

 

&ldquo Increased operating expenses, compounded by a weaker New Zealand dollar against Singapore dollar, led to a decline of 17.3 per cent or S$500,000 year on year in NPI for Q1 2024,&rdquo said the managers.

 

The Perth hotels in the Australia portfolio registered a 6.4 per cent higher RevPAR. Similarly, higher operating costs, on top of unfavourable foreign exhange rates, led to a 9.5 per cent lower NPI for the quarter.

 

The manager highlighted that two of the three UK hotels &ndash Hilton Cambridge City Centre and The Lowry Hotel &ndash experienced lower profit margins due to higher operating costs, particularly in payroll and utilities. Overall NPI of the UK hotels was dragged down 5 per cent to S$2.1 million.

 

Pullman Hotel Munich in Germany recorded an 8.6 per cent higher RevPAR, but a 5.8 per cent lower NPI as only accounting base rent on a straight-line basis was recognised, said the manager. This came as higher repair, maintenance and utilities expenses from the commercial component weighed on the NPI.

 

Japan hotels posted a 32.6 per cent growth in RevPAR, the highest since 2014, on robust inbound demand. Correspondingly, NPI for the Japan hotels improved 46.2 per cent to S$1.1 million, despite the depreciation of the yen against the Singapore dollar.

 

As at Mar 31, CDLHT&rsquo s gearing stood at 37.8 per cent with about S$66.5 million of cash reserves and S$196.9 million of committed revolving credit and term loan facilities available.

 

The stapled group&rsquo s interest coverage ratio stood at 2.73 times, and weighted average cost of debt was 4.3 per cent, as at the end of Q1.

 

&ldquo With access to short-term uncommitted bridge loan facilities of S$400 million, CDLHT will continue to pursue suitable acquisitions to augment and diversify its income streams, while working closely with its lessees and operators to execute strategic asset enhancement opportunities to bolster the portfolio&rsquo s competitiveness,&rdquo said the managers.