CDL Hospitality Trusts' (CDLHT) distribution per stapled security (DPS) fell 19.2 per cent to 1.22 cents for its first half ended June 30, from 1.51 cents a year ago.

 

The drop came on the back of post-rent restructuring, a low base effect from earlier losses and the absence of one-off contributions from a divestment in the first half of 2020.

 

This was despite CDLHT posting a 24.4 per cent higher year-on-year net property income (NPI) of $37 million, compared with $29.7 million for the year-ago period.

 

In a bourse filing on Friday morning (July 30), the managers said the lower DPS can be attributed to three reasons:

 

&bull An NPI increase of $5.4 million for UK hotels and Raffles Maldives Meradhoo that was " largely due to the low base effect" arising from losses in NPI recorded in the year-ago period, over and above expenses below NPI that needed to be accounted for

 

&bull Post-rent restructuring for CDL' s hotels in Germany and Italy as rent recorded was higher than the actual rent received, and after deducting interest, no distribution was left from the rent received and

 

&bull Dissolution of the management corporation strata title relating to the divestment of Novotel Singapore Clarke Quay in the first half of last year that did not result in any one-off contributions to distributable income.

 

CDLHT' s revenue per available room (RevPAR) for its six Singapore hotels declined year on year by 9.5 per cent to $72 from $79 in H1 2020, while overseas, the only countries that saw gains were Australia and New Zealand.

 

It also recorded nearly $15 million in distributable income, which it said it would distribute on Aug 27.

 

It posted a gross revenue of $66.2 million, and gearing of 39.1 per cent with debt headroom of $595 million, for the half-year period as well.

 

In comments published in the stapled group' s filings with the Singapore exchange, chief executive officer of CDLHT' s managers Vincent Yeo noted the mitigating effect of widespread vaccination efforts against Covid-19 in accelerating the ease of restrictions and the restart of international travel in Europe.

 

" The performance of our UK and Germany hotels has been encouraging, and we are experiencing some of the highest occupancies since the onset of Covid-19," he said. " We are optimistic that such form of recovery could follow in other markets upon the continued easing of restrictions and quarantine requirements.

 

" As we head towards travel normalcy, we will continue to work closely with our operators and lessees to ride on the recovery, while maintaining tight costs control measures to protect the bottom line," he added.

 

Earlier this week, it also announced it would be diversifying its portfolio to include rental housing, co-living, student accommodation and senior housing.

 

CDLHT is a stapled group comprising CDL Hospitality Real Estate Investment Trust and CDL Hospitality Business Trust.&bull Dissolution of the management corporation strata title relating to the divestment of Novotel Singapore Clarke Quay in the first half of last year that did not result in any one-off contributions to distributable income.

 

CDLHT said it would distribute the DPS of 1.22 cents per stapled security on Aug 27.

 

It posted a gross revenue of $66.2 million for the half-year period as well.

 

Earlier this week, it also announced it would be diversifying its portfolio to include rental housing, co-living, student accommodation and senior housing.

 

CDLHT is a stapled group comprising CDL Hospitality Real Estate Investment Trust and CDL Hospitality Business Trust.

 

CDL Hospitality Trusts (CDLHT) is revising its principal investment strategy to include rental housing, student accommodation and senior housing assets, triggered by the pandemic' s severe impact on the hospitality sector.

 

The change in strategy is meant to diversify CDLHT' s tenant mix and provide more balanced and stable rental streams. The pandemic has also illustrated to its managers that traditional geographical diversification of a portfolio of hospitality assets has its limitations.

 

CDLHT is a stapled security comprising CDL Hospitality Real Estate Investment Trust and CDL Hospitality Business Trust. The managers noted that the different lodging real estate sectors have varying cycles of rental and occupancy growth rates, and are likely to react differently to the same risk event.

 

This will help improve the resilience of CDLHT' s portfolio, they said.

 

The inclusion of accommodation and lodging assets should enhance income stability as tenants typically have longer lengths of stay compared to those in the hotel-stay sector. The underlying tenure of these leases range from months to one to two years, and rental rates are pre-determined and fixed, the manager said.

 

CDLHT intends to leverage the expertise and network of City Developments (CDL), the parent company of CDLHT' s sponsor. CDL is a real estate company with a network spanning 112 locations in 29 countries and regions.

 

The revision in investment strategy will take effect on Aug 25.

CGS-CIMB puts out ' add' calls on Ascott Residence Trust, CDL Hospitality Trust

 

TRAVEL - both domestic and international - is on the rise, and owners of hotel properties should see income growth this year.

 

CGS-CIMB has therefore upgraded its calls on Ascott Residence Trust (ART) and CDL Hospitality Trust (CDLHT) - to " add" from " hold" - and raised its target prices on expectations of faster revenue recovery.

 

It has a target price of S$1.43 for CDLHT, up from S$1.24 previously. Its target price for ART is S$1.20, up from S$1.08.

 

The brokerage expects revenue per available room or unit will recover in markets with low Covid-19 infections, which would support a pick-up in domestic travel. To reflect this, it has raised its estimates for FY2023 distributions per unit (DPUs) at both hotel trusts. Recovery will be slow, CGS-CIMB said, but should accelerate from the end of 2022.

 

ART, which has a large portfolio across 15 countries, has seen uneven performance across its various assets. In countries such as China and Vietnam, CGS-CIMB said, performance has been better than in locations dependent on transient travellers.

 

But the brokerage now thinks ART will begin to do better than its peers because 41 per cent of its assets under management (AUM) are located in Singapore, Australia, Vietnam and China - all countries with low rates of infection and where domestic travel can be expected to recover more rapidly.

 

CGS-CIMB also highlighted ART' s 20 per cent exposure to Europe, which should also be able to recover more rapidly as its population is innoculated.

 

Over at CDLHT, the same rationale for European travel should apply. CDLHT does not have as wide a geographic presence - its assets are spread across eight countries - but it does have 16 per cent of its portfolio in Europe, the brokerage said. Another 3 per cent of CDLHT' s AUM comes from Australia properties.

 

CGS-CIMB also noted the strong balance sheets of both trusts. ART, it said, had a net gearing of 36 per cent as at end-2020. This gives it S$1.9 billion of debt headroom. CDLHT had a net gearing of 37.5 per cent, giving it debt headroom of S$689 million based on a gearing limit of 50 per cent.

 

Both trusts therefore have ample room to borrow for inorganic growth, the brokerage said.