CFA Society Singapore
SINGAPORE (Jan 29): The managers of CDL Hospitality Trusts (CDL HT), a stapled group comprising CDL REIT and CDL Hospitality Business Trust, posted a 2.1% decline in 4Q18 distribution per stapled security (DPS) to 2.77 cents from 2.83 cents a year ago.
This was mainly due to the absence of contribution from three properties, specifically two Brisbane hotels divested in Jan 2018, as well as Dhevanafushi Maldives Luxury Resort, which has been closed since June 2018 for renovations as it rebrands to Raffles Maldives Meradhoo.
As such, revenue for the quarter fell 5.4% to $52.3 million from $55.2 million previously, while net property income (NPI) declined 5.4% to $38.4 million from $40.6 million in 4Q17.
Net finance costs near-doubled to $8.9 million from $4.6 million in 4Q17, mainly due to higher interest expenses on additional loans to fund the acquisition of Hotel Cerretani Florence; renovation works for Dhevanafushi Maldives Luxury Resort and Orchard Hotel; as well as higher funding costs.
In Singapore, RevPAR grew on stable corporate demand and additional business generated by the ASEAN Summit meetings. The only exception was Orchard Hotel, where ongoing refurbishment works affected income distribution for 4Q.
Overseas, overall RevPAR for CDL HT’s UK hotels grew despite new competition and higher room supply in the city, while international arrival growth contributed to strong RevPAR growth in Pullman Hotel Munich.
Full effects of the recently-acquired Hotel Cerretani Florence, a four-star hotel in Florence, Italy, is expected to be felt from the next quarter.
For the FY18, CDL HT’s DPS stands at 9.26 cents, up 0.4% y-o-y from its previous full-year DPS of 9.22 cents.
The trust has a gearing of 34.2% and regulatory debt headroom of $578 million, which its managers say puts CDL HT in a strong position to continue sourcing for acquisitions.
“After our successful divestment exercise, we have partially recycled our proceeds into a high quality acquisition in a new market, which has further broadened our income base. We continue to focus on organic growth where our core portfolio in Singapore is recording improved performance amidst a recovering hotel sector,” says Vincent Yeo, CEO of the managers.
“To also optimise the long term potential and augment the competitive positioning of our hotels, we are executing strategic asset enhancement initiatives such as the ongoing refurbishment at Orchard Hotel, which will elevate the product offering when the works are completed,” he adds.
Units in CDL HT closed 1 cent higher at $1.58 on Monday.