CDL Hospitality Trusts’ portfolio performance fails analyst expectations

3Q11 result forms 70% of our FY11 estimates. CDLHT achieved revenue and net property income of S$36m and S$34m, a growth of 15% and 13% respectively. The improved operating performance was due to organic growth across the Singapore and overseas hotels, as well as contribution from Studio M Hotel. In line with the improved operating results, income available for distribution (before deducting income retained for working capital) increased 10% yoy to S$29.6m, translating to a DPU of 3.08 Scts. 9M result forms 70% of our FY11 estimates.

Strong portfolio performance but fell short of expectations. Portfolio performance remained solid with average occupancy rate (AOR) at 89.5%, while average daily rates (ADR) and Revpar continued to rise to S$236 (+8.7% y-o-y) and S$211 (+6.2% y-o-y) respectively but fell short of our
expectations. We had assumed RevPAR in 3Q11 to match the previous peak of S $222/night in 2Q08.

The improvement in RevPAR was portfolio-wide except for Orchard Hotel which saw a 2.3% contraction due to 2,268 room nights being taken out of its inventory due to refurbishment. Meanwhile, Australia portfolio performance remained steady buoyed by limited supply of hotel
rooms. Our estimates are tweaked slightly to account for the lower YTD performance, resulting in a 2-4% drop in FY11-12F DPU estimates.