CDL Hospitality Trust Q1 net property income up 5.4% to $37.8m

It cited inorganic contributions from acquisitions and an improved Singapore hotel performance.

CDL Hospitality Trust’s net property income (NPI) in Q1 jumped 5.4% YoY to $37.8m whilst revenue grew 11.6% YoY due to inorganic contributions from recent acquisitions. Distribution per unit (DPU) climbed by 7.4% YoY to 2.2 cents excluding the rights issue.

RHB Research noted that the NPI for its Singapore hotels improved by 5.3% YoY on the back of higher RevPAR and food & beverage (F&B) segment contributions. “There was a capital distribution of $0.7m from divestment gains at its Australian hotels, which offset the loss of income. The payout ratio remained unchanged at 90%,” analyst Vijay Natarajan added.

According to the REIT, despite a huge influx of hotel supply in Q4, demand remained fairly strong in Q1, which helped it in increasing hotel rates. “CDLHT added that the F&B segment’s performance also rose strongly in tandem with the increase in demand. Looking ahead, management remains optimistic that the Singapore hotel sector has turned the corner and expects rates to move up once occupancy improves by a few ppts,” he added.

CDLHT will be undertaking asset enhancements initiatives (AEIs) at Orchard Hotel and Grand Copthorne Waterfront Hotel (GCW) in Singapore in the second half of 2018. “This is to position its assets better ahead of what management believes would be a multi-year recovery in the hospitality sector. Management noted that asset enhancement works would be done in phases, so that there is minimal disruption, and to minimise loss of income,” Natarajan said.

Meanwhile, the Maldives hotel segment continues to face competition due to higher supply and the adverse political situation in its capital Male. “Ongoing works to transform the Dhevanafushi Maldives Luxury Resort to the Raffles Hotel & Resort brand have also had a negative impact,” the analyst explained.

However, he noted that the downside is mitigated by the minimum rent structure currently put in place.

CDLHT’s New Zealand hotel performance is also facing some challenges as RevPAR rose by a modest 4.3% due to a high base effect and higher room supply. “NPI contribution was also impacted by a weaker NZD. Looking ahead, the NZ hotel’s performance is expected to see slight improvement over last year,” Natarajan added.

The performances of its operations at Australia, Japan, the UK, and Germany are expected to remain steady in 2018, he concluded.