Government support measures will boost CDLHT's NPI

The trust may also benefit from a faster write-down to gain more cash.

The 30% reduction in property tax is estimated to have a positive 2% impact on CDL Hospitality Trust’s (CDLHT) FY20 net property income (NPI) and distribution per share (DPS), according to a note by OCBC Investment Research (OIR).

This is expected to cushion the slowdown in its operations. OIR added that they could take advantage of the lull period to upgrade the assets and benefit from a faster write-down to gain more cash.

During the Budget 2020, the government announced its $4b stabilisation and support package to help businesses cope with the near-term economic headwinds from the COVID-19 outbreak. For hospitality firms, support measures are in the form of a property tax rebate. A property tax rebate of 30% will be granted for the accommodation and function room components of licensed hotels and serviced apartments, as well as prescribed MICE venues.

In addition, a new temporary bridging loan programme will be introduced for a year to alleviate the short-term cash flow and operating costs pressures of tourism sector enterprises.