Here’s why CDL Hospitality Trusts is not out for the count just yet

It’s the cheapest REIT to ride the eventual upturn.

Analysts are upbeat on what lies ahead for CDL Hospitality Trust’s (CDREIT), as the company still offers an alluring long-term value while paying investors who wait for the eventual upturn.

According to a report by DBS, CDREIT is the cheapest REIT to ride the market’s recovery. The group’s implied price per key for its Singapore protfolio stands at around $500,000, which is below its replacement cost of about $700,000, recent market transactions of above $650k, as well as that of other listed Singapore hospitality REITs of between $650,000 and $1m.

“Given the quality of the portfolio and CREIT’s long-term track record, we believe this discount is unwarranted. Thus, CDREIT is the cheapest REIT providing exposure to the eventual upturn in the Singapore hospitality market which may occur from 2017 as supply pressures ease,” asserts DBS.

Moreover, additional upside to CDREIT’s profits is expected as the REIT optimises its portfolio. The initial 10-year lease at Rendezvous Grand Hotel Auckland will end in step with FY16, presenting a chance to appoint another operator or renegotiate better lease terms.

On top of this, asset enhancement initiatives are being undertaken at Grand Copthorne Waterfront Hotel and M Hotel in Singapore.