SINGAPORE (Apr 28): The manager of CDL Hospitality Trusts (CDL HT) has announced a total distribution per stapled security (DPS) of 2.17 cents for the first quarter ended Mar 2018, up 7.4% from 2.02 cents a year ago on improved portfolio performance.
Revenue grew 11.6% to $51.8 million from $46.4 million previously, with net property income (NPI) registering a 5.4% rise over the quarter to $37.8 million from $35.9 million a year ago.
This was largely due to inorganic contribution from The Lowry Hotel in Manchester, UK, and Pullman Hotel Munich in Germany, which helped to boost the portfolio’s performance.
In particular, the manager highlights that the Singapore portfolio recorded an improved performance despite a competitive landscape this quarter.
RevPAR for the Singapore Hotels improved 0.8% on-year to $161 in 1Q18 in spite of the supply surge during end-2017. The RevPAR growth was partially supported by the biennial Singapore Airshow which took place in February 2018.
Overall growth in NPI was however partially offset by softer trading performance from the Japan Hotels, Maldives Resorts and Hilton Cambridge City Centre. There was also lower contribution from the Australian portfolio due to the divestment of Mercure Brisbane and Ibis Brisbane in Jan 2018.
As at end-Mar 2018, the trust had a gearing of 33.2% and regulatory debt headroom of $608 million.
CDL HT’s manager has also committed to using part of its gains from the divestment of two Brisbane hotels to make distributions in FY18, to mitigate the net effect of the divestment on the trust’s distributable income.
While supply growth tapers off from this year, the manager believes Singapore room rates are likely to remain competitive as new hotels which opened in 2017 continue to build their base.
It adds that this year will feature a stronger event calendar compared to 2017, and expects the Singapore hospitality market to be driven by a favourable global economic outlook and increased air connectivity.
CDL HT’s manager remains positive on its New Zealand and Japan portfolios, and says it will conduct asset enhancement initiatives (AEI) for its Maldives Resorts to improve its performance amid rising competition.
“Our acquisitions in the past year have reinforced our diversification strategy and we have benefitted from a broader earnings base as different markets experience varying cycles. In addition, it is pleasing to note that our core market, Singapore, is showing improvement despite the strong supply growth in 2017. We will continue to focus on the long-term potential of our assets by seeking asset enhancement opportunities to strengthen their competitiveness,” says Vincent Yeo, CEO of the manager.
“With a strong balance sheet and ample debt headroom, we are well positioned to actively pursue suitable acquisitions in markets with growth potential,” he adds.
Units in CDL HT closed flat at $1.75 on Friday.
