Sunday, July 29, 2012

CDL Hospitality Trusts' Q2 DPU falls 1.4%; NPI down 4.2%

Business Times: Sat, Jul 28

CDL Hospitality Trusts (CDLHT) recorded a 1.4 per cent year-on-year dip in distribution per stapled security for Q2 2012 and a 4.2 per cent decrease in net property income (NPI) to $34.1 million, mainly due to a one-off property tax refund recognised a year ago.

Q2 DPU was 2.92 cents, down from 2.96 cents a year earlier.

Ignoring the previous property tax refund of $3.3 million, Q2 DPU of 2.92 cents was 10.2 per cent higher than the 2.65 cents a year ago, while NPI was 5.9 per cent up at $34.1 million.

"This growth is mainly attributable to Orchard Hotel Shopping Arcade and the newly acquired Studio M Hotel," said DMG Research in a report. "Stripping these two items, NPI for the remaining four hotels grew at a lower rate of some 4 per cent (after stripping the one-off property tax refund)."

This is largely attributed to lower corporate spending amid concerns over the European debt crisis.

CDLHT is a stapled group comprising CDL Hospitality Real Estate Investment Trust (H-Reit), a real estate investment trust, and CDL Hospitality Business Trust (HBT), a business trust.

"Since 2009, corporates have been very tight in terms of negotiating corporate rate increases," said Vincent Yeo, CEO of M&C Reit Management, the manager of H-Reit.

"We are an industry where we deal with many companies and they are not immune to the euro crisis. . . But the fact that our occupancy still sits a shade under 90 per cent would suggest that there is still a lot of demand out there," he added.

The trust should continue to register stable numbers on the back of continual growth in Singapore's tourism, with demand continuing to outstrip supply of new hotels, and strong RevPAR in 2012, said DMG.

CDLHT's Q2 gross revenue rose 6 per cent to $36.6 million, thanks to a 5.9 per cent growth in revenue per available room (RevPAR) for the Singapore hotels (excluding Studio M Hotel) and a full quarter's revenue contribution from Studio M Hotel as compared to 59 days the previous year.

The stapled group, which makes semi-annual payouts, will distribute 5.70 cents per stapled security for the half year. Excluding the one-off tax refund, this is 13.3 per cent higher than the same year-ago period of 5.03 cents.

The counter ended two cents higher at $2.08 yesterday.

The group's Singapore hotels achieved strong performance for Q2, fuelled by 12.3 per cent growth in visitor arrivals in the first five months of 2012. RevPAR of its hotels, excluding Studio M, rose 5.9 per cent year on year to $217. Including Studio M, RevPAR increased 5.6 per cent to $211.

CDLHT's gearing as at end-June was maintained at 25.2 per cent.

Looking ahead, Mr Yeo said he was still on the lookout for investment opportunities. "There have been a lot of deals on the market . . . Australia in particular. . . (In terms of acquisitions) we are chasing the growth of the mainland Chinese traveller."

DMG issued a "buy" call on CDLHT with a target price of $2.20.

Martin Koh | 86666 944 | R020968Z
Sherry Tang | 9844 4400 | R020241C
Senior Sales Director
DTZ Debenham Tie Leung (SEA) Pte Ltd (L3006301G)

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