CDL Hospitality's Third Quarter DPUs Fell 4.1%



Key Highlights:

  • CDL Hospitality Trust (SGX: J85)'s 3Q19 DPU dropped 4.1%

  • The annualised yield and price to book ratio are 5.2% and 1.09 respectively


1. Dividends


Net property income fell 1.5% to $35.7m. The was mainly due to:

  • The poor performance of the oversea properties

  • The weaker foreign currency against SGD


The annualised yield is 5.2%. The DPUs of the REIT has been declining since 2012. However, in the last quarter, its Singapore portfolio enjoys 4.3% growth in the average room rate, supported by the increasing tourists and additional business generated by F1 Singapore Grand Pix.

Source: reitscompass's REITs Insider ratings



2. Portfolio


Portfolio occupancy remains high at 91.4%. The portfolio leverage is currently at the healthy side of 36.3%. The interest cost is 2.3%, with 64% of the loans are on fixed rates.


It is currently trading at a price to book ratio of 1.09.



3. Growth Catalyst


The REIT has a stable pipeline of asset enhancement initiatives. In Singapore, the Copthorne King's Hotel is currently under refurbishment and other assets are under review for future enhancement opportunities. In UK, The Lowry Hotel has completed its F&B outlets' renovations recently. While in the Maldives, the renovation works of Raffles Maldives Meradhoo and Angsana Velavaru are in time for the year-end peak travel season.


As the REIT is maintaining healthy leverage with low-interest cost, the REIT manager will continue to look for acquisitions to drive growth.


Summary


With the current slow down in global economic, we are bearish on the tourism industry. Hospitality REIT is not preferred in the current condition.



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