CDLHT posts 11.9% fall in H2 DPS to S$0.0281 – The Business Times

THE managers of CDL Hospitality Trusts (CDLHT) on Monday (Jan 27) posted a distribution per stapled security (DPS) of S$0.0281 for the second half ended December, down 11.9 per cent from S$0.0319 in the previous corresponding period.

The distribution for H2 will be paid on Feb 28, after books closure on Feb 6.

Distributable income fell 10.9 per cent to S$35.4 million for H2, from S$39.8 million in the same period the year before.

The lower distribution and DPS came as net property income contribution from a residential property in Manchester was insufficient to cover interest costs during the gestation period, said CDLHT’s managers.

They also attributed the decline to higher interest costs and lower net property income (NPI) across its portfolio, as well as the absence of a one-off capital distribution of S$900,000 arising from the liquidation proceeds of an Australian subsidiary.

Interest costs were higher due to an increase in funding costs on the group’s floating rate loans, refinancing of fixed rate loans and amounts drawn to finance a UK project, as well as asset upgrading works. 

Excluding the one-off liquidation proceeds, total distribution and DPS would have declined by 8.9 per cent and 9.9 per cent, respectively, year on year.

The half-year period’s total distribution and DPS figures come after factoring in retained working capital, as well as capital distribution of S$4.8 million. Without the retention, CDLHT’s DPS would have been 11 per cent lower at S$0.0308 compared with S$0.0346 for H2 FY2023. 

Revenue decreased by 3.9 per cent to S$132.9 million, from S$138.3 million the year before. NPI fell 9 per cent on the year to S$68.7 million for the half-year period, from S$75.5 million.

The decline in revenue and NPI comes as demand in some markets moderated after a period of “extraordinary post-pandemic growth”, said the managers.

Revenue per available room (RevPar) was recorded in most of CDLHT’s portfolio, except Singapore and New Zealand.

The stapled group’s portfolio, which is worth more than S$3 billion as at Dec 31, consists of property in eight countries, including Singapore, Japan, the UK, Australia and the Maldives.

In the group’s core market of Singapore, RevPar dropped 10.1 per cent to S$195 from S$217 in H2 FY2023, while the average occupancy rate fell four percentage points to 79.1 per cent.

Its W Hotel in the Republic was affected by the aftermath of June’s oil spill and weaker demand, which came partially from a “non-repeating buyout group that outgrew the size of the hotel”, said the managers.

They also noted that performance in its Singapore portfolio slowed as city hotels faced stiffer competition amid new hotel supply.

CDLHT’s managers expect the first quarter of 2025 to be “more muted” due to the absence of high-profile concerts, the Singapore Airshow and the shift of Ramadan.

But they are positive that the Republic’s tourist attractions, such as Minion Land at Universal Studios Singapore that is set to open on Feb 14, will continue to drive demand.

Inclusive of retained working capital and capital distribution for the full year, CDLHT’s FY2024 DPS stood at S$0.0532, down 6.7 per cent from S$0.057 in the year-ago period.

Total distribution for the period was 5.8 per cent lower at S$66.9 million from S$71 million previously.

Vincent Yeo, chief executive of CDLHT’s managers, said: “While the market is adjusting to new demand normalisation, the competitive landscape in Singapore has also heightened with new hotels emerging.”

But he is “optimistic about the prospects for the Singapore market in the medium term”.

“Our new acquisitions will augment our income streams in 2025, while the increased exposure in the living asset class will also enhance the stability of the portfolio income,” he added.

He also expects the potential easing of interest rates, particularly in Europe, to benefit the group.

CDLHT’s aggregate leverage as at Dec 31 stood at 40.7 per cent, with debt headroom of S$610 million at the 50 per cent gearing limit. Its weighted average cost of debt was 4 per cent, and its interest coverage ratio was 2.3 times as at end-December last year.

The group has S$231.2 million of cash and undrawn revolving credit facilities, as well as S$294.8 million in uncommitted bridge loan facilities.

Stapled securities of CDLHT ended Friday flat at S$0.865.