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Sunday, August 23, 2020

CDL Hospitality Trusts Analysis @ 23 August 2020

Basic Profile & Key Statistics

CDL Hospitality Trusts (CDLHT) is a stapled group comprises of CDL Hospitality Real Estate Investment Trust ("H-REIT") and CDL Hospitality Business Trust ("HBT"). CDLHT invests in mainly hotels and one retail mall. 


Lease Profile

REVPAU of S$ 80.20 is manually calculated from 1H result, weighted by GRI, and excludes Australia hotels as CDLHT receives fixed rent. WALE is long at 5.15 years where the highest lease expiry of 40.7% expired in the year 2026 which is still some number of years away. CDLHT received all of its properties from SGD and major currencies which are NZ$, US$, ¥, € and £. Weighted average land lease expiry is long at 76.7 years.


Debt Profile 

Gearing ratio is healthy at 37.1%. Cost of debt is low at 1.9% despite high unsecured debt % at 90.2%. Fixed-rate debt % is low at 61.6% which is favorable in the current environment. Interest cover ratio is low at 3.4 times. WADE is short at 2.4 years where the highest debt maturity of 31.2% falls in the year 2021.


Diversification Profile

CDLHT is diversified in terms of geographical and property where its top geographical and top property contribute 48.4% and 11.4% respectively. However, its top tenant and top 10 tenants contribution are high at 17.7% and 94%.


Key Financial Metrics

Property yield is low at 4.1%. Management fee is slightly high in which unitholders receive S$ 6.33 distribution for every dollar paid. Distribution on capital is slightly low at 3.1%. Distribution margin is moderate at 46.4%. 7% of the past 4 quarters distribution is from s partial distribution from asset disposal. 


Related Parties Shareholding

As compared to SREITs median, sponsor and manager holding a higher stake while directors of REIT manager holding a lesser stake.


Trend

DPU is fluctuating, which is normal for hospitality trust, where generally 4Q is traveling peak season while 1Q is non-peak. If we look at pre-COVID, DPU is on a downtrend. NAV per unit and distribution margin are on a slight downtrend.


Relative Valuation

i) Average Dividend Yield  - As per DPU, the quarter average dividend yield is fluctuating as well for the same reason. Average yield at 6.38%, apply the past 4 quarters DPU of 6.37cents will get S$ 1.00.

ii) Average Price/NAV - Average value is at 0.96, apply the latest NAV of S$ 1.479 will get S$ 1.42.


Author's Opinion

FavorableLess Favorable
WALEInterest Cover Ratio
Weighted Average Land Lease ExpiryWADE
Cost of DebtTop Tenant & Top 10 Tenants Weightage
Unsecured DebtProperty Yield
Top Geographical WeightageDPU Downtrend
Top Property Weightage

COVID has greatly impacted the performance of all hospitality trust. However, with multiple vaccines are under trial phase and more countries selectively open borders, the worst is likely over. CDLHT on and off will perform capital recycling in which CDLHT has just completed its divestment of Novotel Singapore Clarke Quay and the acquisition of W Singapore - Sentosa Cove in July. With asset disposal, management could choose to use the fund to top-up distribution (one type of capital distribution), albeit there is no such top-up in 1H 2020. CDLHT also taking this time to perform some AEI works.


The above analysis information is extracted from SREITs Dashboard, you are welcome to use the information there for your analysis. You could also refer SREITs Data for an overview of Singapore REITs. If you like my sharing, please join the Facebook group - REIT Investing Community where you could read, share, and discuss REITs related topics. Please also invite your like-minded friends to the group. 


*Disclaimer: Materials in this blog are based on my research and opinion which I don't guarantee the accuracy, completeness, and reliability. It should not be taken as financial advice or statement of fact. I shall not be held liable for errors, omissions as well as loss or damage as a result of the use of the material in this blog. Under no circumstances does the information presented on this blog represent a buy, sell, or hold recommendation on any security, please always do your own due diligence before any decision is made.

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