CDL Hospitality Trusts Analysis @ 8 November 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 mainly in hotels and currently owns 18 properties across 8 countries.

Quarter Performance Review

Total gross revenue and NPI decreased YoY by 38.7% and 57.4% respectively. However, both New Zealand and Australia gross revenue and NPI increased YoY. 

REVPAR decreased YoY varies between different countries, the worst drop is Maldives at 95% while the least drop is Singapore at 58.2%. New Zealand has an increase of 0.4% YoY, this mainly contributed by Grand Millennium Auckland which secured government’s managed isolation business.

Besides Maldives, all countries have REVPAU improvement as compared to the previous quarter.

Lease Profile

YTD REVPAU of S$ 78.3 is calulcated manually from business update, weighted by gross revenue. All of CDLHT income are from SGD and major currencies. WALE is long at 4.9 years with highest lease expiry within 5 years of 12.7% falls in 2022. Weighted average land lease expiry is slightly long at 76.45 years.

Debt Profile

Gearing ratio is healthy at 36.7%. Cost of debt is low at 1.8% with 90.2% unsecured debt (based on previous quarter). Fixed rate debt % is low at 61.5%. Interest cover ratio is low at 2.9 times. WADE is short t 2.5 years where the highest debt maturity of 31.3% falls in 2021.

Diversification Profile

Top geographical contribution and top property contribution are low at 49.2% and 11.4% respectively. Top tenant and top 10 tenants are high at 17.7% and 94% respectively. Top 3 countries contributions are from Singapore, England and New Zealand. 

Key Financial Metrics

Property yield and distribution on capital are low at 2.9% for both. Management fee is not competitive in which unitholders receive S$ 5.88 for every dollar paid to the manager. Distribution margin is slightly low at 44.6%. 9% of the past 4 quarters DPU is from distribution from asset disposal. In 1H 2020, CDLHT did not provide any distribution from asset disposal.

Trends

CDLHT did a rights issue in 3Q 2017, so let's only compare the period after this.

Flat - NAV per Unit

Downtrend - DPU, Interest Cover Ratio, Property Yield, Distribution Margin

Relative Valuation

i) Average Dividend Yield  - Average yield at 6.37%,  apply the annualized past 4 quarters DPU of 5.70 cents will get S$ 0.895. 

ii) Average Price/NAV - Average value at 0.96, apply the latest NAV of S$ 1.474 will get S$ 1.415.

Author's Opinion

Favorable	Less Favorable
Long WALE	Low Interest Cover Ratio
Well Spread Lease Expiry	Short WADE
Low Cost of Debt	High Top Tenant & Top 10 Tenants Contributions
High Unsecured Debt	Low Property Yield
Low Top Geographical Contribution	Low Distribution on Capital
Low Top Property Contribution	DPU Downtrend
	Interest Cover Ratio Downtrend
	Property Yield Downtrend
	Distribution Margin Downtrend

In July, CDLHT had divested Novotel Singapore Clarke Quay and acquired W Singapore - Sentosa Cove. Subsequently, CDLHT has also divested  Novotel Brisbane on 30 October. AEI for Raffles Maldives Meradhoo is expected to be completed by November, albeit tourism demand is still very low for the Maldives. On a QoQ basis, CDLHT performance has seen improvement. However, with some countries impose new lockdowns, it would be a very challenging task for CDLHT to further improve its performance, especially for its England, Germany and Italy properties.

For more information, you could refer to:

SREITs Dashboard - Detailed information on individual Singapore REIT

SREITs Data - Overview of Singapore REIT

REIT Analysis - List of previous REIT analysis posts

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REIT Investing Community - Facebook Group where members share and discuss REIT topic

*Disclaimer: Materials in this blog are based on my research and opinion which I don't guarantee accuracy, completeness, and reliability. It should not be taken as financial advice or a 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.