SINGAPORE (Oct 30): The managers of CDL Hospitality Trusts (CDLHT) has reported distribution per stapled security (DPS) of 2.09 cents for the 3Q19 ended September, some 4.1% lower than DPS of 2.18 cents recorded in 3Q18.
After deducting income retained for working capital, total distribution to stapled securityholders was $25.4 million, down 3.6% from the previous year.
Revenue for the quarter fell 1.8% to $49.1 million, from $50.0 million in 3Q18.
The decline comes despite full quarter contribution from CDLHT’s Italy hotel acquired in November last year, and higher contribution from Singapore hotels.
Overall revenue growth was offset by lower contribution from the rest of the group’s hotels, which posted a collective year-on-year decline of $2.9 million.
Consequently, net property income (NPI) for the quarter came in at $35.7 million, down 1.5% from $36.2 million in 3Q18.
As at end September, cash and cash equivalents stood at $107.2 million.
Notably, RevPAR of the Singapore hotels registered an increase of 4.9%, due primarily to average room rate growth of 4.3% with a high occupancy of 91.4%.
Singapore’s hospitality market was also noted to have improved due to contributing factors such as stronger leisure travel, the diversion of tourism flows to Singapore as a result of the unrest in Hong Kong, and additional business generated from this year’s Formula One Singapore Grand Prix.
In the Maldives, performance for Angsana Velavaru was affected by increased competition from supply growth and renovation works, leading to a RevPAR decline of 32.2%.
The managers also note that Raffles Maldives Meradhoo was also officially re-opened in September, and will go through a gestation period.
Although hotels in Australia continued to receive fixed rent, overall gross revenue contribution was affected by the weakened Australian dollar.
Collectively, the trust’s hotels in Japan posted a y-o-y RevPAR decline of 15.4%.
Aside from a surge in new supply, tourism demand was affected by the tension between South Korea and Japan, which resulted in the number of visitors from South Korea dramatically decreasing by 36.3%2 in 3Q19.
The managers also expects the implementation of the twice-delayed consumption tax hike from 8% to 10% from October to continue to impact Japanese consumer sentiment.
“Due to the cyclical nature of hospitality markets, some of our overseas properties are seeing more competitive trading conditions in the near term amidst a more subdued macro-economic environment and global uncertainties,” says Vincent Yeo, CEO of the manager.
“Nevertheless, we are encouraged by the recovery in performance of our Singapore Hotels, which form the core of our portfolio. Limited new hotel supply in the next few years and exciting tourism infrastructure plans by the Singapore government will continue to provide a favourable environment for medium to long-term growth,” he adds.
The managers add that they will continue to actively pursue suitable acquisitions to diversify and augment its income streams on the back of its strong balance sheet and ample debt headroom.
“We will also continue to evaluate suitable divestment opportunities as they arise to unlock underlying asset values and/or recycle capital for better returns,” Yeo says.
As at 2.42pm, units in CDLHT are trading flat at $1.64.
