CDLHT 1HFY2024 DPS flat at 2.51 cents despite NPI growing 5.9% y-o-y

Jovi Ho
6-min read

CDLHT recorded higher NPI in six markets but NPI in the UK was flat and New Zealand was down 13.9% y-o-y.

CDL Hospitality Trusts (CDLHT) has posted distribution to stapled securityholders (DPS) after capital retention of 2.51 cents for 1HFY2024 ended June 30, unchanged y-o-y.

This is despite net property income (NPI) growing 5.9% y-o-y to $66.5 million in tandem with the 6.8% y-o-y increase in gross revenue to $127.3 million over the same period.

Total distribution to stapled securityholders after retention grew 0.7% y-o-y to $31.4 million.

According to a July 30 announcement, CDLHT recorded higher NPI in almost all its eight portfolio markets, except in the UK, which was flat; and New Zealand, which was down 13.9% y-o-y.

Although the pent-up demand post-pandemic tapered off in most markets, revenue per available room (RevPAR) growth for 1HFY2024 was recorded across nearly all portfolio markets. RevPAR in CDLHT’s one New Zealand property fell 1.2% y-o-y.

As at June 30, CDLHT’s gearing grew to 37.7% with a debt headroom of $783.3 million, up from 36.7% as at Dec 31, 20023. CDLHT has cash reserves of $64.9 million and $648.5 million of credit facilities as at June 30.

Interest costs for 1HFY2024 increased y-o-y, mainly due to interest expenses from additional amounts drawn and higher funding costs on CDLHT’s floating rate loans, which make up 48% of its blended total debt portfolio.

36.8% of its loans are denominated in Singapore dollars, while 28.8% of loans are denominated in British pounds.

In 1HFY2024, CDLHT increased one of its committed sustainability-linked revolving credit facilities by an additional $50.0 million, bringing the total amount of sustainability-linked facilities to $355.9 million.

Vincent Yeo, chief executive officer of CDLHT’s managers, says the Singapore core market “got off to a strong start” in the first quarter, “bolstered by a packed concert and event calendar and the commencement of visa-free travel between Singapore and China”.

“The second quarter saw more muted activity in the hospitality sector, as demand began to normalise from pent-up travel demand. As there is still a gap of visitor arrivals to pre-pandemic levels, there is still a runway for growth ahead,” he adds.

Portfolio update

Singapore recorded 8.2 million visitor arrivals in 1HFY2024, close to two million arrivals improvement y-o-y.

Visitor arrivals and visitor days were 88.4% and 91.2% of 2019 pre-pandemic levels respectively.

CDLHT’s six Singapore hotels saw muted performance in 2QFY2024 as there were several weekday public holidays, weaker materialisation from keynote events, an increase in hotel supply and the oil spill near Sentosa (affecting W Hotel), which caused RevPAR to post a slight 0.9% drop compared to a year ago.

1HFY2024 RevPAR for the Singapore Hotels increased by 7.7% y-o-y, driven by occupancy growth. NPI for the Singapore portfolio (including its sole retail mall asset, Claymore Connect) for 1HFY2024 grew in tandem by 6.8%, or $2.6 million, y-o-y.

In New Zealand, Grand Millennium Auckland recorded a marginal RevPAR decline of 1.2% y-o-y in 1HFY2024. NPI declined 13.9% or $0.5 million y-o-y, due to increased operating expenses, incurred in particular for the relaunch of the refreshed food and beverage establishments.

With the ballroom renovation completed and re-opened for bookings, the revamped venue will strengthen the hotel’s value proposition, says CDLHT. “Onward to the next stage of transformation, the hotel has commenced room refurbishment in phases starting from April.”

In Australia, CDLHT’s two Perth hotels posted a RevPAR growth of 13.9% y-o-y in 1HFY2024, led by occupancy growth from a stronger event line-up. Room renovation works commenced in mid-May at Ibis Perth, rendering 24.1% of inventory out of order during the renovation period.

NPI registered an increase of 24.9% or $0.5 million y-o-y in 1HFY2024 mainly from a significantly improved performance from Mercure Perth.

CDLHT’s two Japan hotels continued to enjoy robust inbound demand, with 17.7 million visitors in 1HFY2024, up 65.9% y-o-y and up 6.9% against 2019. RevPAR grew 25.4% y-o-y, largely contributed by a strong increase in average daily rate (ADR).

The Japan hotels recorded their highest RevPAR for the first half of any year since the acquisition in 2014, at 10,410 yen ($90.99). Despite the depreciation of the Japanese yen, NPI improved 24.1% or $0.4 million y-o-y in 1HFY2024.

The two Maldives resorts, Angsana Velavaru and Raffles Maldives Meradhoo, reported a 7.4% and 4.6% y-o-y increase in RevPAR and NPI respectively for 1HFY2024.

The Maldives achieved a 9.2% y-o-y growth in visitor arrivals in 1HFY2024, surpassing one million visitor arrivals as of June, with China re-emerging as the leading source in arrivals. CDLHT says it is “well-positioned” to meet its full-year target of two million inbound visitors this year.

Further, the new terminal being built at Velana International Airport is poised to enhance the nation’s tourism capacity.

In the UK, Hilton Cambridge City Centre and The Lowry Hotel registered a combined RevPAR growth of 4.7% y-o-y for 1HFY2024. Hilton Cambridge City Centre grew RevPAR by 9.9% y-o-y given an improved leisure segment performance and recovery of corporate demand. The Lowry Hotel posted a marginal RevPAR decline of 0.8% y-o-y amidst a weaker football and concert calendar.

The higher gross revenue was offset by increased operating costs, primarily from higher labour and utilities expenses. NPI contribution from voco Manchester – City Centre increased by $0.2 million against 1HFY2023. Under the annual inflation-adjusted rent structure, the fixed rent increased by 4.5% to GBP2.65 million ($4.58 million) per annum for the period of May 7 this year to May 6, 2025.

Overall NPI for the UK hotels (in Singapore dollar terms) remained largely similar to the same period a year ago.

CDLHT’s UK build-to-rent (BTR) property, The Castings, achieved practical completion in early-June and received its first residents in mid-July.

Per the announcement dated Aug 31, 2021, an acquisition fee of $1.3 million payable to the Trustee-Manager has been recognised following the completion of the property.

In Germany, CDLHT’s sole property, Pullman Hotel Munich, reported an improvement in RevPAR of 9.0% y-o-y for 1HFY2024.

This was supported by enhanced corporate demand and the UEFA European Football Championship, which had matches at the Allianz Arena in Munich.

In Italy, Hotel Cerretani Firenze recorded a 10.5% y-o-y RevPAR growth for 1HFY2024. Notably, the hotel also recorded its highest first-half RevPAR of EUR232 ($337.08). The hotel posted an NPI increase of 3.9% y-o-y in 1HFY2024.

CDLHT says demand for the UK and Germany Hotels will be supported by a “healthy event calendar and stable travel demand”, while the demand for the Italy hotel is expected to normalise following phenomenal growth in FY2023 and 1HFY2024.

CDLHT is a stapled group comprising CDL Hospitality Real Estate Investment Trust, a REIT; and CDL Hospitality Business Trust, a business trust.

Units in CDLHT closed 0.5 cents higher, or 0.51% up, at 97.5 cents on July 29.

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