CDL Hospitality Trusts Review @ 14 November 2021

Basic Profile & Key Statistics

CDL Hospitality Trusts (CDLHT) is a stapled group that invests mainly in hospitality properties and currently owns 18 properties across 8 countries.

Performance Highlight

Gross revenue and NPI have improved YoY which shows signs of recovery from easing of restriction ands border re-opening. The improved NPI mainly comes from New Zealand, UK, Germany, Italy Hotels and Angsana Velavaru in the Maldives.

Besides Australia, REVPAR has improved YoY across all countries.    

Besides Australia and Maldives, REVPAR for 3Q 2021 has improved as compared to the previous quarter. 

CDLHT invested in a build-to-rent residential apartment in Manchester, U.K. Demolition of the existing buildings on site is substantively completed. Construction would start in early 2022 and is targeted to complete in 2024.

The AEI for The Lowry Hotel is completed except for bathrooms for 4 levels, which is expected to be completed in early 2022.

Related Parties Shareholding

• REIT sponsor's shareholding is high at 38.236%
• REIT manager's shareholding is high at 7.927%
• Directors of REIT manager's shareholding is slightly low at 0.011%

Lease Profile

• WALE is long at 5.01 years
• Highest lease expiry within 5 years is moderate at 26% which falls in 2022
• Weighted average land lease expiry is long at 80.1 years

Debt Profile

• Gearing ratio is slightly high at 40.1%
• Cost of debt is low at 1.9%
• Fixed rate debt % is low at 61.6%
• Unsecured debt % is high at 90% 
• WADM is short at 2 years
• Highest debt maturity within 5 years is high at 41.3% which falls in 2022
• Interest coverage ratio is low at 2.9 times

Diversification Profile

• Top geographical contribution is low at 46.8% 
• Top property contribution is low at 14% 
• Top 5 properties contribution is low at 50.6% 
• Top tenant contribution is high at 20.7% 
• Top 10 tenants contribution is high at 93.4%
• Top 3 countries contribution is from Singapore, New Zealand and Maldive which contribute more than 70% of GRI

Key Financial Metrics

• Property yield is low at 3% 
• Management fees over distribution is high at 16.7% in which unitholders receive S$ 5.99 for every dollar paid 
• Distribution on capital is low at 2.1%
• Distribution margin is low at 28.1%
• 35.1% of latest 4 quarters DPU is from distribution from asset disposal

Trends

• Downtrend - DPU, NAV per Unit, Interest Coverage Ratio, Property Yield, Distribution on Capital, Distribution Margin

Relative Valuation

• P/NAV - Above average for 1y; Average for 3y and 5y
• Dividend Yield - Below -1SD for 3y and 5y

Author's Opinion

Favorable	Less Favorable
High REIT Sponsor's Shareholding	Low Fixed Rate Debt %
High REIT Manager's Shareholding	Short WADM
Long WALE	Concentrated Debt Maturity
Long Weighted Average Land Lease Expiry	Low Interest Coverage Ratio
Low Cost of Debt	High Top Tenant & Top 10 Tenants Contributions
High Unsecured Debt %	Low Property Yield
Low Top Geographical Contribution	Non-Competitive Management Fees
Low Top Property & Top 5 Properties Contributions	Low Distribution on Capital
	High Distribution from Asset Disposal %
	DPU Downtrend
	NAV per Unit Downtrend
	Interest Coverage Ratio Downtrend
	Property Yield Downtrend
	Distribution on Capital Downtrend
	Distribution Margin Downtrend

The REVPAR for overseas properties (besides Australia) has improved, notable improvements come from Germany and Italy due to intra-Europe travel as well as the easing of restrictions in the U.K. Besides these, there are other positive updates as well namely: VTLs in Singapore effective 8 Sep; lifted of state of emergency in Tokyo effective 1 Oct; lifted of suspension of visa for South Asian travelers in Maldives effective mid-July. Couple with more easing of restrictions and more border re-opening among multiple countries, CDLHT performance is expected to be improved moving forward.

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*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 and 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.