CDL Hospitality Trusts Review @ 17 February 2022

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 by a big % but income available to for distribution before capital distribution only improve slightly. The management explain that is due to: 

i) Low base effect attributed to losses in NPI recorded in 2H 2020 (S$2.3 million impairment recognized in relation to rental receivables)

ii) The accounting rents recorded for the Germany and Italy Hotels (due to the straight-lining effect per SFRS(I) 16/FRS116) was higher than the actual rents received

Revenue per Available Unit

Besides Australia, REVPAR improved YoY for all countries.

Besides Australia, the REVPAU for 2H has improved as compared to 1H 2021.

Development

The maiden build-to-rent residential project has commenced and is targeted to complete by 2024.

Asset Enhancement Initiatives

AEIs for The Lowry Hotel and Studio M Hotel are ongoing and targeted to complete by early 2022 and May 2022 respectively. For Copthorne King’s Hotel, CDLHT has installed a Guest Solution Management System which enables the efficient management of power, lighting and airconditioning.

Related Parties Shareholding

• REIT sponsor's shareholding is high at 38.21%
• REIT manager's shareholding is high at 8.027%
• Directors of REIT manager's shareholding is low at 0.011%

Lease Profile

• WALE is long at 4.76 years
• Highest lease expiry within 5 years is moderate at 26% which falls in 2022
• Weighted average land lease expiry is slightly long at 79.85 years

Debt Profile

• Gearing ratio is moderate at 39.1%
• Cost of debt is low at 2%
• Fixed rate debt % is low at 61.3%
• Unsecured debt % is slightly high at 83.6% 
• WADM is short at 2.1 years
• Highest debt maturity within 5 years is high at 38.3% which falls in 2022
• Interest coverage ratio is low at 3.3 times

Diversification Profile

• Top geographical contribution is low at 43.4% 
• 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, England and New Zealand which contribute more than 70% of GRI

Key Financial Metrics

• Property yield is low at 3.2% 
• Management fees over distribution is high at 18.9% in which unitholders receive S$ 5.29 for every dollar paid 
• Distribution on capital is low at 1.9%
• Distribution margin is low at 25.4%
• 23.8% of the past 12 months 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 - Average for 1y, 3y and 5y
• Dividend Yield - Below -1SD for 1y, 3y and 5y

Author's Opinion

Favorable	Less Favorable
High REIT Sponsor's Shareholding	Low Directors of REIT Manager's Shareholding
High REIT Manager's Shareholding	Low Fixed Rate Debt %
Long WALE	Short WADM
Low Cost of Debt	Concentrated Debt Maturity
Low Top Geographical Contribution	Low Interest Coverage Ratio
Low Top Property & Top 5 Properties Contributions	High Top Tenant & Top 10 Tenants Contributions
	Low Property Yield
	Non-Competitive Management Fees
	Low Distribution on Capital
	Low Distribution Margin
	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

Generally, the performance and REVPAU have improved in 4Q. However, due to Omicron, some countries have implemented temporary restrictions starting December 2021. Do note that CDLT has distributed S$ 12.5 mils of divestment gain in FY 21, which amounts to 23.8% of FY21 distribution.

You could also refer below for more information:

SREITs Dashboard - Detailed information on individual Singapore REIT

SREITs Data - Overview and Detail of Singapore REIT

REIT Analysis - List of previous REIT analysis posts

And you could join the following to support my work:

Singapore REITs Post Telegram Channel - Join to receive posts for Singapore REITs

REIT-TIREMENT Patreon - Support my work and get exclusive contents

REIT-TIREMENT Facebook Page - Support by liking my Facebook Page

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 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.