CDL Hospitality Trust

CDL Hospitality Trust: Announced AEI plans for its Orchard Hotel Shopping Arcade (OHSA), with an approximate cost of $25m, including the loss of rental income during the period. AEI works are scheduled to commence in late 2013, and expected to complete in 12 months. In the group’s latest results for 1Q13, net property income contributed by the Orchard Hotel Shopping Arcade was S$1.1m. Average occupancy rate was 92.1% with an average monthly rental rate of about $7.56 psf. The revamped mall will be re-positioned as a family-centric mall with enhanced retail offerings, catering to a growing captive residential population within the area and vibrant retail activity along the Orchard Road shopping strip. Upon completion of the AEI, the net lettable area will increase to approx. 10,000 sf, with incremental rental income to be more than $2.0m per year, translating to a ROI of 8%. At last closing price of $1.925, CDL H Trust trades at 1.2x P/B, and historical dividend yield of 5.9%.