CDLH Trust

CDLH Trust: 2Q13 results reflect challenging Singapore and Australia environment. Net property income of $32.6m, -4.4% yoy, largely due to lower contribution from its Spore hotels, and translation loss from the Australian hotels due to a weaker AUD. This was mitigated by a $1.9m revenue boost from the Angsana Velavaru resort in the Maldives, which was acquired in Jan ’13. Distributable income fell 6.4% yoy to $29.4m; accordingly DPU dropped 6.8% to 2.72 cts. Operationally, the Singapore hotels recorded lower average occupancy of 87.7% (-1.6 ppt yoy) and revenue per available room (RevPAR) of $193 (-8.5%), due to softer corporate demand, especially for corporate meetings and conferences. Mgt remains cautious on outlook. Notes an additional 2,200 room slated to open in 2H13, on top of the 1,800 rooms opened in 1H13, thereby resulting in more challenging competitive landscape. Meanwhile, visitor arrivals are expected to grow at a slower pace than in 2012. In Australia, CDLH Trust’s hotels in Brisbane and Perth are expected to experience weaker performance as a result of the slowing Australian economy and mining sector. Mgt will continue to maximize the potential of its assets through asset enhancement initiatives and yield accretive M&A. As planned, Orchard Hotel Shopping Arcade will undergo a 12-mth AEI commencing late 2013, resulting in the closure of the mall. Gearing stands at 29.7%. CDLH Trust offers 6.4% annualized 2Q13 yield, which appears less attractive vs hospitality peers Ascott Residence Trust (7.2%) and OUE Hospitality (FY13e: 7.4%).