CDL Hospitality Trusts

CDL Hospitality Trusts: 4Q13 results were in-line with estimates, as distributable income of $28.5m (+1.3%) and DPU of 2.92¢ (+0.7%) took FY13 DPU to 11.0¢ (-3.1%). Net property income (NPI) was up 2.5% to $36.5m, in tandem with a 2.8% rise in gross revenue of $39.4m, led by strong contributions from the Angsana Velavaru resort in Maldives from which there was a recognition of $5.0m (inclusive of a $3.0m 11 months variable rent) revenue contribution. The resort has performed remarkably since its acquisition in Jan’13, with revenue per available room (RevPar) up 21.1% y/y. Domestically, the Singapore portfolio recorded a decline in revenue, dragged by additional new supply of hotel rooms, exacerbated by an overall weaker corporate market as many companies globally exercised restraint in travel budgets. As a result, RevPAR for the REIT’s Singapore hotels fell by 6.0% to $187 during the quarter. Performance was also impacted by tenants progressively moving out of the Orchard Hotel Shopping Arcade (OHSA) during the quarter, as part of a major asset enhancement exercise, while the weakening Australian dollar (AUD) also led to lower fixed rent contributions from the group’s Australian operations. Going forward, CDLHT expects demand for the Singapore's hospitality industry to be supported by more large-scale corporate and sporting events slated to be held in 2014, while the slower pace of the Australian economy and weaker AUD may affect the performance of the Australia Hotels but its effect will be mitigated by the largely fixed rent structure. The acquisition of Jumeirah Dhevanafushi, which was completed on 31 Dec’13, making it CDLHT's second Maldives resort following that of the successful acquisition of Angsana Velavaru, is expected to contribute positively to the group’s performance. Overall, CDLHT’s Singapore portfolio occupancy stood at 87.0%, a slightly drop versus 88.9% in the corresponding period, while aggregate leverage was at a comfortable 29.7% with a debt maturity profile of 2.6 years. At current price, CDLHT trades at an annualized 7.3% yield and 0.97x P/B versus peer average of 6.9% current yield and 0.93x P/B. Latest broker ratings as follows: OCBC places its Buy rating and $1.84 TP under review