CDL-HT

CDL-HT: Setting its foot in Japanese hospitality ahead of 2020 Tokyo Olympics, CDL-HT is acquiring the 138-room Hotel MyStays Asakusabashi in Central Tokyo and (ii) the 116-room Hotel MyStays Kamata near Haneda airport, together with their master leases, for ¥5.8b (~S$63.8m) or ¥22.8m/key (~$256k/key). The purchase price is ~4.3% below average of two independent valuations. Both hotels are 5-year-old business economy hotels on freehold land operated by MyStays Hotel Management, with RevPAR ¥6,847 (~$75.30) for 9M2014. Though small, the yields are compelling, with expected NPI yield of 5.7% and DPS accretion of 1.2%. Total acquisition cost of ¥6.0b (~S$65.9m) will be initially fully funded by Yen-denominated debt (cost of debt ~1.5%), later to be refinanced by a combination of bond issuance to qualified institutional investor(s) and other means. As such, CDLHT’s gearing will increase from 30.2% to 32.2%, still comfortably within the 45% leverage limit guidance issued by MAS. Upon completion of acquisition in mid-December 2014, CDL-HT’s portfolio will consist of 16 hotels and 1 retail mall across Singapore (74.8%), Australia (10.1%), Maldives (7.8%), New Zealand (4.4%) and Japan (2.9%). CDL-HT has 7 Buys, 9 Holds, 1 Sell with consensus TP $1.87