CDL Hospitality Trust

CDL Hospitality Trust: Nomura believes that current unit price presents an attractive opportunity for long term investors.

The house noted that the REIT’s unit price has fallen 20% since Mar ’15 as compared to an 11.2 % drop for the FSTREI index.

Weaker than expected RevPAR of hotels in Singapore and Maldives in 1H15 has taken its toll on unit price.

Despite a weak 1H15, the house believes current valuation is compelling because master leases of hotels in Singapore, Australia and New Zealand provide a minimum rental income of $63m/year, which translates into a minimum yield of 4% at current price for investors even if no room in the portfolio is occupied.

The house maintains a Buy rating with a lower target price of $1.81 (prior: $1.84), representing 32.6% upside potential for investors.