CDL H-Trust

CDL H-Trust: Announced strong set of 3Q11 results, which was in-line. Rev at $36.4m, +15.2% yoy, while distributable income at $29.6m, +9.9% yoy. Strong performance attributed to improved hospitality performance across the portfolio and contribution from Studio M Hotel (acquired in 2Q11), while RevPAR achieved by at SG hotels in 3Q11 was the second highest recorded in a qtr since the inception of CDLHT.

Going ahead grp remains confident of prospects and tip net hotel room supply in SG to increase by approximately 2,321 rooms in 2012 or 5.6% of the total inventory estimated at the end of 2011. On the demand side, the addition of new leisure attractions in the next 12 mths is expected to contribute positively SG hospitality sector. As part of ongoing efforts to enhance CDLHT’s property portfolio, the recent completion of the refurbishment of the 331-room Claymore Wing of Orchard Hotel, and the improvement works to be done to the remaining 88 rooms at Novotel Clarke Quay would strengthen its competitive positioning.

Result brings YTD rev at $103.3m, +16.1% yoy, while annualized distributable income for 9M11 works out to 10.84c, or an annualized yield of 7%. Balance sheet remains strong with a gearing of 26.5%, giving grp headroom for further debt acquisitions, while valuations remain fairly compelling at 1x P/B vs historical average of 1.22x, given the higher premium investors subscribe to hospitality REITs, which together with retail and healthcare are considered more defensive.