Public Announcement: This will be the last article covering CDL Hospitality Trusts (“CDLHT”) till further notice. The main reason is that CDLHT does not have strong income visibility, unlike REITs which usually sign longer leases with their tenants. CDLHT is also a trust and not subjected to similar regulation as REITs. A new update this week was that there appears to be instability at City Developments Limited (C09.SI), which have resulted in the trading halting of the ultimate parent’s shares for the weekend. While CDLHT has not been directly affected, there may be spillovers which may disrupt the stability of the trust.
On 27 January 2025, CDLHT announced their full year result for FY2024. There is a decrease in distribution noted for this financial year, which management has disclosed that the post-pandemic growth has normalized. This may put a limit on any potential upside that CDLHT can have.
Do note that as of 31 December 2024, 67.9% of their borrowings are on floating rate. This was an increase from the previous quarter, which indicates that management is anticipating and betting on further interest rate reductions by major banks. The result is that interest rate is now highly sensitive, which as disclosed by management, a change in 1% of interest rate will result in a change by 20% of its DPU. Investors will need to also consider their risk appetite, as noted the significant drop in interest coverage ratio this quarter.
Disclaimer: Not financial advice. All data and information provided on this site is for informational purposes only.
Website: Financial Statements And Related Announcement::Full Yearly Results
Website: Financial Statements And Related Announcement::Full Yearly Results
Financial Highlights
Distribution Per Unit (“DPU”)
| Metrics | Current | Previous |
|---|---|---|
| Distribution Per Unit | -6.7% | No Update |
| Rating | Unfavorable | Neutral |
DPU for the full financial year FY2024 saw a decrease by 6.7% to SGD0.0532 per share, from SGD0.0570 per share in the previous financial year. This metric is Unfavorable. The DPU decrease is in line with the decline in net property income, which management has disclosed that this reflects the continued normalization of demand across some markets after a period of extraordinary post-pandemic growth.
Occupancy
| Metrics | Current | Previous |
|---|---|---|
| Occupancy | No Info | No Info |
| Rating | N/A | N/A |
Based on the announcement on 27 January 2025, occupancy rate was not included in the announcement.
Gearing ratio
| Metrics | Current | Previous |
|---|---|---|
| Gearing Ratio | 40.7% | 38.8% |
| Rating | Unfavorable | Neutral |
Gearing ratio increased to 40.7% as of 31 December 2024. Noted the increase was due to additional drawdowns this quarter. The metric shifted towards Unfavorable as it is closer to the MAS limit of 50%.
Interest coverage
| Metrics | Current | Previous |
|---|---|---|
| Interest Coverage | 2.3x | 2.6x |
| Rating | Unfavorable | Neutral |
The interest coverage for the trailing 12 months decreased to 2.3 times as of 31 December 2024. The metric shifted to Unfavorable as the interest coverage is significantly lower than my preference of 3.0 times.
Debt maturity profile
| Metrics | Current | Previous |
|---|---|---|
| Debt Maturity Profile | 2.3 years | 2.0 years |
| Rating | Favorable | Neutral |
Weighted average term to maturity of their debt extended to 2.3 years as of 31 December 2024. This metric is Favorable. Management disclosed that re-financing for the remaining maturing loans in the first half of 2025 is underway and is expected to be completed before end of the year. Approximately 51.0% of their debts are due for re-financing by the end of FY2026.
Price to Book Ratio
| Metrics | Current | Previous |
|---|---|---|
| Price to Book Ratio | 0.53 | 0.59 |
| Rating | Favorable | Favorable |
The Price to Book (“P/B”) ratio currently stands at 0.53. This is computed using the closing share price of SGD0.775 on 28 February 2025 and the net asset value per share of SGD1.45 as of 31 December 2024. The P/B ratio is Favorable.
As of 28 February 2025, the Market Capitalization is approximately SGD975 million.
Website: Yahoo Finance: CDL Hospitality Trusts (J85.SI)
Dividend
| Year | Yield | Total |
|---|---|---|
| 2025 | 3.63% | SGD 0.028 |
| 2024 | 7.35% | SGD 0.057 |
| 2023 | 7.87% | SGD 0.061 |
| 2022 | 6.58% | SGD 0.051 |
| 2021 | 6.01% | SGD 0.047 |
| 2020 | 8.22% | SGD 0.064 |
The dividend paid out of SGD0.028 per share in February 2025 is lower as compared to the same period in the previous financial year. When annualized, this will amount to SGD0.056 per share for the calendar year 2025.
With a closing share price of SGD0.775 as of 28 February 2025, this translates to a dividend yield of 7.23%. For my benchmark, a reasonable yield would be around 5.25%. CDLHT is above the range and the dividend yield is Favorable.
Website: Reasonable Dividend Yield 2025Q1 – 5.25%
Interest Rate Sensitivity
The Federal Reserve on 30 January 2025 have kept interest rates unchanged at a range of 4.25% to 4.50%. This is due to significant uncertainty in the U.S. economic landscape, with a healthy set of macroeconomic fundamentals that have changed little in recent months, but coming decisions from the Trump administration on immigration, tariffs, taxes and other areas that could prove disruptive.
Website: Fed leaves rates unchanged, sees no hurry to cut again
CDLHT have provided the interest rate sensitivity analysis as below. Should the interest rate change by another 1.0%, using FY2024 DPS of 5.32 cents as a base, DPS is expected to change by 20.1%.
| Change in Interest Rates | Change in DPS (cents) | Change as % of FY2024 DPS |
|---|---|---|
| 50 bps | 0.54 | 10.1% |
| 100 bps | 1.07 | 20.1% |
| 150 bps | 1.61 | 30.2% |
| 200 bps | 2.14 | 40.2% |
Summary
| Metrics | Financials | Rating |
|---|---|---|
| Distribution Per Unit | -6.7% | Unfavorable |
| Occupancy | No Update | N/A |
| Gearing Ratio | 40.7% | Unfavorable |
| Interest Coverage | 2.3x | Unfavorable |
| Debt Maturity Profile | 2.3 years | Favorable |
| Price to Book Ratio | 0.53 | Favorable |
| Overall | Neutral |
Overall, the metrics indicate that it remains Neutral to invest in CDLHT. Do note that there are several metrics which have shifted into Unfavorable territory this quarter, and investors will need to monitor if this trend continues moving forward.
Background
CDLHT is one of Asia’s leading hospitality trusts. It comprises CDL Hospitality Real Estate Investment Trust (“H-REIT”), a real estate investment trust, and CDL Hospitality Business Trust (“HBT”), a business trust. CDLHT was listed on the Mainboard of the Singapore Exchange Securities Trading Limited on 19 July 2006, with H-REIT being the first hotel real estate investment trust in Asia (ex-Japan).
H-REIT’s principal investment strategy is to invest in a diversified portfolio of income-producing real estate, which is primarily used for hospitality, hospitality-related and other accommodation and/or lodging purposes (including, without limitation, hotels, serviced apartments, resorts, motels, other lodging facilities and properties used for rental housing, co-living, student accommodation and senior housing) globally.
HBT’s principal investment strategy is to invest in a diversified portfolio of real estate or development projects, which is or will be primarily used for hospitality, hospitality-related and other accommodation and/or lodging purposes (including, without limitation, hotels, serviced apartments, resorts, motels, other lodging facilities and properties used for rental housing, co-living, student accommodation and senior housing) globally and may also include the operation and management of the real estate assets held by H-REIT and HBT.
CDLHT is managed by M&C REIT Management Limited and M&C Business Trust Management Limited, subsidiaries of Millennium & Copthorne Hotels Limited, an internationally recognised hospitality group, which owns and operates hotels globally.
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Website: CDL Hospitality Trust (SGX: J85): 2024 Third Quarter Business Update
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