CDL Hospitality Trusts reports 3Q18 net property income fell 10 percent on divestments, missing forecast

Singapore two-dollar bills

CDL Hospitality Trusts reported on Tuesday that its net property income for the third quarter fell 10.2 percent on-year to S$36.23 million after the divestment of three properties, missing an analyst forecast.

Revenue for the quarter ended 30 September fell 8.8 percent on-year to S$50.01 million, it said in a filing to SGX after the market close on Tuesday.

“This was mainly due to the absence of contribution from three properties – namely Mercure Brisbane and Ibis Brisbane, which were divested in January 2018, and Dhevanafushi Maldives Luxury Resort, which has been temporarily closed since June 2018 for renovations,” CDL Hospitality Trusts said.

“There was also lower net property income contribution from Singapore, U.K. and New Zealand (which was also affected by a weaker New Zealand dollar). Singapore’s performance was affected by Orchard Hotel’s asset enhancement exercise,” the trust said. “These were partially offset by increased net property income contribution from Pullman Hotel Munich and the Japan Hotels, which performed well, as well as Claymore Connect.”

The distribution per stapled security (DPS) fell 4.8 percent on-year to 2.18 Singapore cents from 2.29 Singapore cents in the year-ago period, the trust said.

That missed Daiwa’s forecasts for net property income of S$39.0 million, revenue of S$50.7 million and DPS of 2.33 Singapore cents.

Outlook

CDLHT’s outlook was tempered by near-term issues.

“We are experiencing a transitionary period as we are conducting significant refurbishment works for two of our properties and seeking opportunities to recycle capital from our earlier divestment. Looking ahead, our core portfolio in Singapore is poised to benefit from the recovery in the hotel sector,” Vincent Yeo, CEO of the trust’s manager, said in a statement.

“We will continue to focus on executing asset enhancement opportunities to maximize the long term potential of our hotels. For instance, Orchard Hotel, which is the largest hotel in our Singapore portfolio, will see a significantly improved product offering when the asset enhancement works are completed,” he added.

CDL Hospitality Trusts has a portfolio of 15 hotels and two resorts, comprising 5,002 rooms, as well as a retail mall as of 30 September, it said.

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