CDL Hospitality Trust's Q2 net property income up 0.9%

SINGAPORE - The acquisition of Japan Hotels in December has boosted second quarter earnings at CDL Hospitality Trusts (CDLHT) but the distribution to investors slipped.

Distribution per stapled security for the period ended June 30 fell 10 per cent to 2.25 Singapore cents, as the contribution from Japan Hotels will be available for distribution only from the fourth quarter.

Net property income for the quarter rose 0.9 per cent to S$31.621 million as gross revenue rose 3 per cent to S$39 million.

The results were dragged down by headwinds in the Singapore hospitality market and lower rents in Australia and New Zealand, with the weakening of the Australian and New Zealand dollars against the Singapore dollar.

While early indications show that room rates are likely to remain competitive here, the local market "has a lot of depth," said Mr Vincent Yeo, chief executive of the trusts' managers. "There is strong demand at the different price points, so occupancy continues to be very high by any international standards."

Occupancy rate across CDLHT's Singapore properties rose 0.4 percentage point to 86.5 per cent in the second quarter, but average room rates slipped 5.2 per cent to S$200 and revenue per available room (RevPar) down 4.4 per cent to S$173.

New hotel room supply and a relatively strong Singdollar hit room rates, while slower global economic growth continues to impact corporate demand, said Mr Yeo. The larger hotels with more meeting facilities were worse hit by the subdued corporate meetings market, he noted.

Hotel room supply will grow by 4,405 rooms this year, and room rates are likely to remain competitive, he said. For the first 27 days of this month, RevPar for Singapore hotels fell 4.2 per cent year on year - an indication for the rest of the quarter.

Net property income from Australia fell 10.6 per cent to S$3.571 million due to weaker AUD during the quarter, while that from from New Zealand fell 6.3 per cent to S$2.435 million mainly due to weaker New Zealand Dollar.

Net property income from Maldives resorts was also down owing to the continued strength of the US dollar against most currencies - most of the room rates are priced in the greenback.

The bright spark in the portfolio was from Japan Hotels, with a RevPar growth of 29.1 per cent in the second quarter thanks to a surge in visitor arrivals.

Asset enhancement plans include the refurbishment of 300 rooms at M Hotel, which is targeted for completion by the first quarter of next year.

The refurbishment of lobby, food and beverage outlets, meeting rooms and facilities at Grand Copthorne Waterfront is targeted for completion in the middle of next year.

In terms of future acquisitions, Mr Yeo said the managers continue to prefer Japan, Sydney and Melbourne in Australia, and New Zealand.

Following the results release for the second quarter, CDLHT units closed up 1.5 cents at S$1.63 on Wednesday.

wrennie@sph.com.sg