CDLHT poised to benefit from interest-rate cuts as hotel outlook improves
Nathania Chew
[SINGAPORE] CDL Hospitality Trusts (CDLHT) is shaping up to become one of the key beneficiaries of falling interest rates.
The weighted average cost of debt for the Singapore-listed real estate investment trust (S-Reit) has fallen 60 points basis points in the year to date, to 3.4 per cent as at end-September, from 4 per cent at end-2024.
DBS analyst Geraldine Wong said: “CDLHT continues to be one of the preferred proxies within the S-Reit space for a turn in interest rates. We are optimistic that CDLHT will be a top beneficiary of lower interest rates.”
DBS has maintained its “buy” rating on CDLHT, with a target price of S$1.
As at Oct 30, CDLHT had some 32.2 per cent of debt due to mature by its FY2026 ending Dec 31, 2026, with fixed-rate borrowings accounting for 51.4 per cent of the total debt.
CGS International (CGSI) analysts Li Jialin and Lock Mun Yee suggested that CDLHT’s cost of debt could go down by another 40 to 60 basis points in FY2026.
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“Management expects the cost of debt to remain largely stable at end-FY2025, on re-financing savings and higher interest-rate swap rates,” they added.
CGSI has upgraded its recommendation on CDLHT from “hold” to “add”, and set a higher target price of S$0.87.
This comes after the managers of CDLHT on Oct 30 reported a 5.6 per cent decline in net property income (NPI) to S$34.3 million for the third quarter ended September, from S$36.3 million in Q3 last year.
For the first nine months of FY2025, NPI was 9.7 per cent lower than the corresponding period the year before.
DBS’ Wong attributes this to “softer market performance in Singapore and Europe, and ongoing asset enhancement initiatives (AEI)”.
“Alongside tough market conditions, adverse forex movements in several overseas markets weakened NPI performance,” CGSI’s Li and Lock added.
They cited lingering supply headwinds which “continued to pressure revenue per available room (RevPAR) for hotels in New Zealand and Maldives”, and one-off events such as the World Expo in Osaka in July and August.
However, Maybank analyst Krishna Guha pointed out that these were mitigated by better performance elsewhere.
“Difficult trading conditions and renovation downtime were offset by inorganic contributions from the United Kingdom,” he said.
Maybank maintained its “hold” rating on CDLHT, and revised its target share price up 7.1 per cent to S$0.75, from S$0.70 previously.
CDLHT’s UK assets are performing relatively well: The Castings, a residential build-to-rent property in Manchester, is 90 per cent occupied; Benson Yard, a purpose-built student accommodation building in Liverpool, has a committed occupancy rate of 97 per cent for the academic year 2025/2026.
RevPAR at its UK properties rose 4.4 per cent to £152 (S$260) in Q3 2025.
Meanwhile, the ongoing AEIs at the W Hotel in Singapore and the Grand Millennium Auckland in New Zealand are expected to be completed by end 2025 or early 2026, and contribute positively to CDLHT’s financial figures in FY2026.
Its Singapore hotels recorded stable occupancy at 88.3 per cent in Q3, a 3.3 percentage point increase from the year before, buoyed by events such as the World Aquatics Championships.
Overall, RevPAR from its Singapore properties fell 6.1 per cent in Q3 2025 to S$201. Their performance was under pressure from “supply-influx coupled with a down-trading trend among travellers”, said DBS’ Wong.
However, she noted a positive momentum in recent months, from positive tourism numbers and a strong event-pipeline which boosted demand in Singapore hotels.
During the F1 nights in October, the group’s management said that its Singapore hotels achieved a RevPAR growth of 24.6 per cent year on year.
“With Mice and events returning in FY2026, we expect Singapore hotel RevPAR to further recover,” said CGSI’s Li and Lock.
As at 3.25 pm on Monday (Nov 3), units of CDLHT are trading at S$0.83, up 0.6 per cent or S$0.005.
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