CDLHT’s H2 DPS falls 11.1% to S$0.0319 on higher interest costs

CDL Hospitality Trusts : J85 0%’ (CDLHT) total distribution per stapled security (DPS) for the second half ended Dec 31, 2023 was down 11.1 per cent to S$0.0319 from S$0.0359.

Total distribution to stapled security holders was down 10.7 per cent year on year to S$39.8 million from S$44.5 million previously.

On Tuesday (Jan 30), CDLHT’s managers attributed the lower H2 total distribution and DPS to a rise in interest costs comprising funding costs on floating rate loans and on the refinancing of fixed-rate loans, as well as interest expenses incurred on additional amounts drawn to finance asset enhancement works.

The half-year period’s total distribution and DPS figures come after factoring in retained working capital as well as a capital distribution of S$9.5 million. Without the retention, CDLHT’s DPS would have been 12.4 per cent lower at S$0.0346 compared to S$0.0395 for H2 FY2022.

Revenue for the six-month period rose 5.8 per cent on the year to S$138.3 million from S$130.7 million, while net property income (NPI) grew 3.7 per cent to S$75.5 million from S$72.8 million previously.

The top-line growth came on the back of improvements recorded throughout CDLHT’s portfolio, said its managers, save for lower NPI from Singapore and Perth.

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Positive momentum

They also noted positive momentum in revenue per available room (RevPAR) growth across all portfolio markets as global travel continued to recover in H2 FY2023.

In the group’s core market of Singapore, RevPAR rose 3.5 per cent to S$217 from S$209 in H2 FY2022 though the average occupancy rate fell 3.7 percentage points to 83.1 per cent.

Vincent Yeo, chief executive of CDLHT’s managers, said Singapore’s hospitality sector “witnessed remarkable growth” in the first three quarters of 2023.

“In the final quarter, the pent-up demand that fuelled the industry’s resurgence began to normalise, in contrast to the fervour experienced in 2022.”

Inclusive of retained working capital and capital distribution for the full year, CDLHT’s FY2023 DPS stood at S$0.057, up 1.2 per cent from S$0.0563 in FY2022. Total distribution for the period was 1.8 per cent higher at S$71 million from S$69.7 million previously.

Its managers also noted broad improvement in operational results over FY2023, coupled with RevPAR growth across all portfolio markets.

“The year 2023 was a challenging one where we were pleased to achieve growth amidst a difficult economy and an elevated interest rate environment. The prospects for our portfolio hotels continue to be healthy while interest rates have shown signs of peaking,” said Yeo.

Stapled securities of CDLHT ended Monday S$0.02 or 1.9 per cent higher at S$1.05.