CDL Hospitality Trusts (CDLHT) is revising its principal investment strategy to include rental housing, student accommodation and senior housing assets, triggered by the pandemic's severe impact on the hospitality sector.
The change in strategy is meant to diversify CDLHT's tenant mix and provide more balanced and stable rental streams. The pandemic has also illustrated to its managers that traditional geographical diversification of a portfolio of hospitality assets has its limitations.
CDLHT is a stapled security comprising CDL Hospitality Real Estate Investment Trust and CDL Hospitality Business Trust. The managers noted that the different lodging real estate sectors have varying cycles of rental and occupancy growth rates, and are likely to react differently to the same risk event.
This will help improve the resilience of CDLHT's portfolio, they said.
The inclusion of accommodation and lodging assets should enhance income stability as tenants typically have longer lengths of stay compared to those in the hotel-stay sector. The underlying tenure of these leases range from months to one to two years, and rental rates are pre-determined and fixed, the manager said.
CDLHT intends to leverage the expertise and network of City Developments (CDL), the parent company of CDLHT's sponsor. CDL is a real estate company with a network spanning 112 locations in 29 countries and regions.
The revision in investment strategy will take effect on Aug 25.
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