CDLHT Q4 Distributable Income Up 83.4%

Source : The Business Times, January 31, 2008

Trust hopes to add Copthorne Orchid to portfolio this year

CDL Hospitality Trusts (CDLHT), the biggest owner of hotel rooms in Singapore, yesterday posted strong Q4 and full-year results.

Distributable income for the quarter ended Dec 31, rose 83.4 per cent from a year before to $22.7 million. CDLHT, a stapled entity, is hoping to acquire this year Copthorne Orchid in the Bukit Timah area from parent Millennium & Copthorne Hotels, the London-listed hotel arm of Singapore property giant City Developments.

CDLHT's plan is to build up its assets over three to five years from about $1.6 billion as at the end of last year to around $3 billion, with increasingly more overseas acquisitions.

'My favourite acquisition markets at the moment are Singapore, Vietnam and India. These are high-octane growth markets,' said Vincent Yeo, CEO of M&C Reit Management.

The company is the manager of CDL Hospitality Real Estate Investment Trust, which is stapled to CDL Hospitality Business Trust to form CDLHT.

With CDLHT's current gearing ratio (debts-to-assets) only at about 19 per cent, it has debt headroom of $792 million to fund acquisitions before it reaches its self-imposed gearing threshold of 45 per cent.

'Given our strong balance sheet position, we're well placed to seize acquisition opportunities as they present themselves,' Mr Yeo said.

CDLHT has a right of first refusal to buy parent M&C's Singapore hotels. M&C owns the 445-unit Copthorne Orchid at Dunearn Road, as well as a 370-room new hotel being built in the Mohamed Sultan Road vicinity slated for opening in the first quarter of next year.

Mr Yeo indicated that CDLHT would like to acquire Copthorne Orchid this year 'if it's possible'. He reckons the property is worth over $200 million. 'The ball is in M&C's court ... We're waiting to hear from them,' he added.

The trust would acquire the Mohamed Sultan hotel only after it has opened and even then, this is likely to include initial income support if necessary, he said.

Copthorne Orchid had once been earmarked for development into a condo but it now continues to operate as a hotel as there is a shortage of hotel rooms in Singapore.

When CDLHT launched its initial public offer in July 2006, it had four hotels Singapore in its portfolio - Orchard, Grand Copthorne Waterfront, Copthorne King's and M. In June last year, it acquired Novotel Clarke Quay.

Revenue per available room for the four IPO hotels rose 33.5 per cent year-on-year to $195 in Q4 2007. That together with a full quarter's contribution from Rendezvous Hotel Auckland (acquired in December 2006), and the contribution from Novotel Clarke Quay provided the fillip to CDLHT's Q4 distributable income in the fourth quarter. Gross revenue jumped 65.2 per cent to $27.96 million in Q4 last year.

Unit holders will receive a total distribution per unit of 4.61 cents for the July 19-Dec 31 period, which works out to 10.14 cents on an annualised basis, reflecting a distribution yield of 4.97 per cent based on CDLHT's $2.04 closing price yesterday, when the shares ended 8 cents lower.

For the year ended Dec 31, distributable income was $68.7 million, or 75.7 per cent above the trust's forecast. Gross revenue of $90.65 million was also 61.1 per cent ahead of forecast.