CDL Hospitality Trusts Looks To Foreign Markets To Grow

Source : Channel NewsAsia, 30 July 2008

CDL Hospitality Trusts is setting its sights overseas for potential acquisitions, favouring markets like Japan and China.

It said that while the Singapore hospitality sector is still strong, it is also seeing many interesting offers from the rest of Asia.

Medical tourism and a growing financial sector have kept room rates at record levels in Singapore, but CDL Hospitality Trusts is looking to spread its wings.

About 97 per cent of its S$29.5 million revenue comes from Singapore right now, and the REIT is hoping to take advantage of the current downturn to change that.

Vincent Yeo, CEO of CDL Hospitality Trusts, said: "I think it's part of our plan to diversify and become a pan-Asian REIT. We like to think that we can find bargains around the region, within the next six to twelve months."

The trust has a deep well of reserves to draw from. It currently sports borrowings of 20 per cent and has a debt ceiling of S$740 million before it hits the threshold of 40 per cent.

Among the markets that the REIT finds particularly attractive are Japan, China and India.

Mr Yeo said: "Recently, there have been a lot of deals made available in Japan, and that has come about because of the credit environment where the loan to value ratio has dropped significantly in terms of what banks are willing to lend.

"Credit spreads have also gone up significantly, so people have had refinancing difficulties and have looked to sell at realistic prices."

For the first half of 2008, CDL Hospitality Trusts clocked in a 34 per cent increase in revenue per available room. Distributable income per unit rose to 5.89 cents, up 52 per cent from last year.- CNA/so