CDL Hospitality Trusts (CDLHT) has reported total distribution per stapled security (DPS) of 5.32 cents for the FY2024 ended Dec 31, 2024, 6.7% lower y-o-y. DPS for the 2HFY2024 fell by 11.9% y-o-y to 2.81 cents.

Distributable income for the full year fell by 5.8% y-o-y to $66.9 million due to lower net property income (NPI) and higher interest costs. The REIT’s funding costs rose from floating rate loans, the refinancing of its fixed rate loans, the financing of The Castings, its build-to-rent (BTR) residential development project in the UK, as well as asset enhancement works. The lower amount was also due to the absence of a one-off capital distribution of $0.9 million from the liquidation proceeds of an Australian subsidiary, which was recognised in the 2HFY2023.

Meanwhile, distributable income for the 2HFY2024 fell by 10.9% y-o-y to $35.4 million. This was attributable to The Castings, as its contribution to the REIT’s total NPI was unable to cover its interest costs during the gestation period. The lower amount was also due to higher interest costs and lower NPI for the rest of the portfolio.

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Excluding the one-off proceeds, CDLHT’s FY2024 DPS and distributable income would have declined by 5.5% and 4.6% y-o-y respectively. Similarly, 2HFY2024 DPS and distributable income would have dropped by 8.9% and 9.9% y-o-y respectively.

CDLHT’s gross revenue in FY2024 inched up by 1% y-o-y to $260.3 million thanks to higher revenue from its hotels in Perth, Japan, Germany and the UK. This was, however, offset by lower revenue from its Singapore hotels, Grand Millennium Auckland in New Zealand, Hotel Cerretani Firenze in Italy and the Maldives resorts.

Consequently, FY2024 NPI decreased by 2.2% y-o-y to $135.2 million.

In FY2024, CDLHT’s Singapore hotels reported revenue per available room (RevPAR) of $194, 2.1% lower y-o-y. The normalisation of pent-up demand in the second half of the year offset the strong momentum from the strong slate of events and concerts as well as the beginning of visa-free travel between China and Singapore early in the year. That said, CDLHT’s RevPAR still stood some 15.4% higher than its pre-Covid-19 levels in FY2019.

2HFY2024 RevPAR fell by 10.1% y-o-y to $195 due to the normalisation of demand.

CDLHT’s FY2024 average occupancy rate increased by 2.5 percentage points y-o-y to 78.7% while its average daily rate (ADR) fell by 5.3% y-o-y to $246.

Claymore Connect, the trust’s retail mall adjoining Orchard Hotel, reported an 8.7% y-o-y growth in NPI for FY2024 due to a new tenant, higher rental rates from existing leases and renewals, as well as efforts to streamline operational expenses. As at Dec 31, 2024, the mall’s committed occupancy rate was at 97.6%.

Overseas portfolio

Across the globe, CDLHT’s Grand Millennium Auckland reported FY2024 RevPAR of NZ$129 ($98.95), 5.9% lower y-o-y. The hotel’s RevPAR for the second half of the year fell by 10.7% y-o-y to NZ$121 due to renovations, which led to lower inventory of about 20.4% of room nights. The drop was also due to absence of nine FIFA Women’s World Cup games which were played in 2023, higher property charges, as well as the effect of accounting base rent on a straight-line basis instead of the actual base rent which has stepped up y-o-y. 2HFY2024 NPI plunged by 42.3% y-o-y to $2.08 million due to the lower RevPAR and weaker New Zealand dollar (NZD).

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CDLHT’s hotels in Perth reported a 9.4% y-o-y increase in FY2024 RevPAR of A$123 ($104.33) while 2HFY2024 RevPAR rose by 5.6% y-o-y to A$127. The growth in the second half of the year was largely driven by ADR growth from both hotels while a “healthier” sporting and event calendar in the final quarter of the year partly offset the impact of room renovations at Ibis Perth. Despite the better RevPAR, NPI for the 2HFY2024 fell by 12.8% y-o-y to $2.05 million due to higher operating expenses such as payroll and utilities.

CDLHT’s Japan hotels reported FY2024 RevPAR of 10,681 yen ($92.54) and ADR of 11,537 yen, making this the highest full year on record, thanks to robust inbound travel demand. 2HFY2024 NPI grew by 9.3% y-o-y to $2.26 million despite the weaker Japanese yen against the Singapore dollar (SGD).

FY2024 RevPAR for CDLHT’s Maldives resorts increased by 4.3% y-o-y to US$327 ($440.57) with mixed performances in the 2HFY2024. Angsana Velavaru reported RevPAR growth in the six-month period due to better operating performance while Raffles Maldives Meradhoo’s RevPAR fell as a nearby domestic airport closed for two weeks in the final quarter of the year. 2HFY2024 NPI plunged by 58.8% y-o-y to $1.02 million.

In the UK, FY2024 RevPAR rose by 3.9% y-o-y to GBP138 ($231.63) as the Hilton Cambridge City Centre benefitted from continued recovery in corporate travel, while The Lowry Hotel saw better traffic from the MTV European Music Awards in November 2024. 2HFY2024 NPI, which includes Hotel Indigo Exeter and the REIT’s purpose-built student accommodation (PBSA) asset Benson Yard, rose by 2.1% y-o-y to $9.13 million.

The Castings reported a physical occupancy of 59.1% as at Dec 31, 2024, with gross revenue and NPI at $1.8 million and $0.3 million during the 2HFY2024.

Benson Yard reported a committed occupancy of 95.5% as at Dec 31, 2024. It contributed a gross revenue of $0.2 million and NPI of $0.1 million for 2HFY2024.

CDLHT’s Germany hotel reported FY2024 RevPAR of EUR110 ($155.23), 12.1% higher y-o-y, its highest since it was acquired in 2017. RevPAR in the second half of the year was boosted due to a packed sporting and concert calendar. 2HFY2024 NPI fell by 2.2% y-o-y to $5.47 million partly due to a weaker Euro against the SGD and the effect of accounting base rent on a straight-line basis.

In Italy, Hotel Cerretani Firenze’s FY2024 RevPar increased by 5.1% y-o-y to EUR234. 2HFY2024 NPI fell by 10.2% y-o-y to $2.58 million due to higher utility costs and the accounting requirement to recognise base rent on a straight-line basis despite of the actual step up base rent received.

Outlook

Looking ahead, CDLHT expects its Singapore portfolio to be “more muted” in the 1QFY2025 due to the absence of high-profile concerts, the Singapore airshow and Ramadan, which will now take place during the quarter. That said, it still remains positive on Singapore’s other attractions including the launch of Minion Land at Universal Studios Singapore and Disney’s Asia-based cruise ship, which will begin sailing from Singapore in December this year.

In Japan, the REIT expects visitor arrivals to grow, in line with the Japanese government’s targets to double arrivals to 60 million annually by 2030.

At the same time, it sees near-term challenges in the Maldives due to the growth in supply, the strong USD and the hiking of visitor taxes.

In the UK, high-profile events such as the Women’s Rugby World Cup in 2025 could benefit the hotels portfolio while an expected pick-up in leasing momentum in spring is likely to stabilise The Castings by around 3Q2025. For Benson Yard, leasing for the academic year 2025/2026 began a few months ago and is currently ahead of the previous academic year’s pacing.

In Germany, the REIT expects demand to be sustained in 2025 thanks to a vibrant event calendar while its Italian portfolio is expected to see sustained demand at a normalised level after an “exceptional period of growth”.

As at Dec 31, 2024, CDLHT’s assets under management (AUM) stood at $3.5 billion across its 22 operational portfolios. Its portfolio valuation increased by 4.5% to $3.2 billion. Excluding Hotel Indigo Exeter and Benson Yard, which were acquired in 4Q2024, CDLHT’s portfolio valuation would be up by 1.2% y-o-y.

“While the market is adjusting to new demand normalisation, the competitive landscape in Singapore has also heightened with new hotels emerging,” says Vincent Yeo, CEO of the managers. “However, we remain optimistic about the prospects for the Singapore market in the medium term, particularly with new tourism attractions on the horizon. Our new acquisitions will augment our income streams in 2025 while the increased exposure in the living asset class will also enhance the stability of the portfolio income.”

He adds that the REIT will continue selective asset enhancement initiatives (AEIs) for its existing assets to “invigorate organic growth and fortify the competitive positioning of the portfolio”. While he notes the income disruption from its Australian portfolio due to the AEIs, Yeo remains positive that the REIT will benefit from the moves in the coming years.

On the high interest rates, which “weighed heavily” on CDLHT’s FY2024 earnings, Yeo believes that the potential easing of interest rates, especially in Europe, will benefit the REIT.