CDL Hospitality Trusts’ (CDLHT) 1Q16 gross revenue increased 5.8% YoY to S$44.7m, making up 23.5% of our full-year forecast. Income available for distribution fell 8.5% YoY to S$21.9m. As a result, DPU fell 9.0% to 2.22 S cents in 1Q16, making up 21.8% of our full-year forecast. We note that the distributable income does not include contribution from the Japan Hotels, which will only become available for distribution in 2Q16.

Average occupancy rate dropped 3.8 ppt to 83.9% while average daily rate to S$191. Consequently, REVPAR dropped 6.9% to S$161. The group’s hotels continued to be affected by weak corporate segment demand and disruptions from ongoing asset enhancement initiatives (AEI). Gearing remained at 36.7%. Given the recent appreciation in price, we now place our Buy rating and fair value of S$1.38 under review.

Source: OCBC Research - 29 Apr 2016