CDL Hospitality Trusts’ (CDLHT) 3Q18 results were below expectations. 3Q18 revenue dropped 8.8% to S$50.0m while NPI dropped 10.2% to S$36.2m.

The decline was mainly due to the absence of contribution from three properties – Mercure Brisbane and Ibis Brisbane (both divested in Jan 2018) and Dhevanafushi Maldives Luxury Resort, which has been closed since Jun 2018 for renovations (expected to complete by year-end). SG, UK and NZ also saw lower NPI YoY.

Singapore’s contribution was affected by Orchard Hotel’s AEI and 3Q18 SG RevPAR dropped 0.3% YoY to S$165. Excluding Orchard Hotel, RevPAR growth would have been +1.3% YoY.

On the other hand, we saw higher NPI from Pullman Hotel Munich, Japan Hotels, and Claymore Connect. After including a capital distribution of S$1.8m, 3Q18 DPU (after retention) dropped 4.8% YoY to 2.18 S cents to 22.6% of our initial full-year forecast.

We maintain HOLD but place our fair value of S$1.42 under review pending further details from the conference call.

Source: OCBC Research - 31 Oct 2018