CDLHTrust – BT

Fewer tourists, H1N1 take toll on CDLHT in Q2

Trusts’ distributable income falls 36.8% to $15.8m, DPU drops to 1.89 cents

CDL Hospitality Trusts (CDLHT) has posted a 36.8 per cent year-on-year fall in its second-quarter distributable income to $15.8 million, dragged down by lower tourist arrivals and the impact of the H1N1 outbreak.

The result brings its distribution per unit (DPU) for the three months ended June 30 to 1.89 cents, down from 3.03 cents in the year-ago period.

‘This achievement comes amidst a challenging operating environment for CDLHT in the first half of 2009,’ said Vincent Yeo, chief executive of the trust’s manager. ‘On the back of the global economic turmoil, the tourism and hospitality sectors at large have seen a sharp reduction in travel and tourist arrivals.

‘The situation was further exacerbated in the second quarter by the global outbreak of Influenza A (H1N1) and the knee-jerk reaction of the public to the viral flu, which led to some cancellations and postponement of events. Despite tougher conditions in Q2 2009, we are heartened that our hotels managed to maintain a relatively healthy level of profitability as a result of our proactive cost containment measures.’

The real estate portfolio in CDLHT includes Orchard Hotel, Grand Copthorne Waterfront Hotel, M Hotel, Copthorne King’s Hotel and Novotel Clarke Quay, New Zealand’s Rendezvous Hotel Auckland, and the Orchard Hotel Shopping Arcade.

Net property income for the three months ended June fell 30.6 per cent to $19.2 million. Gross revenue shed 31.5 per cent to $20.2 million.

Average occupancy rate slipped to 75.5 per cent from 87.1 per cent in the same quarter last year. Average daily room rate also shrank 30.2 per cent to $178.

‘The outlook for CDLHT for the rest of 2009 will depend largely on an upturn in visitor arrivals as market sentiment continues to improve, with the economy recently displaying incipient signs of recovery,’ said Mr Yeo. ‘We are already seeing some improvement in demand in the months of June and July as both corporate and leisure travel showed signs of an uptrend compared to the first five months of 2009.’

Before deducting for income retained for working capital, income available for distribution in the quarter went down 30.6 per cent to $17.4 million.

For the first half of the year, distributable income fell 33.5 per cent to $32.3 million. Gross revenue slipped 25.6 per cent to $42.8 million, while net property income dropped 26 per cent to $39.8 million.

The balance sheet showed a $293 million debt repayable yesterday. To refinance that, CDLHT had earlier secured a three-year $350 million bank facility, consisting of a $270 million term loan and an $80 million committed revolving credit facility.

The new facility bears interest at the Singapore dollar swap offer rate plus an interest margin of 2.6 per cent per annum.

Following the announcement of its results, which were released late on Thursday night, shares of CDLHT closed 3 cents up at $1.21 yesterday.