3Q23 Operational Update – Record high RevPARs across the portfolio
- 3Q23 NPI rose 23% y-o-y to S$39m; 9M23 NPI up 23% y-o-y to S$101.9m, in line with our full year estimates
- SG hotel RevPAR rose 20% y-o-y led by strong ADR performance; 7 portfolio hotels reached record 3Q RevPAR since listing (4 within Singapore), Room demand supported by longer average length of stay for travellers in Singapore and Japan, Upturn in MICE events to bode well for Singapore hotels such as Grand Copthorne Waterfront and W Hotel
- Next tranche of renewal in 2H24 to buffer against impact of higher funding cost for rest of the year.
- Maintain BUY with TP of S$1.55, forward FY24F yields of 7.1%
9M23 NPI up 23% y-o-y and in line with our estimates. CDLHT reported a 23% increase in NPI for the quarter at S$39m. 9M23 NPI rose 23% y-o-y to 101.9m, tracking in line with our full year estimates of S$142m.
The stronger NPI performance was led by broad based recovery across all markets on a y-o-y basis, with green shoots in Japan, Europe and New Zealand on reopening recovery and exit of government contracts (New Zealand, exited in mid-22). This was partly neutralised by lower y-o-y contribution from Australia on the back of seasonally lower room demand and forex translation.
All markets saw higher NPI y-o-y with the exception of Australia. Within the portfolio, quarter RevPAR was the highest recorded since listing across 7 portfolio hotels (4 of which are SG hotels being Grand Copthorne, M Hotel, Copthorne Kings and W Hotel). On local currency terms, RevPAR within Singapore rose 20% y-o-y to S$238, led by a 21% y-o-y increase in ADR to S$274, while occupancy was marginally lower (1.2ppt y-o-y) at 86.9%. The lower y-o-y occupancy was due to out-of-order rooms at Grand Copthorne Waterfront hotel which has been undergoing renovation works since the start of the year, which since has seen completion in Aug-23. Overseas markets such as New Zealand (RevPAR: +81% y-o-y to NZ$128) and Japan (RevPAR: +102% y-o-y to JPY8,375) saw recovery kicking in nicely from a low base. Australia hotels saw a 7.1% decline in RevPAR in 3Q23 on lower seasonal demand across winter quarters, and a NPI decline of S$0.7m y-o-y for the quarter due to currency exchange. Europe saw a boost in both general travel and events such as the European Championships that benefited Pullman Hotel Munich in the month of Aug-22. CDLHT will see maiden contributions from The Casting (built-to-rent project in Manchester) which is expected to be on track for completion in mid-2024, asking rents for that asset has risen in the mid-teens y-o-y on robust residential demand.
Stable capital management structure on the back of cash flow improvements. Gearing remains at a comfortable 38.4% for the quarter, with an interest coverage ratio of 2.9x. Weighted average cost of debt rose 10 bps q-o-q to 4.2%, and expects cost of debt to be flat towards year end and marginally higher for FY24. The next tranche of expiries will come into effect in 2H24 with c.33% of total borrowings up for renewals. CDLHT is expecting utility cost savings y-o-y going into FY24 on lower contracted rates.
3Q23 Operational Update
| Summary of results | 3Q23 | 1H23 | %q-o-q | 2Q23 | % y-o-y |
| NPI | 39.046 | 62.854 | 24.2% | 31.628 | 23.5% |
| Key Financial Metrics | 3Q23 | 1H23 | %q-o-q | 2Q23 | % y-o-y |
| Gearing | 38.40% | 37.90% | 0.5 ppt | 39.40% | -1 ppt |
| Average cost of debt | 4.20% | 4.10% | 0.1 ppt | 2.50% | 1.7 ppt |
| ICR | 2.9 | 3.2 | -0.3 | 3.7 | -0.8 |
| Operational Performance – SG | 3Q23 | 1H23 | %q-o-q | 2Q23 | % y-o-y |
| Occupancy (%) | 86.90% | 69.20% | 17.7 ppt | 88.1% | -1.2 ppt |
| ADR (S$) | 274 | 258 | 6.2% | 226 | 21.2% |
| RevPAR (S$) | 238 | 179 | 33.0% | 199 | 19.6% |
| NPI Breakdown by top geographies (S$m) | 3Q23 | 1H23 | %q-o-q | 2Q23 | % y-o-y |
| Singapore | 25.199 | 38.68 | 30.3% | 22.587 | 11.6% |
| United Kingdom | 4.553 | 6.21 | 46.6% | 4.205 | 8.3% |
| Australia | 0.663 | 1.816 | -27.0% | 1.374 | -51.7% |
| Total | 39.009 | 62.854 | 24.1% | 31.628 | 23.3% |