CDL Hospitality Trusts (CDREIT SP) is poised to benefit from its recent UK acquisitions, despite a 7% year-on-year decline in its full-year distribution per unit (DPU) for the financial year 2024. The DPU fell to 5.32 Singapore cents as Singapore hotels continued to experience revenue per available room (RevPAR) softness into the fourth quarter of 2024. However, the trust remains optimistic about its growth prospects in 2025.
The company expects its acquisitions, including Indigo Exeter and Benson Yard, to counterbalance the flat RevPAR forecast for Singapore hotels. Additionally, the ongoing asset enhancement initiative (AEI) at W Hotel, which includes room upgrades, is anticipated to contribute positively to the trust’s performance.
CDL Hospitality Trusts is also set to benefit from interest rate cuts, with 34% of its loan book due for refinancing in the financial year 2025 and a low fixed hedge ratio of 32%. The trust has maintained a “BUY” recommendation, albeit with a lower target price of SGD1.10, citing an attractive yield of 6.2% and potential interest rate savings as upside factors.
