Tuesday, July 8th, 2025

CDREIT Poised for Growth: Strategic Acquisition and Strong Market Performance Highlight Potential Upside

CDREIT Overview
Date: October 29, 2024
Broker: CGS International


Performance Summary
CDL Hospitality Trust (CDREIT) reported a mixed performance in its 3Q revenue and net property income (NPI), reflecting a year-over-year decline of 3.7% and 6.8%, respectively. The 9-month period (9M24) showed a slight increase in revenue and NPI of 2.9% and 1.0%, largely driven by markets in Singapore, Australia, Japan, and Germany. Out of the eight geographies covered, seven exceeded 2019 levels in 3Q24, with New Zealand as the sole underperformer.


RevPAR Performance
The RevPAR performance for CDREIT varied across its portfolio in 3Q24, with notable increases in Australia (up 17.5% YoY), Germany (up 12.4% YoY), Japan (up 16.5% YoY), and Maldives (up 12.3% YoY). Conversely, Singapore saw a decline of 10.3% YoY, attributed to lower average daily rates (ADR) and occupancy rates, alongside a high base in 3Q23. Other regions also faced declines, including New Zealand (down 17.2% YoY) and Italy (down 7.4% YoY).


Financial Metrics
The cost of debt increased by 20 basis points quarter-over-quarter to 4.4% as of 3Q24, with gearing inching up from 37.7% in 2Q to 38.8% in 3Q. Management anticipates gearing will reach approximately 39.5% post-acquisition of Hotel Indigo Exeter. The interest coverage ratio (ICR) slightly improved to 2.55x from 2.66x in 1H24.


Recent Acquisition
On October 15, 2024, CDREIT announced the acquisition of Hotel Indigo Exeter and two retail units for £19.4 million (approximately S$33.2 million), equating to about 1.1% of its assets under management (AUM). The property, which features 104 rooms and opened post-renovation in October 2023, is expected to yield a stabilised NPI of approximately 8% by FY26F. Management views the acquisition as an opportunity to enhance operational performance.


Market Outlook
The forecast for FY24 indicates that the cost of debt should remain stable in the low-4% range. Management does not foresee constraints due to the approximately 40% gearing and plans to continue exploring acquisition opportunities, deciding on funding structures on a case-by-case basis. Despite a decline in certain markets, the overall outlook remains positive due to ongoing asset enhancement initiatives and a strong performance in key regions.


Investment Recommendation
CGS International reiterates an “Add” recommendation for CDREIT with a dividend discount model (DDM)-based target price of S$1.16. This suggests a potential upside of 25.4% from the current price of S$0.925. Key risks include lower-than-forecast travel demand impacting occupancy and room rates.

Civmec’s Strategic Position in Australia’s Naval Shipbuilding: Opportunities and Outlook

Comprehensive Market Analysis and Company Insights – Lim & Tan Securities Comprehensive Market Analysis and Company Insights Broker: Lim & Tan Securities Date: 10 December 2024 FSSTI Market Overview The FSSTI Index closed at...

Singapore Airlines Poised for Takeoff: Winter Travel Boom and Strategic Upgrades Propel Growth

  Singapore Airlines (SIA) is ready to ride the seasonal tailwinds of booming winter travel demand and strategic innovations, positioning itself for stronger performance despite market pressures. As global air traffic surges and holiday...

Micro-Mechanics (Holdings) Ltd Reports 14% Net Profit Growth in 1QFY2025

Micro-Mechanics (Holdings) Ltd Reports 14% Net Profit Growth in 1QFY2025 Revenue: Increased to S$16.2 million, a YoY growth of 2.5%. Net Profit: Rose by 14.0% YoY to S$3.1 million, with net profit margin at...