CDL Hospitality Trusts (CDLHT) FY 2025 Financial Analysis and Outlook

CDL Hospitality Trusts (CDLHT), a leading hospitality REIT in Asia, reported its 2H and full-year FY 2025 financial results amidst a dynamic global hospitality market. This analysis reviews key metrics, performance drivers, and management’s strategic actions to provide investors with a comprehensive view of CDLHT’s current financial standing and outlook.

Key Financial Metrics and Comparative Performance

Dividend Distribution

CDLHT declared a Distribution Per Stapled Security (DPS) of 2.82 cents for 2H 2025, slightly higher than 2H 2024 (2.81 cents), but the full-year DPS of 4.80 cents represented a 9.8% decline year-on-year. The total distribution for FY 2025 was S\$60.9 million, compared to S\$66.9 million in FY 2024. The book closure date is 9 February 2026, with distribution payable on 27 February 2026. The dip in full-year distribution reflects lower NPI and some assets undergoing renovation, partially offset by improved performance in the second half and lower interest expenses.

Historical Performance Trends

• Portfolio Value: CDLHT’s investment properties increased by 0.8% year-on-year to S\$3.4 billion as at 31 December 2025, continuing a 5-year compound annual growth rate (CAGR) of 4.5%.
• NPI Performance: NPI in 2H 2025 grew by 3.5% year-on-year, driven by stronger contributions from Australia, New Zealand, Japan, and inorganic contributions from UK assets. Excluding assets undergoing renovations, NPI grew 6.3% year-on-year in 2H 2025.
• Geographical Diversification: Singapore remains the largest contributor (59.4% of NPI), followed by Europe and Oceania.

Balance Sheet and Capital Management

• Gearing: Improved to 37.7%, with S\$819 million debt headroom to the 50% regulatory limit.
• Weighted Average Cost of Debt: Reduced to 3.0% at year-end, reflecting proactive refinancing and a higher fixed-rate hedge ratio (56%).
• Liquidity: Cash and available credit facilities amounted to S\$593.5 million as at 31 December 2025.
• Interest Coverage Ratio: 2.3x, providing a healthy buffer against interest rate volatility.
• Perpetual Securities: In November 2025, CDLHT issued S\$150 million in perpetual securities at a 3.7% coupon, using proceeds to retire higher-cost GBP loans and further reduce interest expenses.

Divestments, Fundraising, and Corporate Actions

• No major divestments were reported in FY 2025.
• CDLHT completed a forward purchase agreement for the Moxy Singapore Clarke Quay hotel (475 keys), with no capital outlay until completion (expected end-2026), which will substantially increase its Singapore footprint and future income streams.
• Significant refinancings were executed, including the introduction of sustainability-linked facilities (now totaling S\$1.1 billion).

Events and Factors Impacting Performance

• Asset Enhancements: Major refurbishments at W Singapore – Sentosa Cove and Grand Millennium Auckland are completed, positioning these assets for improved performance in 2026 and beyond.
• Portfolio Expansion: The living sector assets (UK Build-to-Rent and Purpose-Built Student Accommodation) delivered their first full year of income, contributing S\$8.2 million in NPI.
• Tourism Recovery: Singapore’s international visitor arrivals reached 89.4% of pre-pandemic levels year to date, with room for further upside as Chinese, Indonesian, and Indian visitor numbers continue to recover. Government infrastructure investments and a strong events pipeline support long-term growth.
• Macroeconomic Shifts: While some markets (e.g., Maldives, Germany, Italy) faced softer trading conditions in 2025, overall portfolio value and NPI remained resilient, demonstrating the benefits of diversification.

Management Commentary

“NPI grew 3.5% YoY in 2H 2025 driven by stronger contributions from Australia, New Zealand and Japan, as well as inorganic contributions from the UK portfolio, which mitigated softer trading conditions in other markets. Excluding the assets under renovation, NPI growth would have improved by 6.3% YoY in 2H 2025. Total Distribution registered growth in 2H 2025 buoyed by lower borrowing costs and better operating performance. Total Portfolio Value up by 0.8% or S\$ 27.7 million YoY to S\$3.4 billion as at 31 Dec 2025.”

The tone is cautiously optimistic, highlighting resilience and successful asset enhancement initiatives despite pockets of market softness and ongoing renovations.

Outlook and Forecasted Events

• Singapore: Demand is expected to be underpinned by a robust 2026 events calendar, new infrastructure, and improving visitor arrivals. The opening of Moxy Singapore Clarke Quay in 2027 will further boost capacity and earnings.
• Asset Catalysts: Refurbished W Singapore – Sentosa Cove and Grand Millennium Auckland are positioned for stronger performance post-renovations. The Castings (UK BTR) is expected to stabilize NPI from 2026 onwards. The Halcyon (Maldives) should benefit from its rebranding alliance with Marriott.
• Interest Rates: Declining interest rates and realization of full-year interest savings from perpetual securities are expected to improve distributable income in 2026.

Conclusion and Recommendations

Overall Assessment: CDLHT’s FY 2025 performance appears resilient, with clear signs of recovery and positive catalysts ahead. While full-year NPI and DPS were lower compared to FY 2024, the second half of 2025 showed a return to growth. Strategic asset enhancements, diversified income streams, reduction in borrowing costs, and an improving macroeconomic environment support a cautiously positive outlook. Risks remain in certain overseas markets, but management’s proactive actions and Singapore’s robust pipeline provide reassurance.

Recommendations

• If you currently hold the stock: Consider maintaining your position. CDLHT is well-diversified, has improved its capital structure, and is poised to benefit from multiple upcoming catalysts. The recovery in NPI and DPS in the second half, combined with asset enhancements and a declining interest rate environment, suggest a likely earnings rebound in 2026. Monitor for sustained improvements in overseas markets and further growth in Singapore.
• If you do not currently hold the stock: Consider CDLHT as a potential addition to a diversified income-focused portfolio, especially if seeking exposure to hospitality and living sector assets across Asia-Pacific and Europe. The current valuation reflects some of the near-term challenges, but the outlook is improving, and strategic initiatives are in place for medium-term growth.

Disclaimer: This analysis is based solely on the information disclosed in CDLHT’s FY 2025 investor report. It does not constitute investment advice. Investors should do their own due diligence and consider their own financial situation and risk tolerance before making investment decisions.

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