CDL Hospitality Trusts: 3Q25 Operational Update: Funding tailwinds cushions a softer quarter
- Portfolio NPI declined 5.6% y/y to SGD34.3m on softer market performance in SG and Europe, and on ongoing AEI works
- SG Hotels saw stable occupancy at 88.3% (+3.3ppt y/y), but on softer rates (c.-9% y/y); F1 nights in Oct saw a +25% y/y boost
- Expect more stability in FY26 as AEIs to complete end25/ early26; Key IR beneficiary in sector with low 51% hedge ratio and >one-third of loan book to refinance near term.
- Maintain BUY with TP of SGD1.00
3Q25 Update. CDL Hospitality Trusts’ 3QFY25 results were in line with estimates. Group NPI fell 5.6% y/y to SGD 34.3 m due to weaker contributions from Singapore, New Zealand and European hotels, due to a mix of higher submarket supply, lower events and ongoing AEIs at W Hotel Singapore and Grand Millennium Auckland. The decline in NPI would have came in lower at 4.0% excluding ongoing AEIs. In Singapore, hotels posted higher occupancy of 88.3% (+3.3ppt y/y), buoyed by major events such as the World Aquatics Championships, though ADR declined 9.4% y/y to SGD 228 as the F1 event shifted from September to October. The UK portfolio remained a bright spot, with NPI up 8.6% y/y (or +18.8% excluding one-offs), supported by inflation-linked rents and healthy event demand in Manchester. The UK living assets also ramped steadily, with physical occupancy of 90% at The Castings and committed pre-leases of 97% for Benson Yard’s academic year 2025/26 intake. Australia outperformed with RevPAR +20.7% y/y on the completion of the Ibis Perth refurbishment, while Japan and Maldives softened from event and seasonal factors. Group financing cost improved to 3.4% (–30bps y/y) with lowered fixed hedge ratio of 51.4% as at quarter end, and gearing remained stable at 42.4%.
Our view. Management gave privy into the performance of F1 nights in October, which saw a strong boost to RevPAR at +24.6% y/y, positioning 4Q for a SG-led rebound. There will be a couple of refurbishments and rebranding works that will see completion into FY26, including (i) W hotel room renovations to complete end25 / early26, (ii) second phase of AEI at Grand Millennium Auckland, room enhancements, to finish by year end, (iii) Maldives resort’s rebranding under Marriott’s Autograph Collection from November 2025 is expected to expand distribution and improve brand visibility, and (iv) continued stabilisation of UK living asset The Casting, which has achieved 90% physical occupancy and tilted towards positive NPI territory in the quarter. We believe most of the frictional transitions from AEIs and rebranding will bottom in this financial year, to find further stabilisation in operations next year. Moreover CDLHT comes as one of our top interest rate picks for the sector, with their low in-place interest hedge ratio of 51% and refinancing to expect in FY25/26 comprising c.35% of loan book, for SGD and EUR denominated loans. Maintain BUY with TP of SGD1.00.
Key Results Summary
| Metrics | 3QFY25 | 2QFY25 | % q/q | 3QFY24 | % y/y |
|---|---|---|---|---|---|
| Singapore Hotels Occupancy (%) | 88.3 | 86.8* | +1.5 ppt | 84.9 | +3.3 ppt |
| Singapore Hotels ADR (SGD) | 228 | 235* | –3.0% | 252 | –9.4% |
| Singapore Hotels RevPAR (SGD) | 201 | 204* | –1.5% | 214 | –5.9% |
| Group Gross Revenue (SGD mn) | 46.2 | 45.8* | +0.9% | 47.7 | –3.1% |
| Net Property Income (SGD mn) | 34.3 | 34.0* | +0.8% | 36.3 | –5.6% |
| Aggregate Leverage (%) | 42.4 | 41.9 | +0.5 ppt | 41.4 | +1.0 ppt |
| Interest Coverage Ratio (x) | 2.1 | 2.0 | +0.1 x | 2.2 | –0.1 x |
| All-in Debt Cost (%) | 3.4 | 3.5 | –0.1 ppt | 3.7 | –0.3 ppt |
| Fixed-Rate Borrowings (% of total) | 51.4 (as of 30 Oct) | 47.9 (as of 30 Sep) | +3.5 ppt | 45.0 | +6.4 ppt |
Source: DBS, Company
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