ASCOTT RESIDENCE TRUST (SGX:HMN)
CDL HOSPITALITY TRUSTS (SGX:J85)
Singapore Hospitality REITs - Ascott Residence Trust & CDL Hospitality Trusts 1QFY21 Business Updates
- Mixed bag of performances by Ascott Residence Trust and CDL Hospitality Trusts in 1Q21.
- SG was largely stable supported by government contracts but overseas recovery, especially in Europe and Japan remained volatile.
- Reiterate ADD on Ascott Residence Trust and CDL Hospitality Trusts.
Ascott Residence Trust and CDL Hospitality Trusts's 1QFY21 business updates
- Ascott Residence Trust (SGX:HMN) and CDL Hospitality Trusts (SGX:J85) released 1QFY21 business updates today. See
- CDL Hospitality Trusts’s 1QFY21 revenue and NPI grew 2.8% and 1% y-o-y to S$34m and S$19.8m (largely in line at 27% of our FY21F NPI), respectively, driven by the reopening of Raffles Maldives, strong leisure demand in Maldives and New Zealand. On a q-o-q basis, revenue and NPI fell 4% and 19%, respectively. All countries (except Maldives and NZ) saw weaker q-o-q due to lower staycation demand in SG and lockdowns.
- Meanwhile, Ascott Residence Trust continued to generate operating profits and positive cash flow in 1QFY21.
SG hotels largely supported by government contracts
- CDL Hospitality Trusts’s SG RevPAR declined ~25% q-o-q due to lower demand from staycation in 1QFY21 while Ascott Residence Trust’s SG RevPAU improved 14% q-o-q.
- On a y-o-y basis, Ascott Residence Trust experienced a 42% decline in RevPAU while CDL Hospitality Trusts’s fell 34% given the full-quarter COVID-19 impact in 1QFY21.
- The REITs’ Singapore business would largely be supported by government contracts until at least mid-2021, in our view.
Mixed overseas performance
- Overseas performance was mixed for both REITs.
- Ascott Residence Trust saw q-o-q improvement in Australia (+46%) and the US (+16%) supported by isolation business as well as leisure demand and long stays in the US. While China (-9%) and Vietnam (-4%) RevPAUs were weaker q-o-q, we consider them to be relatively stable, supported by long-stay guests.
- For CDL Hospitality Trusts, Maldives saw strong +114% y-o-y in RevPAR driven by the operation ramp-up of Raffles Maldives and leisure demand from Eastern Europe. NZ (+5% q-o-q) was supported by higher occupancy from in isolation business. Australia continued to be supported by fixed rents but this is expected to decline after leases expire on 30 Apr 2021.
- UK, Europe and Japan were generally weak for both REITs due to lockdowns in the countries.
Remain active in acquisitions
- Ascott Residence Trust made a second rental housing acquisition in Sapporo for S$25.5m (EBITDA yield of 4%), increasing its asset allocation in longer-stay properties. The acquisition is expected to be DPU accretive and completed in 2Q21. Long-stay assets accounted for 7% of Ascott Residence Trust’s total assets and it hopes to bring this to 10-15% going forward.
- CDL Hospitality Trusts is also actively evaluating acquisition opportunities.
Reiterate ADD on Ascott Residence Trust and CDL Hospitality Trusts
- We understand that there is a strong desire to travel although demand is affected whenever there is a lockdown. Both leisure demand and queries from corporates have also picked up recently although booking window remains narrow. We expect travelling activities to resume gradually as more people are vaccinated.
- See
- Upside/downside risks include faster travel resumption/resurgence of COVID-19 cases.
EING Kar Mei CFA
CGS-CIMB Research
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LOCK Mun Yee
CGS-CIMB Research
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https://www.cgs-cimb.com
2021-04-29
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