CDL Hospitality Trusts - Maybank Kim Eng 2021-09-01: A First Pivoting Move

CDL HOSPITALITY TRUSTS (SGX:J85) | SGinvestors.io CDL HOSPITALITY TRUSTS (SGX:J85)

CDL Hospitality Trusts - A First Pivoting Move


CDLHT's maiden foray into UK build-to-rent

  • CDL Hospitality Trusts (SGX:J85) has entered into a forward-purchase agreement for The Castings, a build-to-rent (BTR) residential property in Manchester, UK, at GBP73.3m (S$136.0m), and a 5.1% stabilised NPI yield. The deal is accretive; it follows its expanded investment mandate in Jul 2021, and is its first into an adjacent accommodation segment, which we believe is supported by favourable growth fundamentals.
  • CDL Hospitality Trusts's RevPAR visibility remains low against an uneven reopening recovery, and we maintain our forecasts, S$1.20 DDM-based target price (COE: 6.5%, LTG: 2.0%), and HOLD rating.
  • We prefer Ascott Residence Trust (SGX:HMN) for its long-stay assets, and upside from capital distributions amid slower DPU growth.


Property well-sited, expands UK Asset Under Management

  • The ~220k sf NLA freehold property in Piccadilly East, a developing area within 2 km from Manchester’s CBD, is highly accessible, is a 9-min walk to Manchester CDL Hospitality Trusts's announcements.
  • The deal is expected to complete in May 2024, and will be CDL Hospitality Trusts’s third UK asset, and its second in Manchester.


Favourable growth fundamentals

  • The sector is nascent at ~2% of existing residential High Speed 2 railway (in 2040), could support longer term valuation upside.


Deal accretive, low development risk






Chua Su Tye Maybank Kim Eng Research | https://www.maybank-ke.com.sg/ 2021-09-01
SGX Stock Analyst Report HOLD MAINTAIN HOLD 1.200 SAME 1.200



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