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
- The transaction is on a fixed-cost model, with cashflows managed over the project’s 140-week ~S$444m in debt headroom (at 50% limit).
- See
- With the sector’s recovery into FY22 uneven, we expect CDL Hospitality Trusts's management will look to further diversify away from its traditional hospitality AUM.
Chua Su Tye
Maybank Kim Eng Research
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https://www.maybank-ke.com.sg/
2021-09-01
SGX Stock
Analyst Report
1.200
SAME
1.200
