6
CDL
HOSPITALITY TRUSTS
On behalf of the Board of Directors of the H-REIT Manager
and the HBT Trustee-Manager, I am pleased to present our
financial results for the financial year ended 2014 ("
FY 2014
").
PORTFOLIO PERFORMANCE DRIVEN BY
ACQUISITIVE GROWTH
Our Singapore Hotels contributed S$96.1 million in net
property income in FY 2014, a comparable performance
against FY 2013, despite the more challenging market
conditions in the Singapore tourism market.
In 2014, Singapore experienced a 3.1%
(1)
decrease in tourism
arrivals – the first decline since 2009. This was mainly due
to a sharp drop in the Chinese visitors, Singapore’s second
biggest inbound market. The drop in Chinese arrivals could
be attributable to the disappearance of Malaysia Airlines
flight MH370 and the political instability in Thailand. In spite
of this, the Singapore Hotels managed to achieve record high
annual occupancy of 89.1% in FY 2014. Revenue per Available
Room ("
RevPAR
") decreased marginally by 1.6% year-on-year
("
yoy
") to S$188 as average room rates were also affected by
increased competition from the supply of new hotel rooms
and a cautious corporate spending environment.
In addition, due to asset enhancement works at Claymore
Connect (previously known as Orchard Hotel Shopping
Arcade), there was no income contribution from this asset
(apart from Galleria)
(2)
for the last twelve months. There was
also lower fixed rent contribution from its Australia Hotels
due to the weak Australian dollar in FY 2014.
On a portfolio basis, performance has improved mainly due
to contribution from the Maldives Resorts – Angsana Velavaru
and Jumeirah Dhevanafushi. In FY 2014, acquisitive growth
of Angsana Velavaru (acquired in January 2013) together
with the addition of Jumeirah Dhevanafushi (acquired in
December 2013) contributed S$16.6 million in net property
income, an increase of S$7.6 million from a year ago. This has
bolstered the overall performance of the stapled group by
providing the benefits of diversification when other markets
are going through less favourable cycles.
As a result, net property income of CDLHT increased 2.3%
yoy to S$140.5 million for FY 2014. Income distributed (after
deducting income retained for working capital) for FY 2014
increased 0.8% yoy to S$107.6 million. Income distributed per
Stapled Security for FY 2014 was 10.98 cents, compared to
10.97 cents the year before.
MAIDEN ENTRY INTO JAPAN WITH ACQUISITION
OF TWO TOKYO HOTELS
On 19 December 2014, CDLHT secured a strategic foothold in
Japan with the acquisition of two Tokyo hotels for a purchase
consideration of ¥5.8 billion (S$63.7 million)
(3)
. The entire
acquisition was fully funded with Yen-denominated debt.
Tokyo is currently one of the leading hospitality markets in the
world and exhibits strong growth potential. The last couple
of years have seen remarkable growth in terms of visitor
arrivals and this trajectory will be further supported by the
various government initiatives to increase inbound visitors to
20 million
(4)
by the 2020 Tokyo Olympics.
The two hotels, commonly known as business hotels in Japan,
are situated in close proximity to major transport hubs and
tourist attractions. In FY 2014, occupancy levels of the two
hotels were above 90.0%. Since the acquisition, both hotels
have been trading very strongly.
With the successful completion of our maiden acquisition
in Japan, CDLHT now enjoys greater income diversification
though an enlarged portfolio of 14 hotels and two resorts in
five markets with a total room count of 4,709.
ASSET OPTIMISATION
In2014, several asset enhancement initiativeswereundertaken
to optimise the assets for future growth: Lobby refurbishment
at Mercure Brisbane and Mercure Perth, conference room and
restaurant refurbishment at Ibis Perth, and refurbishment of
J Bar at M Hotel Singapore.
CHAIRMAN'S
STATEMENT
(1) Singapore Tourism Board, International Visitor Arrivals, 11 February 2015
(2) Currently, three tenants still occupy the adjoining Galleria which is not part of the asset enhancement exercise.
(3) Excluding acquisition costs and based on an assumed exchange rate of S$1.00 = ¥90.99.
(4) Japan Today, "Gov't eyes 20 million foreign tourists by 2020", 19 January 2014
Angsana Velavaru
