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OVERVIEW OF CDL HOSPITALITY TRUSTS
OVERVIEW AND FINANCIAL REVIEW
• Opportunities arising from divestment of assets by
owners or developers.
• Opportunities to acquire under-performing assets
with turnaround potential by implementing value-
added strategies such as re-flagging, management
change and asset enhancements.
CAPITAL AND RISK MANAGEMENT STRATEGY
The H-REIT Manager intends to use a combination of
debt and equity to fund future acquisitions and property
enhancements such that it is within the Aggregate
Leverage limit set out in the Property Funds Appendix.
The objectives of the H-REIT Manager in relation to
capital and risk management are to:
• maintain a strong balance sheet and remain within
the Aggregate Leverage limit set out in the Property
Funds Appendix;
• minimise the cost of debt financing;
• secure diversified funding sources from both financial
institutions and capital markets as H-REIT grows in
size and scale; and
• manage the exposure arising from adverse market
movements in interest rates and foreign exchange
through appropriate hedging strategies.
ACTIVE ASSET MANAGEMENT
The H-REIT Manager actively engages its master lessees,
leveraging on H-REIT’s economies of scale and its
relationship with M&C, which has extensive experience
in the hospitality industry, to maximise the operating
performance and cash flow of the assets. In addition, it
seeks to implement various asset enhancement initiatives
to improve the assets’ value and competitiveness.
HBT’S STRATEGY
M&C Business Trust Management Limited, as
trustee-manager of HBT (the "
HBT Trustee-Manager
"),
first activated HBT at the end of 2013.
HBT may act as the master lessee(s) of H-REIT’s hotels if
any of the following occurs:
• It is appointed by H-REIT, in the absence of any other
master lessee(s) being appointed, as a master lessee
of one of the hotel assets in H-REIT’s portfolio at the
expiry of the lease term. The intention is for HBT
to appoint professional hotel managers to manage
these hotels.
• H-REIT acquires hotels in the future, and, if there are
no other suitable master lessees, H-REIT will lease
these acquired hotels to HBT. HBT will then become
a master lessee for these hotels and will appoint
professional hotel managers to manage these hotels.
The HBT Group currently acts as the master lessees
for three of the properties in H-REIT’s portfolio, namely
Jumeirah Dhevanafushi, Hotel MyStays Asakusabashi
and Hotel MyStays Kamata, and is the asset owner of
Hilton Cambridge City Centre, and appoints professional
hotel managers to manage these properties.
HBT may also undertake certain hospitality and
hospitality-related development projects, acquisitions
and investments, which may not be suitable for H-REIT.
Junior Ballroom, Novotel Singapore Clarke Quay
3
Annual Report 2016
OVERVIEW AND
FINANCIAL REVIEW