New acquisitions to boost CDL Hospitality Trust amidst stable Singapore hotel income

Singapore hotels are facing an oversupply of rooms.

CDL Hospitality Trust can expect flat revenues amidst an oversupply of hotel rooms in Singapore, but its recent acquisitions would offset some of the negative impact, a DBS report said.

DBS said CDLHT continues to be one of the top choices within the S-REIT space with a 40bps q/q dip in borrowing costs, after peaking in Q3 2024. With 34% of its loan book to be refinanced in FY2025, and a low fixed-hedge profile of 32%, DBS expects CDREIT to be the top beneficiary of lower interest rates once cuts materialise in 2025.

Meanwhile, an oversupply of hotel rooms in Singapore and reduced room inventory at W Hotel amidst its refurbishment is projecting flat RevPAR growth for CDREIT’s Singapore hotel properties. However, it is marginally offset by flat borrowing costs year-on-year and incremental contributions from UK assets (Benson Yard, The Casting, and Hotel Indigo Exeter).

Additionally, the pivot towards the built-to-rent (BTR) sector amongst other possible lodging asset classes, highlights management’s strategic intent to build resilience through diversity and earnings stability post-pandemic.

“With two announced acquisitions within the UK – Benson Yard (purpose-built student accommodation) and Indigo Hotel Exeter, CDLHT’s UK income exposure is expected to go north of 20%. CDLHT managers remain opportunistic in pursuing accretive overseas acquisitions, with the UK remaining a favoured market,” DBS said.

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