CDL Hospitality Trust (“CDLHT”) plans to issue new SGD NC5 perpetuals at the initial price guidance (“IPG”) of 4.00%. The new bond is expected to be issued on 18 November 2025. These perpetuals have their first reset date on 18 November 2030, with subsequent resets every five years after. The reset rate will be calculated using the 5Y SORA plus the initial spread. Both the issuer and bonds are expected to be unrated. The net proceeds from the issuance will be used for general corporate and working capital purposes, investments, refinancing of existing borrowings, and financing of asset enhancement works.
CDLHT is one of Asia’s leading hospitality investment trusts, managing approximately SGD 3.5B in assets (as of 30 September 2025). It is a stapled group consisting of CDL Hospitality Real Estate Investment Trust (“H-REIT”) and CDL Hospitality Business Trust (“HBT”). M&C REIT Management Limited manages H-REIT, while M&C Business Trust Management Limited is the trustee-manager of HBT.
As of end-September 2025 (“3Q25”), CDLHT reported a 2.5% year-on-year (“YoY”) increase in gross revenue to SGD 69.2M (3Q24: SGD 67.5M), supported mainly by stronger contributions from its Australia and UK portfolios. However, net property income (“NPI”) declined by 5.6% YoY to SGD 34.3M (3Q24: SGD 36.3M) due to softer Revenue Per Available Room (“RevPAR”) across the hotel portfolio, higher operating costs, and ongoing asset enhancement works that temporarily limited revenue contributions from W Singapore – Sentosa Cove and Grand Millennium Auckland. That said, excluding these two properties, revenue would have risen by 6.8% YoY, while NPI would have remained broadly stable, declining only 0.2% YoY. This points to resilient underlying portfolio performance, anchored by CDLHT’s high-quality and diversified portfolio.
CDLHT’s Singapore portfolio remains its main revenue driver, though performance softened in 3Q25. RevPAR declined 5.9% YoY due to lower average room rates, as the F1 Singapore event was held in 4Q25 rather than 3Q25, while occupancy remained strong at 88.3%. Consequently, NPI fell 8.1% YoY for the quarter to SGD 21.9M (3Q24: SGD 23.8M). Nonetheless, we remain optimistic on the Singapore portfolio given a positive outlook for Singapore’s hotel sector, supported by the Tourism 2040 roadmap, upcoming local attractions and infrastructure, as well as more major events. To capture the tourism momentum, the Group expects an increase in supply of nearly 3,000 new hotel rooms until 2027.
CDLHT reported an aggregate leverage ratio of 42.4% as of 30 September (30 June: 42.0%), which we think leans towards the high side as compared to other SGD REIT issuers. Nonetheless, it is not an immediate concern for us as there is roughly SGD 500M debt headroom before the ratio breaches MAS' 50% limit. The Group reported a total debt of SGD 1,405M as of 30 September (30 June: SGD 1,390M). Around SGD 190M to SGD 260M of debt is maturing annually over the next three years (as of 30 October), which may be manageable if the Group maintains its positive operating cashflow momentum, helped by a total available liquidity (cash and credit facilities) of SGD 475M as of 30 September.
There is also potential for secured borrowings if additional financing is needed, as about 95% of CDLHT’s property value remains unencumbered.
The Group also reported an interest coverage ratio of 2.1x as of 30 September, unchanged since 30 June, and above MAS’ threshold of 1.5x. Encouragingly, the weighted average cost of debt fell to 3.4% as of 30 September (30 June: 3.6%), which helped support the interest coverage ratio, despite likely weaker EBITDA. We think the Group can maintain a decent interest coverage ratio moving forward, barring a material rise in debt take-up. Per management, the cost of debt is expected to remain broadly stable at end-FY25. Meanwhile, a large part of CDLHT’s debt is floating rate (around 49%), which should benefit from the declining rates backdrop.
Recommendations
Table 1: Peer comparison
|
Issuance
|
Issuer
|
Ask
Price
|
Years
to Call
|
Yield
to Worst
|
|
CDREIT
Perpetual Corp (SGD)*
|
CDL
Hospitality Trusts
|
100.00*
|
5.00*
|
4.00%*
|
|
ARTSP
4.600% Perpetual Corp (SGD)
|
CapitaLand
Ascott REIT
|
105.45
|
4.25
|
3.21%
|
|
ARTSP
4.200% Perpetual Corp (SGD)
|
CapitaLand
Ascott REIT
|
104.45
|
5.38
|
3.29%
|
|
EREIT
5.750% Perpetual Corp (SGD)
|
ESR-REIT
|
106.80
|
4.36
|
4.03%
|
|
Source:
Bondsupermart, iFAST Compilations.
Data as
of 11 November 2025.
*Yet to
be issued.
|
Overall, we think CDLHT’s credit profile is relatively stable with a manageable debt profile and interest coverage. At an IPG of 4.00%, CDLHT’s new perpetual issuance is seemingly more attractive as compared to other SGD real estate perpetuals with 2030 – 2031 call dates, which are mostly trading at a yield-to-worst of between low to mid 3.0%. We think this is due to CDLHT having a slightly more leveraged profile. That said, we expect the final price guidance (“FPG”) to adjust downwards from the IPG.
In our opinion, CDLHT’s new issuance also looks more attractive relative to its closest peers – specifically perpetuals from CapitaLand Ascott REIT (Hospitality REIT issuer) - which are currently trading around 3.2% – 3.3%, albeit with a stronger credit profile. However, CDLHT’s new issuance is less attractive compared to EREIT 5.750% Perpetual Corp (SGD), which has comparable credit ratios, though ESR-REIT exhibits a weaker earnings trend. The two issuers also differ in their portfolio focus, with CDLHT being exposed to the hospitality assets, whereas ESR-REIT is primarily exposed to industrial and logistics assets.
In sum, we believe CDLHT’s new perpetual issuance is suitable for investors who are comfortable with a slightly higher-leveraged issuer. However, for more aggressive investors, we think issuers such as ESR-REIT offer more attractive opportunities.
Declaration: For specific disclosure, at the time of publication of this report, IFPL (via its connected and associated entities) and the analyst who produced this report holds a NIL position in the abovementioned securities.