CDL Hospitality Trusts (CDLHT) units took a hard knock on Tuesday after the group posted weaker- than-expected results for the third quarter.
The counter dived to an intraday low of $1.935 before closing the day at $1.94, down 13 cents or 6.3 per cent, after almost 14 million units changed hands.
The results, which the group posted before the start of market trading on Tuesday, showed that gross revenue dipped 0.8 per cent year-on-year to $36.15 million and net property income dropped 1.1 per cent to $33.61 million.
Income available for distribution eased 1.3 per cent y-on-y to about $29.2 million, of which $2.921 million will be retained for working capital, leaving $26.29 million to be paid to security holders.
DMG & Partners has downgraded its call on the counter to "neutral" given a weaker hospitality outlook, and lowered its target price for the stapled security to $2.
CDLHT said the weaker performance was the result of slightly lower revenue per available room (Rev- PAR) for its Singapore hotels as the Singapore economy and the hospitality sector came under the impact of weaker macroeconomic environment.
"The corporate market, particularly the meetings and conference business, was affected by the economic malaise," CDLHT said.
RevPAR for the group's Singapore hotels excluding Studio M Hotel (which was acquired on May 3, 2011) dipped 0.9 per cent y-on-y to $209 in Q3 2012, on the back of a 0.9 percentage point dip in average occupancy rate to 88.6 per cent.
The average daily room rate remained unchanged at $236. The slow business environment in Singapore has continued into this month.
The first 24 days of October showed an indicative one per cent y-on-y RevPAR growth for the Singapore hotels.
In Australia, where it has five hotels in Brisbane and Perth, the fixed rent contribution from the hotels dipped due to a translation loss arising from the weakening Australian dollar.
CDLHT's distribution per stapled security for Q3 2012 was 2.72 cents, down 1.8 per cent year-on-year.
The stapled group, which makes distributions semiannually, will pay security holders their distribution for Q3 along with that for Q4 in Q1 2013.
For the first nine months of 2012, distribution per stapled security rose 3.8 per cent y-on-y to 8.42 cents. Distribution per stapled security for Q3 2012 and for the first nine months of 2012 translate into annualised distribution yields of 5.6 per cent and 5.8 per cent respectively based on CDLHT's closing price of $1.94 yesterday.
CDLHT's net asset value per stapled security dipped to $1.57 at end-Sept 2012 from $1.60 at end-Dec 2011.
The Q3 and nine-month distribution figures reflect payout ratios of 90 per cent as CDLHT is retaining 10 per cent of income available for distribution as working capital.
Vincent Yeo, CEO of M&C Reit Management Limited, the manager of CDLHT, said the stapled group is "actively sourcing for acquisition opportunities in the hospitality sector in the next 12 months". The group is equipped for expansion, with low gearing of 25.5 per cent at end-Q3, though this was up slightly from 25.2 per cent at end-Q2.
The group's portfolio covers 12 hotels totalling 4,307 hotel rooms - comprising six hotels in Singapore and one in Auckland besides the five Australian properties. It also owns Orchard Hotel Shopping Arcade.
Looking ahead, Mr Yeo said: "Whilst the weak global economy has a dampening effect on Singapore's hospitality market in the near term, the vibrancy of Singapore's tourism market should help to maintain its long term appeal as an attractive travel destination."