CDL Hospitality Trusts (CDLHT) is poised to acquire Studio M Hotel, located in the Mohamed Sultan area, possibly this year, suggest many analysts.
Studio M Hotel, which opened in April 2010 and which is owned by CDLHT’s sponsor, London-listed Millennium & Copthorne Hotels, is deemed as a logical acquisition target for CDLHT.
It usually takes around two to three years for a newly launched hotel in Singapore to stabilise its income and be ready for injection into a real estate investment trust (REIT), said Vincent Yeo, CEO of the manager of the trust.
“But in this strong market, that has shortened considerably; a hotel like Studio M has already reached gestation within a nine-month period,” he said.
When asked about target acquisition markets, he said, “Singapore still offers the best prospects, in terms of visibility and growth potential.”
CDLHT yesterday announced significant year-on-year gains in top and bottom lines for the fourth quarter and full-year 2010. Its strong financial performance was attributed to the contribution from the five Australian hotels it acquired in February last year and the improved showing by its Singapore hotel.
The company’s income available for distribution to stapled security holders surged 29.3 percent year-on-year to around S$28 million in Q4 2010. CDLHT, however, will retain S$1.4 million of this amount as working capital and distribute S$26.6 million to security holders.
For the whole year 2010, the company saw a 32.7 percent growth in total distributable income to S$100.65 million, of which about S$8.7 million will be kept as working capital, while about S$92 million will be paid to security holders. This means a payout ratio of 91.4 percent for 2010, compared to 94.6 percent in the previous year.
CDLHT also posted a 27.5 percent year-on-year increase in gross revenue to S$33.3 million in Q4 2010, as well as a 27.3 percent year-on-year gain in net property income to S$31.5 million.