Two Singapore-listed hospitality trusts have issued grim guidance notes, warning investors of significant cuts to revenue and distributions amid COVID-19 travel curbs.
CDL Hospitality Trust (CDLHT) warned investors on 17 July that income for distribution for the six months ended 30 June 2020 is expected to decline by 60% to 70% year-on-year.
Accordingly, distribution per stapled security (DPU) for the period is expected to decline by 60% to 70% year-on-year from the 4.16 cents recorded in 2019.
CDLHT’s overseas properties are either closed on a temporary basis or operating at low occupancies, except for the New Zealand hotel.
The occupancies of the Singapore and New Zealand hotels have been, and continue to be supported by demand for accommodation facilities which can be used for isolation purposes, said CDLHT.
Additionally, the occupancy of the Singapore hotels is also supported by demand from foreign workers affected by border closures.
Overall, RevPAR across CDLHT’s portfolio has been, and will continue to be significantly affected, it added.
“While sentiments point to a start of the recovery of international travel demand in 2021, the situation remains fluid and there is much uncertainty on the recovery trajectory”, warned CDLHT.
Similarly, ARA US Hospitality Trust has warned of “a significant decline in gross revenues”, without providing specifics.
However, the trust affirms that it is in a secure financial position, and has adequate liquidity to meet its operational needs and financial commitments to navigate through the crisis.
CDL Hospitality Trust and ARA US Hospitality Trust are trading at discounts of approximately 30% and 50% to book values respectively, according to data compiled in the Singapore REITs table.