Letter to Unitholders

On behalf of the Board of Directors of the H-REIT Manager and the HBT Trustee-Manager (collectively the "Managers"), I am pleased to present our annual report for the financial year ended 31 December 2021 ("FY 2021").


The COVID-19 pandemic continued to disrupt global travel and impact the hospitality industry, with varying degrees of restriction measures remaining in place across the world throughout 2021. On a brighter note, the rising vaccination rates have led to the progressive easing of border restrictions across some countries which has revived interest in travel. While the operating environment remains challenging during this transition period, we look forward to a more sustained recovery of global travel and the return of major MICE events.

In 2020, we implemented proactive measures to contain costs and conserve cashflows, and pursued alternative revenue channels to mitigate the impact of the pandemic. Throughout 2021, we have maintained the same approach as we continue to navigate through the pandemic.

The occupancies for the New Zealand and Singapore Hotels were largely supported by demand for accommodation facilities used for isolation purposes throughout the year and the operating performance of all the markets in our portfolio (except Japan) recorded a yoy increase in Revenue Per Available Room ("RevPAR") in FY 2021. This increase was supported by improvements in the operating environment with some encouraging signs of recovery for global travel in 2H 2021 before the setback brought upon by the Omicron variant at year end.

For FY 2021, we recorded net property income ("NPI") of S$86.1 million, an increase of 24.2%, compared with S$69.3 million for FY 2020. Notably, there were some months of pre-pandemic trading in early FY 2020 before the lockdowns were implemented. Total distributable income for FY 2021 was S$52.6 million (including S$15.4 million of capital distribution), 13.0% lower compared with S$60.4 million for FY 2020. As a result, distribution per stapled security for FY 2021 was 4.27 Singapore cents as compared with 4.95 Singapore cents for FY 2020.

As at 31 December 2021, the portfolio book value (excluding right-of-use assets) increased by 2.1% yoy to S$2.7 billion, which was partly attributed to the inclusion of the UK residential BTR asset during the year. On the same store basis (stripping out the value of the UK residential BTR asset), the increase would have been 1.0% (or S$26.8 million) yoy instead.


In Singapore, international visitor arrivals fell to about 330,000 in 2021, from an all-time high of 19.1 million in 2019 (1), as tight border restrictions remained in place throughout most part of the year, before some arrival recovery materialised from November 2021 following the launch of the Vaccinated Travel Lanes ("VTLs"). In FY 2021, occupancy for our Singapore Hotels was mainly supported by government demand for dedicated isolation facilities, strong transient leisure business to Sentosa and long-stay corporate groups, with average room rates recording a 5.5% improvement compared to FY 2020. W Hotel continued to benefit from healthy staycation demand across long weekends and the year-end festive period. As a result, RevPAR for the 6 Singapore Hotels increased marginally by 1.0% yoy to S$82 for FY 2021. During the year, the impact to the 5 Singapore Hotels (2) was partially mitigated by minimum rent and alternative sources of business.

Singapore has achieved one of the world's highest vaccination rates, with 92% of its total population fully inoculated and booster shots administered to about 70% as of 16 March 2022 (3). Making progress towards the resumption of international travel, Singapore has 32 active VTLs as of 16 March 2022 (4). As a strong indication that Singapore remains committed to reopening and returning to normalcy, the Formula One race in Singapore is scheduled to return in October 2022, under a new seven-year deal. This renewal, which is the longest with the Formula One Group, affirms Singapore as a business and lifestyle destination, and ensures the country maintains its competitive edge in the long term (5).

During this recovery period, Singapore's tourism sector will continue to be supported primarily by the domestic tourism business and the gradual return of international travellers. Our hotels that are open to the public will continue to focus on capturing a greater share of the staycation market.

At Claymore Connect, retail activity gradually picked up in the latter half of the year due to rising vaccination rates and the resumption of group gatherings of up to five pax at F&B establishments, which helped to support mall traffic. FY 2021 NPI for Claymore Connect fell 42.8% yoy primarily due to rental rebates/reductions given to tenants in view of the trading environment. During the year, the mall continued to focus on tenant retention and securing new leases.

In New Zealand, Grand Millennium Auckland remains contracted by the government as a managed isolation facility throughout the year. For FY 2021, RevPAR for the hotel increased by 20.9% yoy to NZ$175, supported by higher room utilisation. New Zealand's five-stage border re-opening plan has commenced in end-February 2022 and the fifth stage, which will allow entry for all international travellers, is expected to begin in October 2022 (6). The progressive easing of border restrictions in 2022 is likely to mark a transition year for New Zealand's hospitality industry.

In Australia, the fixed-rent leases of the Perth Hotels expired on 30 April 2021 and AccorHotels was appointed as the hotel manager for a term of 10 years from 1 May 2021 under hotel management agreements. Consequently, CDLHT was fully exposed to the underlying trading performance of the hotels upon the expiry of the leases. During the year, demand was significantly curtailed by the closure of international borders and limited interstate travel into Western Australia ("WA"). As a result of the weak demand coupled with the absence of contribution from Novotel Brisbane, which was divested on 30 October 2020, FY 2021 NPI for the Australia portfolio decreased by 77.6%. WA's border restrictions were eased on 3 March 2022, allowing triple-dose vaccinated arrivals from interstate to enter WA without quarantine as well as international travellers, who will be subject to certain travel exemptions and quarantine requirements (7).

In Japan, foreign visitor arrivals for 2021 were virtually absent as strict border restrictions remained in place for most of 2021. While average room rates continue to be soft in 2021, occupancy was higher in last three quarters of the year, compared to the same period last year. The Japan Hotels reported a RevPAR decrease of 6.1% yoy to ¥2,729 for FY 2021, due to the stronger performance in 1Q 2020 when there were a few months of normal pre-pandemic trading. Japan is gradually easing border restrictions (8) and the hospitality sector will continue to be supported by domestic business ahead of the full reopening of international borders.

In the Maldives, the island nation remained open to international travellers throughout 2021 and tourist arrivals have recovered steadily. We are encouraged by the strong recovery in tourist arrivals in 4Q 2021, which has recovered to around the same level as 4Q 2019 (9). Our Maldives Resorts were largely operational for FY 2021, as compared to FY 2020 when Raffles Maldives Meradhoo was closed for a six-month period to minimise operating losses. At Angsana Velavaru, the major refurbishment of all 79 beach villas, which was fully completed in July 2020, has strengthened the resort's attractiveness. The asset enhancement initiative has delivered strong results with a significant growth in RevPAR for FY 2021, surpassing pre-pandemic RevPAR recorded in FY 2019. Collectively, the Maldives Resorts achieved a RevPAR of US$256 for FY 2021 from a low base of US$86 for FY 2020. Consequently, the Maldives Resorts recorded an NPI of S$8.1 million for FY 2021, a reversal from the loss of S$2.6 million in FY 2020. As compared to FY 2020, when our UK Hotels were temporarily closed for about three to five months due to the nationwide lockdown, both UK Hotels were operational throughout FY 2021.

Our UK Hotels benefitted from strong leisure demand and the encouraging return of incentives, corporate groups and sporting events, following the easing of restrictions from mid-May 2021 (10). Collectively, the UK Hotels achieved a significant recovery in RevPAR, which increased by 78.4% yoy to £72 for FY 2021. The outlook for the tourism sector across the UK continues on a recovery trajectory with the remaining domestic restrictions lifted from 24 February 2022 (11).

In Europe, the implementation of the European Digital COVID Certificate in July 2021 (12) helped to facilitate interregional travel for EU citizens and residents, supporting the steady recovery of intra-Europe travel. Amidst receding infection rates, Germany permitted non-essential travel from May 2021. Pullman Hotel Munich showed more meaningful demand recovery in 2H 2021 with average occupancy level reaching 38.5% compared to 17.7% the year before. Overall for the year, RevPAR increased 4.9% yoy to £28, pulled down by the significant decline yoy for 1Q 2021 due to the high base effect of normal trading in 1Q 2020 pre-pandemic lockdown. Looking ahead, broad restrictions of social, cultural and economic life should be gradually lifted by 20 March 2022 (13).

In Italy, the ban on inter-region travel was lifted from end-April 2021 (14). Although borders reopened to most visitors in 2H 2021, the constantly evolving restrictions affected international demand and occupancies were mainly driven by domestic leisure and intra-Europe travel. Albeit remaining at a low level as compared to pre-pandemic, the Italy Hotel recorded a RevPAR improvement of 50.9% yoy to £35 for FY 2021, mainly due to a low base in FY 2020 when the hotel was closed for a longer period as compared to FY 2021.

New challenges lie ahead as we continue on the road to recovery in 2022. Notably, the impact of the Russia-Ukraine conflict could weigh on the global travel rebound from the pandemic. Oil prices increased to the highest levels since 2014 as Russia invaded Ukraine, while the increase in the price of multiple commodities is also contributing to a surge in inflation (15). Higher oil prices may be passed on in the form of higher air fares and the surge in inflation could lead to higher interest rates (16).


On 26 July 2021, as part of our strategic pivot to position for growth, we announced the revision of our principal investment strategy to include adjacent accommodation and/or lodging assets such as properties used for rental housing and student accommodation. With the inclusion of these adjacent accommodation/lodging assets, which rely on different demand drivers, we aim to achieve both enhanced income stability and asset class diversification, which takes us beyond traditional geographical diversification of hospitality assets. A global pandemic like COVID-19 has shown that geographical diversification alone is inadequate. Increasing the pool of investment opportunities will also provide CDLHT with better growth prospects.

On 31 August 2021, we marked a significant milestone with our maiden investment into the residential BTR sector in Manchester, UK, through a forward-funding arrangement. The development of the 352-unit residential BTR building is expected to be completed in 2024. Manchester is a major employment centre that is home to a growing number of global, European and national headquarters, including 80 of the FTSE 100 companies, and the largest economic hub in the north of England. On completion, the BTR property is expected to be leased to a mix of individual residential tenants or families. Following the gestation period, the property is expected to provide stable and resilient income, mainly due to longer underlying average length of stay and the typical profile of high rent collectability and lease renewal rates for BTR assets.

BTR markets are backed by macro trends such as persistent housing shortage and increase in the house price-to-income ratio, which result in affordability becoming an impediment to home ownership. Supported by such macro trends, the BTR sector in Manchester and across many cities globally have displayed resilience, even amidst the pandemic. With strong demand drivers complemented by the asset's superior location, we expect the BTR property to achieve steady rental growth over time. With our attractive entry price, the asset is also well-positioned for capital appreciation in the future, amidst growing institutional investment demand. The construction of the new BTR building continues to be progressing in accordance with the planned schedule. Piling works have completed and groundworks have commenced.

Subsequent to the financial year ended 31 December 2021, in February 2022, we acquired a newly opened lifestyle hotel, Hotel Brooklyn. Located in Manchester, UK, Hotel Brooklyn is under a fixed, full repairing and insuring occupational lease with approximately 59 years unexpired (17), subject to upward-only annual rent review provisions broadly based on inflation. This acquisition is in line with the strategy to acquire assets with more stable income in order to increase CDLHT's resilience and fixed rental base. Through this accretive acquisition, we have increased our proportion of fixed rent income and provided immediate benefits to Stapled Security Holders.

Together with CDLHT's other lifestyle hotels in Singapore, namely W Hotel and Studio M Hotel, and in the pipeline, Moxy Singapore Clarke Quay under a forward purchase agreement (completion expected in 2025), the acquisition of Hotel Brooklyn allows CDLHT to further penetrate the lifestyle hotel market.


We remain confident in the long-term fundamentals of our key markets and continue to prepare for the eventual recovery of international travel. Ahead of the recovery, we took the opportunity to carry out asset enhancement initiatives to enhance our product offerings and ensure that our hotels will be well-positioned to take advantage of the returning demand.

During FY 2021, The Lowry Hotel completed the full refurbishment of two floors and the upgrading of the remaining four floors was largely completed in early 2022.

The room refurbishment project, for all 360 rooms at Studio M Hotel, was delayed due to the inability to access the rooms for works to be conducted since May 2020. The project has since recommenced in December 2021 and the refurbishment of 146 rooms has been completed in January 2022, with the remaining 214 rooms expected to be completed in 2Q 2022.


As at 31 December 2021, CDLHT has a healthy balance sheet with a gearing ratio of 39.1% (18) and ample debt headroom of S$613.8 million (19), cash reserves of S$139.5 million and S$632.6 million of credit facilities (20). Approximately 90.6% of our borrowings are unsecured debt, which provides us with greater financial flexibility for future financing.

Subsequent to the financial year end, to manage interest rate risk, CDLHT entered into two fixed-rate interest rate swaps to hedge against the interest rate volatility arising from the progressive drawdown from the UK residential BTR development term loan facility. In addition to this, proceeds from previous divestments amounting to £18.8 million were utilised to partially pare down the UK borrowings.

To manage our foreign currency risks associated with the capital values of our overseas assets, we typically adopt natural hedges by borrowing directly in the same currency as the underlying asset, or through cross-currency swaps.

With a healthy balance sheet and strong liquidity, CDLHT remains well-positioned to navigate through the economic challenges as we transition into an eventual market recovery. In the meantime, we will continue to pursue acquisitions, with a focus on long term value creation for our Stapled Security Holders, and evaluate suitable divestment opportunities as they arise to recycle capital for better returns.


In FY 2021, we continued to make progress on the sustainability journey, working closely with our stakeholders, including the master lessees and hotel managers at CDLHT's assets. Together, we focused on enhancing transparency, exploring and implementing new initiatives across our portfolio. Currently, most of the properties in our core market, Singapore, have obtained the BCA Green Mark certification.

There has been an increasing concern for environmental sustainability, in particular, climate change. For the year ahead, we will strengthen our efforts to work with our master lessees and hotel managers to adopt the best Environmental, Social and Governance ("ESG") practices. In our pursuit of long term growth and value creation for our stakeholders, we will also endeavour to make a positive impact in the community. We are pleased to present our Sustainability Report for FY 2021 on pages 113 to 134 of this Annual Report.


Many of our hotels continue to enjoy recognition as the preferred choice of accommodation. In 2021, six of our properties were recipients of the TripAdvisor Travellers' Choice Award 2021. Grand Millennium Auckland and Hilton Cambridge City Centre both received the TripAdvisor Certificate of Excellence for the tenth and seventh year running, respectively.

The restaurants at our hotels have also been recognised for their quality food and beverage offerings. Hua Ting Restaurant at Orchard Hotel has been awarded the Michelin Plate distinction and is included in The Michelin Guide Singapore. W Hotel's all-day dining restaurant, the kitchen table, which was renovated in December 2020, has secured the ninth spot globally in the Best Brunch Spots category in the TripAdvisor Travellers' Choice Awards 2021.


On behalf of the Boards and management team, I would like to express my appreciation to our Stapled Security Holders and various stakeholders such as our lessees, hotel operators, business partners and service providers for your continued support and confidence in the Boards' stewardship and in CDLHT through this very challenging time.

I would like to thank my fellow Directors for their valuable contributions, as well as the management team and staff for their hard work and dedication, adapting and ensuring business continuity during this pandemic.

We wish everyone good health and look forward to meeting you at our annual general meetings on 22 April 2022.

Chan Soon Hee, Eric
Dated as of 18 March 2022

  • (1) Singapore Tourism Board ("STB")
  • (2) Comprises Orchard Hotel, Grand Copthorne Waterfront Hotel, M Hotel, Copthorne King's Hotel and Studio M Hotel.
  • (3) Ministry of Health, Singapore
  • (4) Immigration & Checkpoints Authority, Singapore
  • (5) The Straits Times, "Singapore renews Formula One deal until 2028; this year's night race on Oct 2", 27 January 2022
  • (6) BBC, "Covid: New Zealand unveils phased border reopening plan", 3 February 2022
  • (7) ABC News, "WA border opening date is March 3, as Mark McGowan announces new COVID restrictions", 18 February 2022
  • (8) CNA, "Japan eases border rules but extends COVID-19 curbs for some regions", 3 March 2022
  • (9) Ministry of Tourism, Republic of Maldives
  • (10) Gov.uk, "Further easing of COVID restrictions confirmed for 17 May", 10 May 2021
  • (11) Gov.uk, "COVID-19 Response: Living with COVID-19", 23 February 2022
  • (12) European Commission, "EU Digital COVID Certificate"
  • (13) Business Times, "Germany to end most Covid curbs in March: draft government plan", 14 February 2022
  • (14) Reuters, "Italy gives timetable for easing COVID-19 restrictions", 17 April 2021
  • (15) The Straits Times, "Oil soars to US$105 as Russia attacks Ukraine, topping US$100 for 1st time since 2014", 24 February 2022
  • (16) The Straits Times, "Global stocks dive, STI sinks 3.5% as Russia launches military attack on Ukraine", 24 February 2022
  • (17) The lease has a term commencing on 7 May 2021 and expiring on 6 May 2081 with a break option exercisable by the tenant on 15 January 2045 and then on every fifth anniversary from that date, by providing at least six months' prior notice to CDLHT.
  • (18) Assuming the acquisition of Hotel Brooklyn had been completed on 31 December 2021 and the acquisition was 100% financed through debt, the gearing ratio of CDLHT would be 40.0% on a pro forma basis. For the purposes of gearing computation, the total assets exclude the effect of FRS 116/SFRS(I) Leases (adopted wef 1 January 2019).
  • (19) Computed on basis of the regulatory gearing limit of 50.0%.
  • (20) Comprising committed revolving credit facilities amounting to approximately S$232.6 million and S$400.0 million uncommitted unsecured bridge loan facilities. In February 2022, £23.1 million was drawn down from one of the bridge loan facilities to fund the acquisition of Hotel Brooklyn.