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 2022 ("FY 2022").


Recovery in global travel accelerated in 2022 following the easing of pandemic-related travel restrictions and the restoration of public confidence, which also led to the release of strong pent-up demand. Notably, the stellar performance across our portfolio in FY 2022 was achieved despite the absence of international travellers from China.

As we move towards a full recovery, we are faced with challenges and economic headwinds arising from elevated inflation, higher interest rates and disruptions caused by the Russia-Ukraine conflict. Despite these economic headwinds, the return of Chinese travellers is expected to boost international tourism in 2023 and beyond.

Operational efficiency measures taken during the pandemic continue to benefit us today and real productivity gains achieved helped cushion the labour-related inflation.

On the back of positive momentum in rate growth, Revenue Per Available Room ("RevPAR") for all of our portfolio hotels (except Grand Millennium Auckland) recorded a yoy increase in FY 2022. By the fourth quarter of 2022, majority of our hotels have achieved RevPAR levels exceeding that of 4Q 2019 pre-pandemic levels. As a result of the strong recovery in trading performance, we recorded an increase of 43.7% in net property income ("NPI") to S$123.7 million for the year, from S$86.1 million for FY 2021.

Total distribution and distribution per Stapled Security for FY 2022 was S$69.7 million and 5.63 cents, representing an increase of 32.6% and 31.9% against FY 2021, respectively. Adjusted distribution and adjusted distribution per Stapled Security improved by 74.0% and 72.7% yoy respectively(1).

As at 31 December 2022, the portfolio valuation increased by 6.3% (S$166.3 million) yoy to S$2.8 billion, mainly due to the growth in valuation of the Singapore portfolio, the inclusion of Hotel Brooklyn (acquired in February 2022) and construction progress of The Castings(2) (residential BTR in UK). On the same store basis (excluding Hotel Brooklyn), the increase would have been 4.8% (S$127.6 million) yoy.


Accommodation demand in Singapore gained momentum following the lifting of travel restrictions in late April 2022, driven by both domestic and inbound demand as well as a series of sporting and citywide events and conventions. These include the return of major events such as the Singapore Grand Prix in September 2022, which was surrounded by a vibrant line-up of events.

Since September 2022, Singapore's airport capacity has been restored with the reopening of all four terminals at Changi Airport, returning the airport's handling capacity to more than 70 million passenger movements a year. As at the first week of January 2023, Changi Airport has reached 82% of pre-pandemic connectivity with over 5,600 weekly scheduled flights, connecting Singapore to 143 cities in 48 countries and territories worldwide(3).

Singapore ended 2022 with 6.3 million international visitor arrivals, exceeding the Singapore Tourism Board's forecast of between four to six million visitors. Although the number of visitor arrivals in December 2022 only amounted to 54.0% of the December 2019 pre-pandemic figure, a longer average length of stay supported the recovery in total visitor days to 71.9% of December 2019(4).

The majority of our Singapore Hotels that were operating as isolation facilities have ended these arrangements by mid-2022 and only one hotel remained as such at yearend. The opening of Havelock MRT station in November 2022 has enhanced the connectivity of Grand Copthorne Waterfront Hotel, Copthorne King's Hotel and Studio M Hotel to places of interest such as the Central Business District and the Orchard Road shopping belt. Overall, all of the Singapore Hotels ended the year on a positive note with RevPAR levels for 4Q 2022 exceeding that of 4Q 2019.

For the year ahead, key demand drivers for Singapore's hospitality sector include a healthy pipeline of MICE events, new tourism offerings, increased flight connectivity and capacity, as well as China's reopening. According to STB's forecast, international visitor arrivals are expected to reach around 12 to 14 million in 2023 (approximately 63% to 73% of 2019), before a full recovery to pre-pandemic levels by 2024(5). The prospects for Singapore's hospitality sector are bright and our Singapore Hotels are well-positioned to benefit from the continued positive momentum in 2023.

In New Zealand, Grand Millennium Auckland exited from the government isolation program in June 2022. Despite the full border reopening from 31 July 2022, the New Zealand Hotel faced challenges such as labour constraints and gradual international flight capacity restoration. Consequently, for FY 2022, the New Zealand Hotel recorded RevPAR decline of 26.8% yoy to NZ$128. Visitor arrivals into New Zealand are expected to recover progressively in 2023, further boosted by major sports events towards the latter half of the year.

In Australia, the performance of the Perth Hotels improved from June 2022 following the lifting of state-wide restrictions from late April 2022(6). This was aided by the subsequent recovery of shipping and mining demand, as well as national and international sporting events. The Perth Hotels posted a RevPAR increase of 75.6% to A$87 for the year. In 2023, Perth's hotel demand is expected to be supported by the increased activity in Western Australia's resources sector, coupled with the government's initiatives to attract more tourists, skilled workers and international students.

In Japan, 2.3 million visitor arrivals were recorded in the last two months of 2022, after border restrictions were lifted in October 2022(7), representing 46.4% of visitor arrivals in the same period in 2019(8). Rate recovery gained momentum thereafter and the Japan Hotels achieved a RevPAR growth of 61.0% yoy to ¥4,393 for FY 2022. The continued recovery of inbound visitors and return of visitors from China, which accounted for approximately 30% of total visitor arrivals before the pandemic, are expected to drive hotel demand going forward.

Tourist arrivals into the Maldives for 2022 recovered to 98.4% of 2019 pre-pandemic levels, notwithstanding the absence of China inbound tourism as well as a brief setback earlier in the year due to the onset of the Russian-Ukraine conflict which affected demand. Towards the end of 2022, the reopening of alternative island destinations and the strengthening of the US dollar, resulted in a weakening of demand for the Maldives' resorts. Despite these challenges, the Maldives Resorts achieved a RevPAR increase of 25.9% yoy to US$322 for FY 2022. Going forward, the return of Chinese travellers, which is the largest pre-pandemic visitor source market to the Maldives, should mitigate the impact of the new supply of resorts as well as the diversion of demand into other resort destinations which have now fully re-opened.

In the UK, consumer confidence quickly improved after all remaining domestic restrictions were lifted towards end- February 2022. During the year, the contribution from our UK portfolio included that of Hotel Brooklyn, which was acquired on 22 February 2022. Hilton Cambridge City Centre and The Lowry Hotel recorded a collective RevPAR growth of 70.2% yoy for FY 2022, against a comparatively low base last year. Despite economic challenges clearly weighing on the hospitality sector, UK's tourism outlook remains positive with 35.1 million inbound visitors forecasted to arrive in 2023, representing 86% of the 2019 level and an increase of 18% from 2022(9).

Pullman Hotel Munich saw a slow start to the year due to pandemic-related restrictions in place for most of 1Q 2022. Thereafter, the performance gained traction with the subsequent relaxation of restrictions, coupled with the return of corporate travel and citywide events. Driven by the strong tailwinds, the hotel achieved its highest annual ADR of €157 since its acquisition in 2017, while RevPAR improved to €86 for FY 2022, as compared to €28 in the prior year.

In Italy, Hotel Cerretani Firenze experienced healthy demand from domestic, intra-Europe and US leisure travel, further supported by the return of events and festivals. Notwithstanding a three-week disruption due to air-conditioning repair works from late July 2022, the Italy Hotel registered its highest annual ADR of €229 since its acquisition, which propelled RevPAR to €152 for FY 2022 against €35 in FY 2021.

The positive trends in Munich and Florence are expected to continue into 2023, supported by the recovery of travel in Europe as well as a healthy exhibition and fair calendar.

The financial markets have been very volatile in recent months, exacerbated by the turmoil in the banking system. There will be more macroeconomic uncertainties amidst a weak global economic environment. We will continue to be affected by challenges ahead such as inflationary cost pressures, higher energy prices and as a result of sharply higher interest rates worldwide, elevated interest expenses as well. While these factors could weigh on our bottom line performance in the near to medium term, higher room rates, especially in strong markets or in periods of high demand, should mitigate some of these adverse effects. The return of Chinese travellers bodes well for international tourism and should contribute to the continued positive momentum for many of our portfolio markets. While the high interest rate environment is a concern, we believe that these elevated levels will not be a permanent feature and interest rates will normalize once global inflation abates.


In February 2022, we acquired Hotel Brooklyn, a 189-key, 4-star upscale lifestyle hotel located in Manchester, UK. Hotel Brooklyn has contributed to the pool of stable rental income through an inflation-adjusted, full repairing and insuring lease. The property yield of 7.4% at the point of acquisition has since increased to 7.8% from 7 May 2022 following the annual rental adjustment. The addition of Hotel Brooklyn to our portfolio aligns with our growth strategy of building resilient income streams.

In terms of pipeline, the new UK BTR project, The Castings, will further strengthen our rental income base and provide meaningful portfolio diversification following its expected completion by 3Q 2024.

In addition, the forward purchase of a turnkey lifestyle hotel, Moxy Singapore Clarke Quay, is expected to be completed in 2025. This acquisition will add 475 keys to the portfolio, increasing CDLHT's ownership of total Singapore hotel key count to 3,031 rooms on completion. With a stronger foothold in the core market of Singapore and a growing presence in the lifestyle hotel segment, we will be wellpositioned to capture new opportunities and drive growth in the years ahead.


As part of our asset enhancement aspirations, Grand Copthorne Waterfront Hotel, a major asset, is currently undergoing a full renovation of 549 rooms scheduled to be completed in 2Q 2023. The hotel's meeting rooms will also be undergoing an extensive rejuvenation from April to July 2023 to significantly elevate its facilities. Although the renovation will disrupt performance in the short term, these works will strongly enhance the hotel's positioning as a leading conference hotel in Singapore in the years to come.

We made further progress on our sustainability journey in FY 2022, and together with our lessees and hotel managers, implemented several new initiatives across the portfolio. Most of the properties in Singapore have obtained the BCA Green Mark certification and we are working towards obtaining the relevant green certifications for the rest of the portfolio. Upon completion in 2025, Moxy Singapore Clarke Quay, which has obtained the BCA Green Mark Award GoldPlus, will add to our portfolio of green properties.

As a testament to our commitment on environmental sustainability, we have rolled out smart in-room control systems at Copthorne King's Hotel, which will be extended to Grand Copthorne Waterfront Hotel as part of the abovementioned asset enhancement exercise. At the Maldives Resorts, installation of solar panels will progressively take place during the year with a significant portion expected to be commissioned by 2Q 2023.

We remain confident of the long-term prospects of the portfolio, especially in our core market of Singapore, and will assess opportunities to invest in capital expenditures and asset enhancements to strengthen the competitiveness of our properties, in a sustainable way.


Maintaining a strong financial position remains one of CDLHT's key priorities. CDLHT's balance sheet is healthy, with a gearing ratio of 36.6% (10), which provides us with a debt headroom of S$790.4 million (11).

Well-supported by banks, we re-financed approximately S$509 million of loans and bank facilities during the financial year. To manage interest rate risks, CDLHT entered into three fixed-rate interest rate swaps and a cross currency swap to hedge against the interest rate volatility on some of its borrowings. In addition, proceeds from previous divestments amounting to £18.8 million were utilised to partially pare down the UK borrowings. These initiatives were taken to partially mitigate the interest cost increases.

The healthy gearing level and a strong unencumbered position of 94.7% of property value provide us with financial flexibility to pursue growth opportunities.


On behalf of the Boards and management team, I would like to thank our Stapled Security Holders and various stakeholders such as our lessees, hotel operators, business partners and service providers for your continued support.

I am pleased to welcome Mr Kwek Eik Sheng, who joined our Boards on 20 October 2022. With his years of experience in the real estate industry, CDLHT will benefit from his strong business acumen as we forge forward to grow and continue to build a resilient and sustainable portfolio.

At the same time, Mr Ronald Seah has retired after serving for nine years on the Boards. Mr Seah has contributed greatly to CDLHT with his vast experience in finance and investment, and on behalf of the Boards, I would also like to express our thanks and heartfelt appreciation for Mr Seah's dedication and invaluable counsel.

Lastly, I wish to extend my sincere appreciation to my fellow members of the Boards, management and staff of the Managers and the H-REIT Trustee. Their contributions and dedication allowed us to tide through the unprecedented pandemic. It is without a doubt that we have emerged stronger and the valuable lessons learnt will enable us to scale greater heights.

I look forward to meeting you at our annual general meetings on 21 April 2023.

Chan Soon Hee, Eric
Dated as of 21 March 2023

  • (1) Adjusted distribution per Stapled Security excludes the capital distribution of S$12.5 million in FY 2021 from sales proceeds of past divestments.
  • (2) Property under development via a forward fund scheme. The independent valuation as at 31 December 2022 was derived by applying the percentage of the spend-to-date (from 31 August 2021 to 31 December 2022) over the total contractual commitment to the assessed market value.
  • (3) Changi Airport Group, "Changi Airport handled 32.2 million passengers in 2022", 31 January 2023
  • (4) Singapore Tourism Board ("STB")
  • (5) STB
  • (6) ABC.net.au, "WA's relaxed COVID rules explained, from masks and G2G passes, to close contact changes", 27 April 2022
  • (7) Kyodo News, "Japan scraps COVID border controls in hopes of reviving tourism boom", 11 October 2022
  • (8) Japan National Tourism Organization
  • (9) VisitBritain, "2023 tourism forecast", 13 December 2022
  • (10) For the purposes of gearing computation, the total assets exclude the effect of FRS 116/SFRS(I) Leases (adopted wef 1 January 2019).
  • (11) Computed on basis of the regulatory gearing limit of 50.0%.