Better than expected NPI margins. Gross revenues of S$22.5m (-19% yoy , 20% qoq) was in line. Hotel operations were weak on a portfolio basis; RevPAR declined to S$150 (-27% yoy), which were in line. However, higher than projected net property income margins of 91.5%, were ahead of our projected 88%. This was largely due to successful cost containment measures, which somewhat offset the decline in room revenues. As a result, NPI of S$20.6m (-21% yoy, -5% qoq) was slightly ahead of projections. Distributed income came in at S$16.5m (-30% yoy, +11%qoq), translating to DPU of 1.97 Scts.

No further financing till 2012. CDL HT has successfully secured re-financing for ST expiring loans. The new facility amounts to S$350m comprising of a 3-year S$270m term loan and an S$80m committed revolving facility with DBS Bank. Interest rate for the new facility is lower than projections.

Maintain BUY, TP S$0.74. Valuation of 0.4x P/BV is attractive. While short term newsflow is expected to remain negative, as Singapore’s largest hotel owner, we believe CDL HT presents long term value to investors looking to leverage on the medium term prospects of the local tourism industry. Maintain Buy, TP S$0.74 based on DDM. CDL HT currently offers a prospective FY09-10F DPU yield of 12%. Risk to earnings: A sustained outbreak of Swine Flu virus impacting regional travel.