Investor Information / Financial Information / Financials

UNAUDITED FINANCIAL STATEMENTS ANNOUNCEMENT OF CDL HOSPITALITY TRUSTS AND H-REIT AND ITS SUBSIDIARIES FOR THE YEAR ENDED 31 DECEMBER 2009

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Fourth quarter ended 31 December 2009

Gross revenue for 4Q 2009 was S$26.1 million, a decrease of 7.1% compared to S$28.1 million in 4Q 2009. The reduction in revenue was mainly due to lower revenue per available room ("RevPAR") of the Singapore Hotels, which declined by 13.6% to S$159 in 4Q 2009 compared to S$184 in 4Q 2008. Average occupancies for the Singapore Hotels in 4Q 2009 exceeded the corresponding quarter last year by 5.2 percentage points to 88.9%. Average room rates for the reporting quarter, however, remained soft due to the intense price competition.

Despite the reduction in gross revenue of S$2.0 million for the reporting quarter, net property income increased by S$3.0 million or 14.0% to S$24.7 million compared to the corresponding period a year ago of S$21.7 million. This improvement was mainly due to a reduction in property tax expenses of S$3.7 million (in the absence of a one-off additional property tax assessment of S$3.2 million raised by IRAS in December 2008) and lower other property expenses, which decreased by S$1.2 million.

Net finance costs for 4Q 2009 increased by S$2.8 million, partly due to the absence of recognition of foreign currency translation differences on a New Zealand Dollar loan, following its repayment in July 2009. In addition, the Group did not enter into any financial derivatives for the quarter, hence no remeasurement of financial derivatives was recorded in 4Q 2009.

The Group revalued its investment properties as at 31 December 2009 and recorded a net revaluation surplus of S$0.5 million in 4Q 2009. This is a significant improvement compared to the revaluation deficit of S$123.2 million recorded on its investment properties the same period last year.

With respect to distribution, in light of IRAS recent clarification that H-REIT is only required to distribute 90% of its taxable income in order to enjoy tax transparency, H-REIT has decided to distribute 100% of its taxable income and retain an appropriate proportion of its tax exempt income for working capital purposes. The total distributable income for 4Q 2009 is S$24.5 million, comprising 100% of its taxable income of S$19.6 million for 4Q 2009 and S$4.9 million of taxable income which was retained in previous quarters.

The total tax exempt income for the full year ended 31 December 2009 was S$7.4 million. S$3.3 million of the tax exempt income was distributed in 1H 2009 and the remaining S$4.1 million will be retained for working capital needs. In 3Q 2009, the tax exempt income to be distributed was S$2.0 million for that quarter. Following the clarification from IRAS and HREIT's decision to distribute the taxable income retained in the previous quarters as described in the foregoing paragraph, the S$2.0 million tax exempt income to be distributed in 3Q 2009 has been reversed in the current quarter.

Overall, the income to be distributed per Stapled Security for 4Q 2009, after deducting the income retained for working capital, was 2.67 cents against the distribution per Stapled Security of 1.80 cents in 4Q 2008.

For the reporting quarter, the Singapore Hotels recorded a combined Hotel revenue of S$66.3 million, a reduction of 10.5% over 4Q 2008. Gross operating profit in 4Q 2009 was S$34.1 million compared with S$39.9 million reported in the same period last year.

Net property income contributed by the Orchard Hotel Shopping Arcade for 4Q 2009 was maintained at S$0.8 million. Average occupancy was 81.8% in 4Q 2009 with an average monthly rental rate of approximately S$7.35 per sq. ft.

Full year ended 31 December 2009

Gross revenue for FY 2009 was S$91.8 million, a reduction of S$22.9 million or 20.0% over 2008. For the year ended 31 December 2009, RevPAR decreased by 28.0% from S$207 in 2008 to S$149 in 2009. The decrease in RevPAR is reflective of the decline in visitor arrivals and is consistent with the overall hotel industry which was sharply impacted by the softening of tourist, MICE (meeting, incentive, travel, convention and exhibition) and business travel arising from the global economic slowdown. This was exacerbated by the absence of biannual Singapore air show event and the global outbreak of influenza (H1N1) virus, which had resulted in a reduction in room bookings (including cancellations) during 2009. In addition, contributions from the Formula One TM Grand Prix and the APEC conference towards the end of 2009, whilst positive in terms of occupancy rate, did not yield the high average room rates recorded a year ago.

Net property income for FY 2009 of S$85.9 million was boosted by a one-off 40% property tax rebate of S$2.1 million granted by IRAS, lower property tax and lower other property expenses, which have been explained under the 4Q 2009 results.

Net finance costs for FY 2009 decreased by S$1.6 million, partly due to lower net funding costs and the absence of any remeasurement or recognition of financial derivatives following the expiry of these instruments in FY 2008.

The Group revalued its investment properties as at 31 December 2009 and recorded a net revaluation surplus of S$0.5 million. This is a significant improvement compared to the revaluation deficit of S$123.2 million recorded in FY 2008. The revaluation adjustment has no impact on the total distributable income.

The total distributable income for FY 2009 was S$75.8 million, out of which $71.7 million or 94.6% will be distributed to unitholders. The remaining undistributed income of S$4.1 million, comprising solely of tax exempt income earned in 2H 2009, will be retained for working capital needs.

The income to be distributed per Stapled Security for 2009, after deducting the income retained for working capital was 8.57 cents against the distribution per Stapled Security of 10.62 cents for 2008.

Overall, the Singapore Hotels recorded a combined Hotel revenue of S$236.4 million, 21.3% lower than the corresponding year of S$300.4 million. Gross operating profit for the year ended 2009 was S$118.6 million compared with S$161.2 million reported in 2008.

Net property income contributed by Orchard Hotel Shopping Arcade for the year ended 2009 was maintained at S$3.2 million, with an average occupancy of 86.1% and an average rental rate of approximately S$7.49 per sq. ft.

The year 2009 ended on a relatively upbeat note. Despite close to 1,000 new rooms added to the overall Singapore market in 2009, the average occupancy in 4Q 2009 rose sharply to 88.9%, exceeding even the occupancies for the same period in both 2007 and 2008. Occupancy in 2H 2009 was 12.4 percentage points higher than 1H 2009 at 87.5%. RevPAR in 2H 2009, however, still recorded a 22.2% decline compared to 2H 2008 as intense price competition in the first half of 2009 had resulted in a 25% decline in ARR from S$238 in 2H 2008 to S$179 in 2H 2009.

In the course of 2010, there will be 5,823 rooms comprising 17.7% of the existing number of gazetted rooms coming on to the Singapore market. This will have the effect of increasing supply and offering more options for the consumer. The bulk of the rooms, numbering around 4,300, will be from the highly-anticipated launch of the two Integrated Resorts ("IRs") in early 2010. The opening of the IRs is expected to be the single most important event in 2010 and is expected to have a broad-ranging and substantial impact on Singapore and its hospitality sector. Offering gaming entertainment, world-class conference facilities and attractions including a Universal Studios theme park, the IRs mark a significant step forward in Singapore's transformation into a world-class travel destination and a preferred mono-travel destination. Other players in the entertainment and tourism industry, in anticipation of a new demand boost from the launch of the IRs, have also invested significantly by launching numerous new activities, entertainment spots, new concept or boutique hotels, nightclubs and restaurants. Further enhancing the tourism appeal of Singapore is the rejuvenation of existing retail malls and the launch of new retail malls along Orchard Road.

The increase in Singapore's "Entertainment Quotient" and the successful revamp of the Orchard Road shopping belt in 2009 have also led to a rise in demand for locations in which to house new entertainment and F&B venues. CDLHT continues to review various assetenhancement options and opportunities for the Orchard Hotel Shopping Arcade - Galleria. As an initial step, the retail space in the Galleria has been increased by around 5,000 square feet, which has already been leased by a new tenant that will create a bistro and live music venue on two levels of the complex.

The structural boost in business and leisure demand led by the opening of the IRs, as well as a broad range of new demand drivers, should lead to increased visitor arrivals and extended lengths of stay in Singapore. According to the Straits Times in December 2009, the MICE industry is expected to see three times as many new business events in 2010 as compared to 2009, and at least 10 major events attracting more than 5,000 foreign delegates – twice as many as in 2009. In the next few years, once the two IRs have firmly promoted and established themselves in the market, the MICE business should see a further significant increase.

The Universal Studios theme park and gaming entertainment are expected to be key drivers of new and repeat leisure demand, particularly during the weekend period where the Singapore hotels in CDLHT's portfolio have traditionally experienced lower occupancies than during weekdays. The strategic location of H-REIT's Singapore properties relative to the IRs will be a competitive advantage in capturing demand from visitors to the resorts.

Singapore's Changi Airport also experienced a record-breaking increase in air traffic numbers in December 2009, which augurs well for the hotel industry in 2010. A total of 3.83 million passenger arrivals were recorded during the month, which was the highest number recorded in a single month. Since passenger numbers started picking up in August 2009, traffic has grown every month and the hotel industry has also benefited, with occupancy rates soaring to a high of 84% in November 2009.

There is also potential for Singapore to convert transit passengers into actual visitors. Historically, the proportion of visitor arrivals into Singapore compared to total passenger movements at Changi Airport has been less than 20%. This means that less than 7.4 million of a total of 37.2 million passengers passing through Changi Airport in 2009 would have visited Singapore. The country's new attractions should help in encouraging more transit passengers to spend some time discovering and enjoying Singapore, thereby boosting demand for rooms.