Hotel Properties 5.1% 5yr Senior Unsecured SGD

Shawn Sng  |   23 Apr 2024  |    101 views

Hotel Properties recently announced the issuance of its Senior Unsecured notes at final price guidance of 5.1%. These bonds come with a semi-annual coupon payment scheduled on the 3rd of May and the 3rd of November each year, with the first coupon payment commencing on the 3rd of November 2024. This new issuance is non-rated, and the proceeds from these bonds will be used to refinance existing borrowings and finance working capital requirements (including redemption of the SGD160 million 4.40% Subordinated Perpetual Securities comprised in Series 002)

 

Hotel Properties 4.4% Perpetual Bond Holders

While there has been no official announcement of the redemption of the 4.4% notes, the purpose behind this new 5.1% issuance suggests a strong likelihood for the previous holders of the 4.4% notes that it will be redeemed.

 

Company Overview

Hotel Properties Limited (HPL) owns and operates hotels, resorts, and shopping galleries in 15 different countries. The group also has an interest in 38 hotels under prestigious hospitality brands such as Four Seasons Hotels & Resorts, InterContinental Hotels Group, and Marriott International. The group also manages its own portfolio of hotels, such as Hard Rock Hotels and Concorde Hotels & Resorts. HPL is listed on the mainboard of the Singapore Exchange (SGX:H15), and as of 23rd April 2024, HPL has a total market cap of $1.856bn.

 

FY2023 Results

With the continued recovery in international travel, the Group’s hotels and resorts have benefitted from this, which resulted in its revenue improving by 22.19% Y.o.Y (from $525.5m in FY2022 to $642.1m in FY2023). The disposal of the 7 shop units in Ming Arcade ($87.8 million) that was previously proposed back in December 2022 was also fully collected upon completion in May 2023. The group’s net profit has also increased by 14-fold (from $40.2m in FY2022 to $561m in FY2023) due to higher net fair value gain of its investment properties.

 

Looking at its capital management, the Group’s finance costs have increased (from $59.4m in FY2022 to $98.3m in FY2023) mainly due to higher interest rates. HPL currently also has a cash and cash equivalent of $94.7m as of FY2023 and an interest coverage of 5.8 times. The Group should not face any issue servicing its debts that will be maturing within the next 12 months as those debts amount to $49.5m.

 

Looking ahead

With international travel continuing to pick back up, HPL would be well-positioned to relish this influx of travel demand through its hotels, resorts, and shopping galleries. Additionally, their Paddington Square project is at its last phase of development, and the new Paddington Bakerloo ticket hall is expected to be completed in the second half of 2024. Once completed, this London Underground station will directly link the development and bring significant footfall through the retail mall.

However, one thing to note is the current high interest rate environment and the ongoing geopolitical tension in the Middle East and Russia. Should it continue to amplify, this might dwindle the tourists flying in from Russia as HPL’s Maldives and resorts make up approx. 35% of its Group’s revenue, and according to Maldives tourist statistics, Russian tourists are ranked 3rd in terms of tourist arrivals for Maldives.

 

New HPL 5.1% issuance

This new issuance would be a great alternative for investors who did not manage to obtain the previous HPL 5.25% issued last year.

 

Current HPL Bonds in the Market:

  • Hotel Properties 4.4% Perpetual (SGD)
  • Hotel Properties 3.8% 2 Jun 2025 (SGD)
  • Hotel Properties 4.2% 30 Mar 2027 (SGD)
  • Hotel Properties 5.250% 9 Mar 2028 (SGD)
  • Hotel Properties 3.750% 31 May 2028 (SGD)

 

Bond Overview

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