RESEARCH ALERT-DBS downgrades CDL Hospitality Trust to hold

SINGAPORE Feb 1 (Reuters) - DBS Group Research downgraded its rating on CDL Hospitality Trust to hold from buy and cut its price target to S$1.82 from S$1.85.

By 0415 GMT, CDL Hospitality Trust's shares were down 2.5 percent at S$1.73 after falling 17.2 percent since the start of last year.

STATEMENT:

DBS said though it still liked CDL for "its exposure to the buoyant Singapore tourism sector", it saw limited upside to the target price from current levels.

CDL reported a 13 percent rise in October-December gross revenue to S$37.8 million from a year ago. Net property income also rose 13 percent to S$35.5 million. DBS said the results were in line with expectations.

DBS said a prudent 90 percent payout ratio for fiscal year 2011 was favourable for CDL as the management guided that income retained will be utilised towards capital expenditure and upgrading mainly at Novotel Clarke Quay later this year.

The brokerage said such a move "implies that the trust will gradually be more self sufficient in funding its capex going forward". (Reporting By Mark Tay; Editing by Anshuman Daga)