YTL REIT's 4Q net property income falls 26.5%, declares 2.8373 sen DPU

KUALA LUMPUR (July 31): YTL Hospitality Real Estate Investment Trust’s (YTL REIT) net property income fell 26.52% to RM44.28 million in the fourth quarter ended June 30, 2020 (4QFY20), from RM60.26 million a year ago.

This, the REIT said in a filing yesterday, was due to a lower revenue amid the Covid-19 pandemic, which was however partly cushioned by lower property operating expenses of RM25.49 million versus RM58.40 million previously. 

Revenue for the quarter dropped 41.2% at RM69.77 million, from RM118.67 million in 4QFY19, as revenue contribution from property rental in Malaysia and Japan, and the hotel segment in Australia, shrank.

The REIT reported a net loss of RM123.16 million, compared with a net profit of RM23.12 million in 4QFY19. 

The net loss, it said, was due to fair value loss on properties of RM28.12 million, compared with a fair value gain of RM23.88 million in 4QFY19, as well as the wider unrealised foreign currency translation loss on borrowings of RM99.8 million, compared to RM12.54 million in 4QFY19.

For FY20 as a whole, YTL REIT’s net property income fell 7.13% to RM235.22 million from RM253.28 million in FY19, as revenue dropped 13.13% to RM426.45 million from RM490.91 million.

The REIT has declared a final income distribution per unit (DPU) of 2.8373 sen, payable on Aug 28. This represents an increase of 35.18% compared with 2.0989 sen in 4QFY19. 

This brings the total DPU for the full year to 6.7115 sen, compared with 7.8711 sen in FY19. 

Noting that Covid-19 has adversely impacted the tourism, travel and hospitality industries, the group said it is taking steps to proactively manage the business and take necessary actions to ensure the group’s long term business prospects remain stable. 

YTL REIT agrees to 50% rental reduction for two years

In a separate filing, YTL REIT said it has agreed on rental variation requested by tenants, by offering a discount of 50% for two years in a bid to provide relief to tenants during the current challenging period.

The two-year period is until June 30, 2022. Subsequently, the tenants will pay the difference between the original rentals and reduced rentals on a staggering basis within seven years after the rental adjustment period or over the remaining tenures of the existing leases, whichever is earlier.

The REIT said the decision was taken after considering the unprecedented impact of the Covid-19 pandemic on the hospitality sector and the estimated time frame of two years for the lessees to recover their market position plus market share, and return to profitability. 

"The rental variations do not involve any rental waiver as the rental differences will be paid to YTL REIT group over time, with approximately 87% of the rental differences to be paid within 4.5 years after the rental adjustment period. Such payments (unlike rental waivers) will increase the distributable income for the benefit of unitholders in the relevant financial years," the REIT said.

Among the lessees are Star Hill Hotel Sdn Bhd, East-West Ventures Sdn Bhd, Prisma Tulin Sdn Bhd, Business & Budget Hotels (Penang) Sdn Bhd, Busines & Budget Hotels (Kuantan) Sdn Bhd, Syarikat Pelanchogan Pangkor Laut Sendiri Bhd, Tanjong Jara Beach Hotel Sdn Bhd, Cameron Highlands Resorts Sdn Bhd and Niseko Village K.K. and YTL Majestic Hotel Sdn Bhd. 

Meanwhile, the properties involved in the rental variation are JW Mariott Hotel Kuala Lumpur, The Ritz-Carlton Kuala Lumpur Hotel Wing, AC Hotel Kuala Lumpur Titiwangsa, AC Hotel Penang Bukit Jambul, AC Hotel Kuantan City Centre, Pangkor Laut Resort, Tanjong Jara Resort, Cameron Highlands Resorts, Hilton Niseko Village, The Ritz-Carlton Kuala Lumpur and The Majestic Hotel Kuala Lumpur.  

YTL REIT's share price closed one sen or 1.04% lower at 95 sen yesterday, giving a market capitalisation of RM1.62 billion. Year-to-date, the stock has declined by 30%.

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