KUALA LUMPUR: Analysts may have a “neutral” stand on the local real estate investment trusts (REIT) market with a less than rosy outlook for next year, but YTL Hospitality REIT seems to be shining through the gloom with its considerably high 12-month rolling distribution yield of above 8.29%.
The REIT is one of the property trusts of YTL group and owns prime hotel and hospitality-related properties in Malaysia, Australia and Japan.
In its latest financials, the REIT recorded an income distribution of RM112.06 million for the financial year ended June 30, 2014 (FY14). This translates to 8.46 sen per unit on a distribution per unit (DPU) basis. If one takes last week’s closing price of RM1.03 per unit into account, the yield is slightly lower at 8.2% — which is still high.
Comparatively, according to TheEdge Research, IGB REIT, which focuses on retail properties, gives a rolling 12-month distribution yield of 5.71%; similarly, Pavilion REIT gives only 5.09%, while Axis REIT, which invests in industrial-logistics properties, gives 5.44%.
“[A] DPU of 8.46 sen or a yield of 8.2% is a good return. This is higher than retail REITs, which typically offer 5% to 6%, while office REITs is circa 7%,” Pacific Mutual Sdn Bhd’s head of equities, Helen Tan, told The Edge Financial Daily in an interview.
According to the REIT’s 2014 annual report, the attractive yield generated by the property trust is thanks to the consolidation of results from its Sydney Harbour, Melbourne and Brisbane Marriott hotels in Australia, underpinned by better average daily rate, higher occupancy rate and larger revenue per available room.
The report also showed that revenue from these Australian properties have soared 73.9% on year to RM311.7 million from RM179.2 million. Consequently, their contribution to the REIT’s total revenue hit 73.3%, a significant increase from 61.3% from the year before.
It should also be noted that its FY14 total revenue went up 45.6% on year to RM425.11 million from RM292.02 million, while net property income jumped 29.2% on year to RM202.9 million from RM156.9 million.
Its net asset value per unit has also risen substantially to RM1.35 from RM1.07 a year ago, thanks to a net revaluation surplus of RM343 million recorded in May this year.
While its Australia segment boasted superb improvement in performance, the local and Japan segments also grew, albeit marginally.
According to its 2014 annual report, the REIT has invested in 13 properties across Australia, Malaysia and Japan. Some of its more notable properties in Malaysia are JW Marriot Hotel Kuala Lumpur, The Residences at the Ritz-Carlton, The Ritz-Carlton, and Vistana Penang Bukit Jambul, while its Japanese investment is in Hilton Niseko Village Hotel.
In the report, chief executive officer Tan Sri Francis Yeoh forecast a positive outlook for the REIT, given the ongoing Visit Malaysia Year 2014 initiative. He also noted that Australia and Japan are expected to continue their current stable trajectories — given the maturity of these economies — with growth pinned at 2% to 3%.
This article first appeared in The Edge Financial Daily, on November 3, 2014.