It forecasts YTL REIT to grow its FY20 distributable earnings per unit by 10% on full-year contribution from Green Leaf Niseko Village, earnings recovery at Brisbane Marriott Hotel post-renovation and rental revision at JW Marriott following the renovation works.
The research house added that it is positive on YTL REIT's resilient master leases, which account for 60% of its FY20 net property income.
It said the master lease agreements with the lessees have long contract tenure and stable rental income with a 5% step-up provision every five years.
Meanwhile, Affin Hwang expects YTL REIT to deliver another 9% year-on-year earnings growth in FY21 on lower finance cost and a stronger Australian dollar to the ringgit.
It expects YTL REIT to refinance its term loan of A$342.8mil as the lending rates of Australian banks for large businesses have declined in recent years.
"We have pencilled in a 100bps decline in the finance cost for the AUD loan, which should result in c.RM9.8m savings and lift its FY21E earnings," it said.
The research house maintained its buy rating on the REIT with a higher price target of RM1.46 after lifting its earnings forecasts and incorporating a lower cost of equity.
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