Affin Hwang lifts earnings forecasts on YTL REIT

  • Property
  • Wednesday, 01 Jan 2020

KUALA LUMPUR: YTL Hospitality REIT is expected to see higher distributable earnings for financial years 2020 and 2021 on higher contributions and lower financing cost for its Australian dollar borrowings, says Affin Hwang Capital research.

It forecasts YTL REIT to grow its financial year 2020 (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 100-basis-point (bps) decline in the finance cost for the Australian dollar loan, which should result in about RM9.8mil savings and lift its FY21 earnings, ” it said.

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