PETALING JAYA: YTL Hospitality Real Estate Investment Trust’s (YTL-REIT) bottom line will be enhanced following rental adjustments made for AC Hotels.
According to Maybank Investment Bank (Maybank IB) Research, AC Hotels will contribute about 5% to YTL-REIT’s financial year 2025 (FY25) and FY26 revenue.
“We are positive about the 11% incremental rental revision for YTL-REIT’s AC Hotels, namely for AC Hotel KL Titiwangsa, AC Hotel Penang Bukit Jambul and AC Hotel Kuantan City Centre.
“We raise the FY25 to FY26 estimated net profit by 1% per annum and dividend discount model-target price by two sen to RM1.08,” the research house said in a report, adding that YTL-REIT remained its to “REIT-buy” due to its resilient earnings, strong pipeline of assets and favourable net distribution per unit yield of 8% compared with the sector’s 6.6%.
However, Maybank IB expects gross gearing to inch up to 0.42 times from 0.40 times as of end June FY23 due to the refurbishment as well as the recent proposed acquisition of Hotel Stripes Kuala Lumpur.
To recap, YTL-REIT’s three supplemental lease agreements with the lessee of AC Hotels will increase the annual rental to RM2.7mil per year.
In return, YTL-REIT will pay the RM38.5mil refurbishment cost of the respective AC Hotels to spruce up their rooms.