PETALING JAYA: Maybank Investment Bank Research (Maybank IB) expects YTL Hospitality-Real Estate Investment Trust (YTL-REIT) to enjoy a better recurring rental base following new contributions from recently acquired and refurbished assets.
“These additions will strengthen YTL-REIT’s recurring rental base and support growth in the medium term,” it said.
The research house has reiterated its “buy” call on YTL-REIT, raising its target price to RM1.35 on the back of strong earnings visibility and a steady income stream.
In a recent note, Maybank IB highlighted several asset enhancement initiatives and acquisitions completed in the financial year ended June 30, 2025 (FY25).
These include four AC Hotels and a hotel in Puchong, Selangor.
YTL-REIT has commenced a RM12mil renovation of the Puchong property, which is slated to reopen as an AC Hotel under a master lease by April 2026.
The project is projected to deliver a net property yield of 7%.
Meanwhile, construction of the Moxy Niseko hotel in Japan is progressing and is expected to be completed by the second half of FY27.
The development is forecast to yield a net property return of between 5% and 6%.
The research house also noted the REIT’s prudent capital management. As at the end of FY25, YTL-REIT’s gearing stood at 42.8%, with borrowings of RM2.3bil.
After accounting for the ongoing renovation and development costs, the REIT still has an estimated RM621mil in debt headroom.
Maybank IB highlighted that the A$260mil term loan maturing in FY25 has been extended by a year at a reduced interest rate of 5.8%. This, it said, provides flexibility for the group to reassess or restructure the loan for tax efficiency.
The REIT is currently adopting a floating rate strategy, with room to lock in rates should conditions improve.
“We forecast a blended FY26 interest rate of 5.2%,” it added.
Maybank IB has revised its earnings and distribution per unit forecasts for FY26 to FY28 by 1% and 3%, respectively, reflecting contributions from the Puchong hotel and the future opening of Moxy Niseko.
“We also expect steady rental reversion for master leases up for renewal in 2026, which account for about 30% of net property income.
“We continue to like YTL-REIT for its visible earnings pipeline, stable master lease income and revenue per available room growth prospects in Australia,” it said.
For FY25, YTL-REIT’s net profit dropped to RM148.56mil from RM178mil in the previous corresponding period, while revenue slipped to RM548.3mil from RM554.91mil a year earlier.
In a filing on its financial performance, YTL-REIT said the hospitality sector is anticipated to maintain its resilience and growth in the regions where the it operates, driven by sustained demand.
“The group is actively managing its business portfolio and making strategic decisions to protect long-term growth, while ensuring sustainable value creation for its unitholders,” it said.
