YTL REIT looking at more hotels

Monkey Island Resort in Bray. Courtesy Photo from YTL Hotels

By Sharen Kaur - Published in NST Property, February 6, 2020 

KUALA LUMPUR: YTL Corp Bhd aims to buy more assets to increase the size of its YTL Hospitality REIT (real estate investment trust) business, currently valued at RM4.62 billion.

Executive director Datuk Mark Yeoh told the New Straits Times the group was looking at hotels in Europe, Japan and Malaysia.

“We are strategic investors. When the opportunity is right, we will look at acquiring assets.”

Yeoh, who is also executive director of YTL Hotels, said the board had given the group a mandate to grow the REIT business, and it had been expanding steadily over the years.

“We are looking at several assets overseas. Every deal will have to be yield-accretive. This is a pure-play hospitality REIT. It has good value and is cheap in terms of price.

“Whether we develop the hotel from scratch or acquire an existing property, there is always asset enhancement. This is where we reposition the hotel and bring up the numbers before offering it to YTL REIT. Generally, we pay more than six per cent and that is why we are popular with investors.”

YTL REIT, presently the only REIT listed in Malaysia that invests specifically in hospitality assets, has an investment portfolio of 15 prime hotels and hospitality-related properties in Malaysia, Australia and Japan.

Yeoh said YTL Corp was on target to inject luxury hotels across the United Kingdom, owned and operated by YTL Hotels, into YTL REIT this year.

They are the Academy Hotel in Bloomsbury district, Threadneedles Hotel in London, Monkey Island Estate in Bray, Gainsborough Bath Spa in Bath and the Glasshouse Hotel in Edinburgh, Scotland.

The Academy Hotel in London. Courtesy Photo from YTL Hotels

Yeoh said the assets were performing well and would add more income and provide unitholders with stable cash distributions.

YTL Corp had invested about £100 million to buy the properties in the last four years.

Datuk Mark Yeoh.

Yeoh said valuations were being done and the exercise to inject the hotels into YTL REIT would be completed this year.

“When the hotels generate a good yield, we will offer them to YTL REIT. This frees up our cash position and allows us to continue to reinvest in new assets.”

YTL REIT is trading at a lower price earnings ratio but has a higher distribution yield of 5.81 per cent compared with regional peers, such as Singapore-listed Far East Hospitality Trust and Ascott Residence Trust.

Several property and REIT analysts said they liked YTL REIT as it was a pure play hospitality
REIT with exposure to the international market, and had master leases on properties in Malaysia and Japan that provided a steady income.

An analyst said YTL REIT’s yields of six to seven per cent was above the industry average of five per cent. YTL REIT’s net profit rose more than 240 per cent to RM39.6 million in the first quarter ended Sept 30 last year.

Affin Hwang Capital expects YTL REIT to grow its distributable earnings per unit by 10 per cent this year. This would mainly be driven by contribution from Green Leaf Niseko Village, earnings recovery at Brisbane Marriott Hotel and rental revision at JW Marriott.

The firm, in a recent report, maintained its “buy” call on YTL REIT with a higher target price of RM1.46 from RM1.38 previously.

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