YTLREIT Net Asset Value's (NAV) Trend

Description on NAV Fluctuation

FY2012 & FY2013 – Acquisition Position ‘On!'

• Bulk acquisition of Malaysia’s & Japan’s hospitality properties to transform into pure play hospitality REIT through cash, disposal of preference shares in Star Hill Global REIT and new units issuance on November 15,  2011. (Net effect on  Asset & Equities)
• Acquisition of Australian 3 properties via debt (RM1581 mil) by pledging the trust’s properties portfolio as collateral to AmBank. (Net effect on Asset & Liabilities)

FY2013 – Higher Financing Cost after securing debt with value of RM1581 mil & Weakening Australian Dollar leading to lower revenue. (Equity reduce)

FY2014 – Bank Negara Malaysia raise overnight policy rate (opr) from 3% to 3.25%, leading the trust’s finance cost to rise. (Equity reduce)

FY2014 – Revaluation of portfolio’s properties, causing rise in asset value. (Asset increase, Equity increase)

Accounting Equation

Asset = Liability + Equity

Download you PDF file here:

https://www.dropbox.com/s/za0d3k2f28ow3o8/NAV%20Trend%282012-2014%29.pdf?dl=0

  

Disclaimer:

The information in this article has been obtained from sources believed to be reliable. Its accuracy or completeness is not guaranteed and opinions are subject to change without notice. This report is for information only and not to be construed as a solicitation for contracts. The blog’s owner accepts no liability for any direct or indirect loss arising from the use of this article.

YTLREIT: Sole Hospitality Player in Malaysia REITs’ Sector Introductory and Qualitative Overview

Real Estate Investment Trust (REIT) can be classified as a mutual fund. They are allowed to be traded in the form of shares within the capital secondary market which provides investors with liquidity advantage as compare to direct investing in real estate. YTL Hospitality Real Estate Investment Trust (YTLREIT) main income streams are from fixed rental income (Malaysia & Japan) based on master lease contract and hotel business’ income (Australia) based on management contract. YTLREIT’s investment properties are located in 3 countries – Australia, Japan and Malaysia. Australia is the largest portion of YTLREIT's portfolio with 43% of the trust’s fund allocated. 

YTLREIT's Properties

Hotel Brands under Management

International Brands

• JW Marriot
• Marriot
• Ritz Carlton
• Hilton 

Local Brands

• Vistana
• Cameron Highlands Resort
• Pangkor Laut Resort
• Tanjong Jara Resort

YTLREIT Group Structure 

Source: YTL Hospitality REITs

The Trust Manager

Pintar Projek was incorporated in 1994 and is a 70%-owned subsidiary of YTL Land Sdn Bhd, which is a wholly-owned (100%) subsidiary of YTL Corporation Berhad.

Key active personnel in managing YTLREIT:

·         Francis Yeoh Sock Ping

·         Mark Yeoh Seok Kah

YTLREIT’s Ownership Structure^

Top 30 shareholders – 79.28% or 1,049,996,489/1,132,330,089 shares.

Minority Shareholders – 20.72% or 82333600/1,132,330,089 shares.

Level of ownership concentration: High*

*69.04% or 914,303,689 of the total shares hold by YTL Corporation Bhd

Yeoh Family Holdings

Direct & Indirect Shareholdings via companies listed below:

YTL Corporation Bhd – 56.44% or 639,087,102 shares.

East-West Ventures Sdn Bhd – 4.72% or 62,500,000 shares.

YTL Power International Berhad – 3.25% or 36,800,727 shares.

Syarikat Pelanchongan Pangkor Laut Sendirian Berhad – 1.83% or 24,250,000 shares.

Business & Budget Hotels (Kuantan) Sdn Bhd – 1.42% or 18,750,000 shares.

Megahub Development Sdn Bhd – 1.38% or 18,250,000 shares.

Other Key Shareholders:

EPF (Malaysia sovereign fund) Shareholdings

#Key shareholders who are expected to play a monitor role in overseeing the substantial shareholders.
^ As at 16 July 2014

Comments:

·   YTLREIT’s competitors – SUNREIT and ARREIT, but they have different focus. E.g. SUNREIT focus on retail segment of their properties.

·  Hospitality focuses REIT with a geographically and brand diversified portfolio.

·  Fixed and stable income stream from master lease’s lessee with 5% increment in lease fee every 5 years time, although foreign exchange risk exists.

·  Seasonal cycle in Australian hotel business. 

· Sign of weak corporate governance – high family ownership concentration through individuals, public and private corporation holdings. (Threats to minority/retail shareholders)

Download your pdf version here:

https://www.dropbox.com/s/n23igob2s9opbr3/YTLREIT_Overview.pdf?dl=0

Disclaimer:

The information in this article has been obtained from sources believed to be reliable. Its accuracy or completeness is not guaranteed and opinions are subject to change without notice. This report is for information only and not to be construed as a solicitation for contracts. The blog’s owner accept no liability for any direct or indirect loss arising from the use of this article.

YTL Hospitality REIT: 2015 A Bumpy Year Ahead

Currency Risk

Major trust’s revenue contributor – Australian properties (73% of FY2014 total revenue) are facing tension in delivering revenue back to Malaysia as weakening Australian Dollar (AUD) against Malaysian Ringgit (MYR) has lead revenue to shrink due to weak mineral commodities price. Same position as to Japanese property as BOJ is busying in printing money to achieve target inflation rate and target economic growth, leading Japanese Yen (JPY) to shrink against world’s major currency including MYR. However, the expected impact of weak AUD will ease in the second quarter of FY2015 with expected stronger revenue due to holiday season and expected continuation of decreasing oil price will pressure on MYR performance in the comming months of 2015.

Financing Risk

Financing the purchase of Australian properties via debt during FY2013 has increased the trust gearing ratio. With Malaysia Overnight Policy Rate (OPR) hikes and the postpone of corporate exercise by the trust to CY 2015 in paring down the gearing level will lead to a rise in financing cost. The expected finance cost rise will further squeeze the trust’s income available for distribution to the shareholder

Interest Rate Risk

Recent rising Malaysian Government Securities (MGS) yield due to weakening Ringgit and oil price slump has lead the yield spread between the trust’s yield and bond’s yield to shrink, making the REITs sector to lose it shine causing investors to shift their funds into a safety shelter as compare to REIT.

Conclusion: The postpone of the corporate exercise to drawn down the trust’s debt level will continue to the trust’s dividend payout, causing the trust’s dividend yield is expected to shrink. Thus, we recommend a hold which will be the best cause under current rising volatility market condition.

Download your pdf version here:

https://www.dropbox.com/s/66djhf1z2sbf413/YTLREIT.pdf?dl=0

Disclaimer:

The information in this article has been obtained from sources believed to be reliable. Its accuracy or completeness is not guaranteed and opinions are subject to change without notice. This article is for information only and not to be construed as a solicitation for contracts. The blog’s owner accept no liability for any direct or indirect loss arising from the use of this article.