KUALA LUMPUR: Maybank Investment Bank (Maybank IB) is forecasting Malaysian real estate investment trusts’ (M-REITs) earnings to grow by a decent 9.1 per cent this year, supported by sustained occupancy and rental rates, plus several new asset injections.
This is up from an estimated 6.9 per cent growth in 2023, said the investment bank, which retained its “neutral” rating on the sector.
“(Meanwhile,) we expect Bank Negara Malaysia to pause on interest rate, with the overnight policy rate staying at three per cent throughout 2024. (This will be) providing a respite after the higher financing cost experienced in 2023,” it said in a research note.
Maybank IB said that with global monetary policy tightening at its tail-end, interest should return to high yielding stocks in 2024.
“M-REITs currently offer an average estimated 2024 net yield of 6.4 per cent, primarily led by YTL Hospitality REIT (YTL REIT) (8.1 per cent) and Sentral REIT (7.9 per cent),” it noted.
The investment bank named YTL REIT as its top “buy” due to its strong dividend yield of 8.1 per cent and the improving performance from its Australia hotels.
“Rental income from its Malaysia and Japan hotel portfolios should remain resilient due to their long-term master lease arrangements,” it added.
Maybank IB also has “buy” ratings for Pavilion REIT, Sentral REIT and Axis REIT.
It said Pavilion REIT is expected to benefit from the improved performance of Pavilion Kuala Lumpur and full-year contribution from Pavilion Bukit Jalil, while Sentral REIT’s earnings growth will be supported by higher occupancy rate for its office assets and new contribution from Menara CelcomDigi.
The bank also said it likes Axis REIT due to its high exposure to the industrial segment and active search for new assets to grow its portfolio. – BERNAMA
