In retrospect, the 10-year Malaysian Government Securities (MGS) yield was less volatile in 2024, maintaining a range of 3.7% to 4.0%. The difference between MGS yield and M-REIT’s net DPU yield has sustained around 164-229 bps, above its 10-year mean of 134 bps. The KLRE index has risen by 12% in 2024 due to the increase in earnings from Retail and Hospitality assets. The M-REITs core earning grow by +7.8% for 9MCY24 mainly due to the new assets (for Sunway REIT, Axis REIT, YTL Hospitality REIT, Sentral REIT), positive rental reversion for retail segment (IGB REIT, CLMT, Sunway REIT) and improved occupancy for hospitality assets (Sunway REIT, KLCCCP, YTL Hospitality REIT) M-REITs that are invested in industrial segment have resilient earnings due to their long-term tenancies with a strong rental reversion. Hospitality assets should also benefit from higher inbound tourist arrivals into the country. M-REITs net DPU yield is currently at +205bps more than the 10-year MGS yield, which is at +1SD above the 10-year mean. The strong dividend yields, and stable occupancy rates maintains the attractiveness of Malaysia’s REIT sector. 55% of M-REIT sector debt is on floating rates (ranging from 9% of total debt for KLCCP to 100% for ALSREIT) at the end of 3Q24. The average interest costs in 9M24 ranged from 3.9% to 6.0%. Oversupply of retail and office space in Klang Valley and financing cost will remain key challenges for this sector. REITs sector - Peer valuation summary Market Summary Report Malaysian REIT 1 ABOUT US 17 2 BUSINESS OVERVIEW 3 SUSTAINABILITY STATEMENT 4 CORPORATE GOVERNANCE 5 OTHER INFORMATION 6 FINANCIAL STATEMENTS
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