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KUALA LUMPUR – Rakuten Trade sees Pavilion Real Estate Investment Trust’s (REIT) distributable income rebounding strongly with the reopening of China’s borders and its economy and the return of foreign tourists to Malaysia.
The brokerage also expects the acquisition of Pavilion Bukit Jalil (PBJ) to have a positive contribution to Pavilion REIT’s income distribution in the financial year 2023 (FY23) and more significantly in FY24, it said in a note today.
“We forecast Pavilion REIT to register a distributable income of RM302.8 million and RM378.4 million for FY23 and FY24 respectively.
“Based on a payout ratio of 100%, we expect the group to distribute 8.0 and 8.7 sen for FY23 and FY24, translating into yields of 6.1 and 6.6% respectively,” the brokerage said.
Rakuten Trade noted that Pavilion Mall Kuala Lumpur is the largest contributor to Pavilion REIT, which has a net lettable area of 1.35 million sq ft, contributing 67% and 87% of revenue and net property income, respectively.
“Pavilion Mall KL’s occupancy rate has gradually improved to 92% in the latest quarterly report.
“We expect occupancy to reach the pre-pandemic level of 98-99% by the second half of 2023 (2H2023) supported by the return of foreign tourists, particularly from China,” it said.
Rakuten Trade has a “buy” call on Pavilion REIT with a target price of RM1.60 based on a target yield of 5.5% over FY24 distribution. – Bernama, April 13, 2023