“The wide gap between net yield and NPI yield is largely attributable to the high depreciation and amortisation charges, as well as interest expenses,” UOBKH says. According to the report, management aims to raise the average room rate to $600 (from $460 currently) by targeting more retail or rack-rate bookings. This would raise net yields to 3%, the report estimates.
Analysts reckon that IOI Properties Group is likely to eventually place South Beach Development and IOI Central Boulevard into a REIT, most probably listed in Singapore in the second half of next year. This is because the yields are likely make sense given Singapore’s lower risk-free rates and lower cost of debt.
A UOB Kay Hian report dated June 13 points out that South Beach Development’s net profit in FY2024 was RM63 million and net property income (NPI) was RM331 million. Based on South Beach’s net profit, NPI and total asset valuation (in ringgit) of RM5.5 billion, net yield is 1.2% and NPI yield is 6%.
