KUALA LUMPUR: UOA Real Estate Investment Trust's (UOA REIT) earnings are expected to improve in the fiscal year 2021 (FY21), thanks to the acquisition of a new asset, the UOA Corporate Tower, in December 2020.
Hong Leong Investment Bank (HLIB) Research said the property has a strong occupancy rate of 91 per cent and is strategically located at a prime location (Bangsar South), with resilient demand.
"We forecast FY21 and FY22's earnings to increase by 57 per cent and 5 per cent respectively from the contribution of the said acquisition, after imputing a healthy occupancy rate and potential positive rental reversions," the bank-backed research firm said.
The research house said UOA REIT's office segment has been stable despite the Covid-19 pandemic.
The company's current portfolio occupancy remains decent at 82 per cent despite the Covid-19 pandemic impact.
"All six properties are strategically located in prime locations at Kuala Lumpur with good connectivity to public transport links.
"Thus, it augurs well for UOA REIT's occupancy, tenant retention, and rental rates," HLIB said.
The firm said UOA Reit has consistently paid out more than 95 per cent of its distributable income since FY15.
This implies an average yield of 7.9 per cent over the past six years, it said.
"We forecast a distribution per unit (DPU) of 8.6 sen in FY21, backed by the new acquisition in FY20.
"We initiate coverage on UOA REIT with a 'Buy' call at a target price of RM1.26," it added.