[RAM] RAM Ratings assigns issue ratings to YTL Hospitality REIT's Senior and Perpetual Notes

RAM Ratings has assigned issue ratings of AA₂(s)/Stable and A₁(s)/Stable to YTL Hospitality REIT’s (YTL REIT or the REIT) Senior Notes and Perpetual Notes (Perps), respectively. The Notes will be issued by the REIT’s wholly owned funding conduit YTL REIT Bond Berhad, under a RM5.0 bil Senior and Perpetual Notes Programme.

The rating of Senior Notes is anchored on YTL REIT’s credit profile, reflecting its contractual obligation under the REIT Trustee Financing Agreement to ensure timely servicing of coupon and principal payments on the Notes. Ratings of the Perps are notched down from the Senior Notes to reflect its subordinated position and the risk of coupon deferment.

YTL REIT’s credit profile incorporates a “moderate” likelihood of support from YTL Corporation Berhad (YTL Corp), whose ratings were upgraded to AAA/Stable/P1 on 28 January 2026. As the REIT’s ultimate sponsor, YTL Corp provides strategic oversight and holds significant interests in both YTL REIT and its manager, aligning all parties’ interests. The REIT’s contribution to YTL Corp is small relative to some of its other major subsidiaries, but plays a strategic role as its key vehicle for hospitality assets, with most properties leased to YTL Corp subsidiaries under long-term, fixed-rent agreements that generate about 60% of net property income. YTL Corp has also shown support by honoring lease obligations during Covid-19 and subscribing to the REIT’s 2016 placement.

Listed on Bursa Malaysia, YTL REIT is a pure-play hospitality REIT with 18 upscale hotel assets and 1 asset under development, comprising over 4,900 rooms across prime tourism and commercial locations in Malaysia, Australia and Japan, with a total appraised value of RM5.1 bil as at September 2025. The portfolio is geographically diversified and benefits from reputable international hotel partnerships. The REIT’s long-term master leases deliver stable, fixed rental income and high NPI margins, contributing about 60% of net property income – resulting in portfolio margins of over 50%.

Moderating the credit profile are YTL REIT’s relatively leveraged balance sheet and moderate debt protection metrics. As at end-September 2025, the REIT’s leverage ratio stood at 43.6%, while its 3-year fixed charge coverage (FCC) averaged at 2.30 times, slightly below the industry median. These ratios are projected to improve to around 38% and 2.50 times over the next three years, following the planned issuance of RM500 mil of Perps, to refinance borrowings and/or for future acquisitions. These estimates also consider tourism recovery, rental uplifts from completed AEIs, contributions from assets under development, subject to assignment of 75% equity credit to the upcoming Perps.


Analytical contacts
Tan Yan Choong
(603) 2708 8256
yanchoong@ram.com.my

Tan Han Nee 
(603) 2708 8322
hannee@ram.com.my

Media contact
Sakinah Arifin
(603) 2708 8212
sakinah@ram.com.my