Last updated on August 23, 2025
KUALA LUMPUR: Sunway Real Estate Investment Trust (Sunway REIT) is on track to deliver stronger earnings in the third quarter of 2025, boosted by a recent asset purchase and the early reopening of Sunway Carnival Mall, according to CIMB Securities Sdn Bhd.
CIMB noted that the mall’s full reopening on May 7 — ahead of its initial end-June timeline — had already supported the trust’s net property income (NPI) in the second quarter.
Further upside is expected from the RM138 million acquisition of Aeon Mall Seri Manjung in Perak, which offers an average NPI yield of 7.0 per cent under a 12-year master lease. This yield surpasses Sunway REIT’s FY2024 retail portfolio yield of 5.7 per cent.
“As the acquisition is fully debt-funded, we estimate the trust’s gearing will rise to about 43 per cent from 41.2 per cent as at end-June,” CIMB said.
The research house expects stronger earnings ahead, supported by contributions from Aeon Seri Manjung, the Sunway Carnival Mall reopening, and cost savings of around RM6 million annually from the recent 25-basis-point cut in the overnight policy rate.
It also noted a rebound in hotel room bookings in July, aided by returning foreign tourists. However, Sunway REIT remains cautious over tenancy sales amid soft consumer sentiment, near-term rental reversions, and potential pressure from the newly implemented 8.0 per cent sales and service tax on leasing services.
CIMB has raised its FY2025–FY2027 earnings forecasts by 1.3–2.2 per cent to reflect the portfolio changes, maintaining a “Hold” rating with a slightly higher target price of RM2.14.
RHB Research Initiates Coverage on IGB Commercial REIT with ‘Buy’ Call
Meanwhile, RHB Research has initiated coverage on IGB Commercial REIT with a “Buy” rating and a 72 sen target price, implying a 20 per cent upside and an estimated 8 per cent yield.
“With improving occupancy, healthy gearing, and high yield, we see IGB Commercial REIT — the largest standalone office REIT — as a defensive investment with an attractive yield spread, particularly after the recent interest rate cut,” RHB said.
The firm expects the REIT’s prime Mid Valley City assets to continue drawing strong tenant demand despite challenges in the broader office market, thanks to their quality profile and self-sustaining ecosystem that offers high convenience and value-added services.
As at end-2024, the REIT posted a strong overall occupancy rate of 93.5 per cent, well above Kuala Lumpur’s 72 per cent average for purpose-built offices. Its KL City assets recorded a more modest 78 per cent occupancy, but RHB sees scope for improvement through ongoing refurbishments.
Backed by the same experienced team managing IGB REIT, the trust benefits from a proven track record of organic growth since 2012 and a right of first refusal from its sponsor for future commercial property acquisitions.
RHB forecasts a FY2024–FY2027 earnings CAGR of 14.5 per cent, driven by higher occupancy, operating leverage, and reduced borrowing costs. The current yield of 7.8 per cent is considered attractive, outpacing the typical 5–6 per cent yields of retail and industrial REITs.
