Malaysian REITs expanding their asset portfolio


MIDF Research continues to see a positive outlook for REITs, led by retail and industrial sub-segments.

PETALING JAYA: With their first-quarter 2024 (1Q24) earnings in line with expectations, Malaysian real estate investment trusts (REITs) are expanding their asset portfolio as prospects for the real estate sector improves.

MIDF Research continues to see a positive outlook for REITs, led by retail and industrial sub-segments.

“Axis-REIT acquired three industrial assets in Bukit Raja in February and April 2024 to strengthen its presence in Bukit Raja which is a growing industrial area with accessibility to major highways. It also announced the acquisition of two automobile service centres from Cycle & Carriage Bintang Bhd,” it said in a report.

The research house said REITs have also been actively acquiring retail assets.

It said Sunway-REIT announced acquisition of 163 Retail Park in Mont Kiara for RM215mil early this year. Similarly, KLCCP Stapled Group is acquiring the remaining 40% equity stake in Suria KLCC for RM1.95bil, while KIP-REIT recently announced the acquisition of DPulze Shopping Centre in Cyberjaya for RM320mil.Commenting on the 1Q24 results, MIDF said all six REITs under its coverage reported earnings that fell within expectations.

“The REIT with highest growth was Axis-REIT which reported 25.8% year-on-year (y-o-y) earnings growth, buoyed by its Bukit Raja Distribution Centre 2, lower property operating expenditure and lower provision for doubtful debts.

“Meanwhile, Pavilion-REIT recorded double-digit earnings growth of 18.7% y-o-y in that period due to contribution from Pavilion Bukit Jalil and higher rental income from Pavilion KL Mall.”

As for KLCCP Stapled Group and IGB-REIT, earnings growth was stable at 4% due to organic growth of positive rental reversion.

The research house noted that rental income from Mid Valley Megamall, The Gardens Mall and Suria KLCC remained stable due to high occupancy rate, footfall and growth in ssales.

The two REITs that reported lower earnings in 1Q24 were Al-Aqar Healthcare-REIT and Sunway-REIT.

In the case of Al-Aqar, it was due to lower rental income from its Australia division, which had offset the higher income from healthcare assets in Malaysia.

“We expect earnings growth of Al-Aqar to be driven mainly by organic growth of lease renewals.”

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