CEO Ho Yew Hong said the group will also maximise operational efficiency through cost management and service improvements
PETALING JAYA: Pavilion Real Estate Investment Trust
(Pavilion-REIT) will focus on strengthening its market position and enhancing its tenant mix across all malls to optimise its retail offerings.
Chief executive officer Datuk Philip Ho Yew Hong said the group will also maximise operational efficiency through cost management and service improvements.
“Additionally, the manager (of Pavilion-REIT) is looking forward to completing the acquisition of Banyan Tree Kuala Lumpur and Pavilion Hotel Kuala Lumpur, which will further diversify and strengthen the portfolio, driving long-term growth and value creation,” he said in the company’s annual report.
Ho noted that several recent developments are expected to support Malaysia’s economic growth and benefit the retail sectors.
“For example, the establishment of the Johor-Singapore Special Economic Zone is set to boost trade, investment and job creation across various sectors on the Malaysian side of the border.
“This initiative is expected to stimulate economic activity and create new opportunities for growth. Not only that, the Tourism Ministry has set a target of 31.4 million international tourist arrivals for 2025.”
Ho pointed out that this aligned with the recovery of the tourism sector and is expected to drive higher footfall and spending in retail and hospitality spaces.
“Bank Negara is likely to maintain the overnight policy rate at 3% throughout 2025, providing a stable financial environment for businesses and consumers alike. Inflation remained stable at 1.8% in 2024 and is anticipated to stay at the same level in 2025.
“These factors, combined with Malaysia’s gross domestic product growth momentum, are expected to drive the economy toward a 5% growth rate in 2025.”
Citing the Malaysian Institute of Economic Research in November 2024, Ho stated that the Business Confidence Index for the fourth quarter of financial year 2024 (4Q24) remained positive, building on the strong performance in 3Q24, which recorded 104.9 points, up from 86.2 points in 2Q24.
“This upward trend reflects stable and positive conditions in both local and foreign manufacturing sectors, supported by improved employment levels, rising wages and better capacity utilisation efficiency.
“The manager believes the retail industry will benefit significantly from these positive developments.”
Additionally, Ho cited Retail Group Malaysia (RGM), which had initially forecast retail growth of 3.6% for 2024.
“However, accelerated sales growth in the second half of the year has revised this figure to approximately 3.9%. For 2025, RGM projects steady retail growth of 4%, further underscoring the resilience and potential of the sector.”
Pavilion-REIT net property income rose to RM134.86mil in 4Q24 ended Dec 31, 2024, compared with RM134.64mil in the previous corresponding period.
Quarterly gross revenue rose 5.1% year-on-year to RM218.79mil from RM208.22mil, underpinned by rental income growth.
Commenting on the financial results performance, UOB Kay Hian Research said it is increasing its 2025 to 2027 earnings forecasts by 3% to 6% to factor in a higher-than-expected contribution from Pavilion Bukit Jalil.
“We have also included the remaining purchase consideration of RM400mil for Pavilion Bukit Jalil in 2025.
“Assuming a placement price of RM1.60, we forecast the share base to increase by 9%.
“As a result, our 2025 to 2027 distribution per unit forecasts are reduced to 9.2 sen to 9.8 sen.”
