PETALING JAYA: Sunway Real Estate Investment Trust
’s (Sunway-REIT) outlook is expected to hinge on its ability to sustain organic growth and execute longer-term pipeline plans as analysts temper near-term expectations following recent portfolio changes.
RHB Research remained constructive on its fundamentals, underpinned by high occupancy, strong tenant quality, and a well-diversified portfolio across retail, office, hotel, and industrial assets.
However, it cautioned that near-term growth visibility has softened for the REIT following the disposal of Sunway University, which it estimated contributed around 6% to 7% of annual net property income (NPI).
“We see limited line-of-sight on acquisition targets that can meaningfully backfill the earnings gap in 2026,” the research house said.
“Organic growth should remain anchored by rental reversions (management guiding for single-digit rental reversion) and a gradual occupancy improvement in smaller assets.
“While the longer-term pipeline remains intact (namely the Velocity cluster, new Seberang Jaya hotel, and Sunway Pier redevelopment), we view the near-term inorganic growth pathway as less visible at this juncture,” it added.
RHB Research maintained its earnings forecast on Sunway-REIT.
However, it downgraded the counter to “neutral” from “buy”, with an unchanged target price (TP) of RM2.45 a share, following recent price rally.
“The stock has reached our TP and we prefer to wait for a clearer earnings catalyst to justify a rerating,” it explained.
Hong Leong Investment Bank Research also downgraded Sunway-REIT to “hold”, with an unchanged TP of RM2.52 a share.
“We expect 2026 top line to be largely flat, as stronger contributions from the retail segment are expected to be broadly offset by the absence of income from Sunway University following its disposal in September 2025.
“We expect stronger retail earnings to be supported by positive rental uplifts, full-year contribution from the reopening of Sunway Carnival Mall following its refurbishment in May 2025 and the injection of AEON Mall Seri Manjung in July 2025 – while its prime asset, particularly Sunway Pyramid, should continue to sustain strong footfall,” the research house said.
“Hospitality occupancy is expected to recover from the fourth quarter of 2025 (4Q25), supported by improving travel demand under the Visit Malaysia 2026 campaign,” it added.
MBSB Research also turned cautious, stating it had downgraded Sunway-REIT to “neutral” from “buy”.
However, it raised its TP for the counter to RM2.48 a share from RM2.34 previously.
It said the recent rally has “priced in the positives,” even as the outlook continued to be driven by the resilient performance of the retail segment.
TA Research struck an upbeat valuation tone, saying: “Following our earnings upgrade, we revise our TP to RM2.70 from RM2.35, based on a revised 2026 target yield of 5% from 5.5% and a 3% environmental, social and governance premium”.
It maintained a “hold” call, noting the revised valuation captured much of the near-term positives.
The research house added that Sunway-REIT’s management was optimistic on its 2026 outlook, with guidance for mid-single-digit rental reversion at the portfolio level and resilient demand across retail, hotel, office and industrial segments, supported by Visit Malaysia 2026 and a solid balance sheet with about RM300mil of debt headroom.
Meanwhile, Kenanga Research highlighted efforts to cushion the income void from the disposed Sunway University, saying the shortfall could be partially cushioned by its growing retail segment and improving industrial occupancy.
It was positive on the disposal of Sunway Hotel Seberang Perai, citing an above-market price and potential synergies from a new hotel development.
“We believe the new hotel stands to benefit from strong synergistic linkages with Sunway Carnival Mall, which has evolved into a regional hub for its vibrant retail offerings,” Kenanga Research said.
“We remain confident Sunway-REIT’s hotel segment will continue to see revenue growth amid the government’s higher budget allocation in promoting tourism.
“That said, the hotel segment is expected to make up only less than 15% of the group’s NPI, with the lion’s share still being contributed by retail operations of around 70%,” it added.
Despite raising its TP to RM2.28 a share from RM2.22, Kenanga Research maintained an “underperform” call.
Sunway-REIT reported a 3.1% year-on-year rise in revenue to RM227.6mil for 4Q25, while net profit fell 12.6% due to lower unrealised fair value gains.
For 2025, revenue rose 16.6% to RM894.3mil and net profit edged up to RM539.4mil.
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