PETALING JAYA: KIP Real Estate Investment Trust
(KIP-REIT) is expected to generate about RM12.2mil in net property income (NPI) through its asset enhancement initiative at AEON Kinta City Mall.
TA Research said the projection assumes the RM160mil project is fully debt-funded upon completion at a 4.5% borrowing cost, applying a 95% NPI margin.
The REIT entered into an agreement with Aeon Co (M) Bhd to undertake a RM160 mil expansion of AEON Kinta City Mall in Perak under a long-term lease extension until 2055.
The secured long-term tenancy is expected to significantly enlarge KIP-REIT’s lettable space. TA Research noted that the added net lettable area (NLA) will be leased to AEON at an annual rate of 8% of the actual development cost incurred.
The project is expected to be completed by the fourth quarter of 2027.
The total development cost represents 10.1% of KIP-REIT’s total asset value as at June 2025.
In addition to factoring an estimated annual interest expense of RM7.2mil, the incremental earnings contribution is estimated at RM5mil per annum.
TA Research expects KIP-REIT to achieve a 6.3% gain in earnings to RM78.2 mil in financial year 2028.
The research house projected limited gearing impact, as KIP-REIT’s financing will largely be contractor-led, with lump-sum payment upon completion.
“With current gearing at about 39% against its internal cap of 45%, the REIT retains RM200mil acquisition headroom without requiring equity issuance.
“We are positive on the AEON Kinta City Mall expansion, which we view as an anchor-backed expansion that will enhance long-term income visibility and strengthen portfolio resilience,” TA Research noted.
It retained its “buy” call on KIP-REIT, with an unchanged target price of RM1.12 per unit.
