PETALING JAYA: Sunway Real Estate Investment Trust
(REIT) wants to grow its asset portfolio via acquisitions and may venture into the data centre space as part of its 2027 growth strategy.
It has been looking at strategic opportunities in upcoming segments such as logistics, services and data centres, according to MBSB Research.
Sunway-REIT also did not discount the possibility of asset divestment if there is limited upside to the asset.
For future asset acquisitions, the group is targeting yields of 6.5% to 7%, focusing primarily on retail assets.
MBSB Research cut its earnings forecasts for financial year 2026 (FY26) by 1.5%, followed by FY27 (minus 1%) and FY28 (minus 1%) to factor in expected weaker performance from the hotel division.
In line with this revision, MBSB Research’s target price for Sunway-REIT has been adjusted to RM2.39 from RM2.48 a share based on the dividend discount model.
The research house also retains its “neutral” stand on the stock.
Overall, it foresees the potential weakness in the hotel segment to be a marginal drag to Sunway-REIT in the near term as the division contributed 14% to total net property income in FY25.
Nevertheless, the group’s long-term prospects should remain stable with resilient earnings from the retail division.
The gross distribution yield is estimated at 5.7% while net yields (10% to 30% tax rate) range from 5.1% to 4%, the research house said.
The footfall of retail malls under Sunway-REIT largely comprises domestic shoppers – hence, retail footfall should remain stable going forward, said MBSB Research.
The research house said rising airfares and conflict in the Middle East have led to some hotel booking cancellations, with foreign guests making up 55% of total guests in FY25.
In view of the ongoing Middle East tensions, the strategy of hotel operations now is to focus on domestic visitors and intra-Asean travel to boost occupancy rates.
Notably, the hotel division is expected to be weaker in FY26 if the oil price hike is prolonged.
Meanwhile, its office segment is forecast to remain a tenant led market with flattish rental reversion outlook.
Sunway-REIT is also undertaking the Sunway Pier redevelopment project at Port Klang, with completion projected in the first half of FY28.
It would have an average long-term yield of more than 6%, with lower yield expected upon commencement of the lease.
