PETALING JAYA: Sentral Real Estate Investment Trust
’s (Sentral-REIT) earnings are expected to stay resilient in financial year ending Dec 31, 2026 (FY26), supported by full-year contribution from newly acquired Arcoris Plaza, despite lingering vacancies at Sentral Building 2 (SB2).
RHB Research said the REIT’s first-quarter (1Q26) core earnings of RM19.8mil met expectations, accounting for 24% of its and consensus full-year estimates.
Looking ahead, the brokerage said FY26 earnings growth is expected to remain positive year-on-year, supported by Arcoris Plaza’s full-year contribution, better occupancy at Menara Shell, and positive low-single-digit rental reversions.
“While SB2 remains a key occupancy drag, we believe the earnings gap will be largely cushioned by Arcoris,” the research house said, noting that Arcoris contributes about 4% of revenue.
It added that Sentral-REIT has been actively engaging prospective tenants for SB2, although replacement tenants are only expected from 3Q26 onwards.
RHB Research also noted that about 21% of the REIT’s leases are due for expiry in 2026, of which 4% had already been renewed as at March 2026.
On expansion plans, it said management will continue exploring retail, industrial, education and healthcare assets as part of efforts to build a more balanced portfolio.
“Based on current gearing, Sentral-REIT has headroom of RM120mil to support debt-funded acquisitions,” it said.
The REIT’s gearing remained broadly stable at 45.3% in 1Q26 versus 45.6% in 4Q25.
Hong Leong Investment Bank (HLIB) Research also said FY26 performance should be supported by portfolio-wide improvements, the first full-year contribution from Arcoris Plaza, and proactive capital recycling following the disposal of Wisma Sentral Inai.
“That said, SB2 (now largely vacant) remains the key swing factor,” it noted.
“While management highlighted a pickup in inquiries since 1Q26 for SB2, we view these as early-stage and not yet firm leading indicators of near-term re-tenanting.”
As such, the brokerage retained a conservative three-quarter downtime assumption for SB2, adding that management is likely to maintain headline rental rates given the building’s favourable location.
Sentral-REIT’s 1Q26 core earnings rose 1.1% year-on-year and 10.8% quarter-on-quarter to RM19.8mil.
Earnings were mainly supported by the acquisition of Arcoris Plaza, completed on Dec 30, 2025, which helped offset the loss of rental income from SB2 following a tenant’s non-renewal.
Net property income margin moderated to 74.3% in 1Q26 from 76.7% a year earlier, which RHB Research attributed to changes in asset and tenant mix over the past year.Portfolio occupancy improved to 89% from 86% in 4Q25.
Following the results, RHB Research lowered its FY26 to FY28 earnings forecasts by 4.5% to 4.7% to reflect lower net property income margin assumptions.
However, it maintained its “buy” call on the REIT with a lower target price of 87 sen from 91 sen previously.
“Our target price implies an FY26 yield of about 7%, broadly in line with yields offered by office-heavy assets within our REIT basket,” it said. “We remain constructive on management’s plan to diversify beyond office assets, as this should gradually improve portfolio resilience.”
Separately, HLIB Research also adjusted its FY26 and FY27 core profit forecasts upward by 2% and 1%, respectively, following updates from the REIT’s FY25 annual report, while introducing FY28 estimates.
The research firm maintained a “hold” call on Sentral-REIT with a higher target price of 72 sen from 70 sen previously.
