PETALING JAYA: Analysts have raised their financial year ending June 30, 2027 (FY27) and FY28 earnings forecasts for KIP Real Estate Investment Trust
(KIP-REIT) by 5.4% and 5% to reflect the stronger-than-expected performance of the retail portfolio.
TA Research said in a report that it also introduced its FY29 net profit forecast of RM84.8mil and earnings per unit forecast of 8.8 sen, implying earnings growth of 3.2%.
Its forecasts have yet to incorporate the proposed Setapak Central acquisition and the associated private placement, it said, adding that it will revisit its estimates upon completion, when the final placement price, number of new units and effective financing cost are known.
TA Research noted that the company’s management indicated that KIP-REIT achieved rental reversions of approximately 6% to 7% in FY26 and expects positive reversions to continue in FY27.
Around 42.7% of portfolio gross rental income is due for renewal in FY27, providing room for further rental growth.
It also said portfolio occupancy improved to 98.7% in the fourth quarter of 2026 (4Q26) from 98.5% in 3Q26, supported by healthy occupancy across both the retail and industrial portfolios, with KIP-REIT’s community-focused malls continuing to benefit from necessity-based spending and established local catchments.
TA Research said following its earnings revisions, it raised target price to RM1.15/unit from RM1.13/unit, based on an unchanged 2027 target yield of 6.75% and a 3% environmental, social, and governance premium.
At last look, the stock was at 86 sen.
TA Research said KIP-REIT remained its top pick in the Malaysian REIT sector, supported by its above-sector distribution yield, defensive community-mall portfolio and visible organic growth opportunities from rental renewals, tenant remixing and planned asset enhancement initiatives.
Key downside risks for the company include weaker-than-expected rental reversions, higher financing costs, greater placement dilution and delays in completing the Setapak Central acquisition.
KIP-REIT’s gross revenue rose 30.1% year-on-year to RM177.1mil, while net property income increased 34.1% to RM129.9mil.
Realised profit after tax increased 42.7% to RM73.6mil, and income available for distribution grew 41.4% to RM74.5mil.
For 4Q26, KIP REIT proposed an income distribution of 2.03 sen per unit, totaling RM19.5mil.
This brought the total distribution for FY26 to a record 7.26 sen per unit, up from 6.80 sen a year earlier, translating into a distribution yield of 8.6% based on its closing unit price of 85 sen as at June 30.
