PETALING JAYA: Sunway Real Estate Investment Trust
(Sunway-REIT) is expected to post stronger earnings in the second half of financial year 2026 (2H26) as resilient retail demand, improving hotel bookings and steady occupancy support its core portfolio.
Its growth prospects are also set to be reinforced by rental reversions, asset enhancement initiatives and potential acquisitions as the REIT expands its asset base.
TA Research expects retail momentum to remain healthy, with Sunway-REIT achieving mid-single-digit rental reversions in 1H26 and targeting a similar pace in 2H26.
It said tenant sales per sq ft (psf) growth moderated to 4% year-on-year (y-o-y) from 6% in the first quarter financial year 2026 (1Q26), mainly due to the festive season boost.
“Retail momentum is holding up well,” TA Research said, adding that management remained active in pursuing retail and industrial assets from both its sponsor and third parties, with target acquisition yields generally in the mid-6% to 7% range.
It maintained its RM2.79 per unit target price for Sunway-REIT based on a 2027 target yield of 5%, incorporating a 3% environmental, social and governance premium.
The research house upgraded Sunway-REIT to “buy” from “hold”, citing more attractive valuations following recent share price weakness and an estimated 2026 distribution yield of about 6%.
CIMB Research also upgraded Sunway-REIT to “buy” from “hold”, despite lowering its target price to RM2.55 from RM2.68.
It expects sequentially stronger earnings in 2H26, supported by more public holidays and improving hotel bookings.
Retail occupancy remained strong at 98% in 1H26, while average gross rent and tenant sales psf rose 6% and 4% y-o-y respectively.
Hotel room occupancy held at 60%, although banquet occupancy improved to 59% from 54% a year earlier.
“Sunway-REIT also offers attractive 2026 to 2027 dividend per unit yields of 5.9% to 6.1%, with further earnings upside from accretive mergers and acquisitions and potential injections of sponsor-owned assets,” CIMB Research said.
Hong Leong Investment Bank Research maintained its “buy” call and RM2.48 target price for Sunway-REIT, based on a target yield of 5.3%.
It expects mid-single-digit rental reversions across Sunway Pyramid, Sunway Carnival and Sunway Putra Mall, while hotels should benefit from stronger leisure demand and October’s Formula 1 event.
MBSB Research likewise maintained a “buy” with a RM2.39 target price, noting that the retail division’s predominantly domestic shopper base should shield it from geopolitical risks affecting tourist arrivals.
It sees a gross distribution yield of 6.2%.
Kenanga Research retained its “outperform” call and RM2.45 target price, with potential upside from the planned Sunway 163 Mall asset enhancement initiatives and future sponsor asset injections, including Sunway Velocity Mall.
“We believe the new hotel stands to benefit from spillover from Sunway Carnival Mall, which has evolved into a regional hub for its vibrant retail offerings,” it said.
Sunway-REIT reported 2Q26 net profit of RM106.51mil, up from RM96.53mil a year earlier, while revenue rose to RM220.35mil from RM211.4mil.
For 1H26, earnings increased to RM215.55mil from RM195.09mil, while revenue rose to RM443.36mil from RM430.26mil in 1H25.
One analyst told StarBiz that he was optimistic that Sunway-REIT’s diversified portfolio would provide the REIT with a solid earnings base.
“We believe Sunway-REIT remains well placed to capture longer-term growth as rental reversions, asset enhancement initiatives and potential asset injections gradually strengthen its income profile,” he said.
