PETALING JAYA: Capitaland Malaysia Trust
(CLMT) is poised for further earnings growth, supported by resilient rental income from its existing portfolio and growing exposure to Johor’s industrial property market.
The real estate investment trust’s (REIT) three facilities at Nusajaya Tech Park and three at Senai Airport City are fully occupied, while rental rates for premium industrial facilities in Iskandar Puteri of around RM2.50 per sq ft (psf) to RM3 psf are supportive of the RM2.60 psf rental level implied by management’s 7.3% first-year gross yield guidance for i-TechValley.
“A further five facilities under a forward-purchase arrangement with AME Elite Consortium Bhd are currently being developed at i-TechValley.
“Upon completion, CLMT’s Johor portfolio will expand to 11 assets with about 781,000 sq ft of net lettable area and a combined value of around RM320mil,” TA Research said in a report, noting that its visit to CLMT’s industrial assets across Nusajaya Tech Park, Senai Airport City and i-TechValley had strengthened its confidence in the REIT’s Johor industrial strategy.
The research house said management continues to see healthy industrial activity in Johor, supported by spillover from Singapore, competitive operating costs and improving cross-border connectivity.
It added that occupier requirements range from 15,000 to 150,000 sq ft, spanning conventional manufacturing as well as higher-value activities across electrical and electronics, medical devices, pharmaceuticals and aerospace industries, alongside distribution and warehousing activities.
“Management also highlighted growing requirements for regional and global distribution facilities, as companies increasingly use Johor as part of their wider supply-chain network.
TA Research said CLMT’s existing Johor facilities are fully occupied, with tenant stickiness supported by occupiers having a broader presence within the same industrial parks.
At Nusajaya Tech Park, Edmund Optics occupies two CLMT-owned facilities and leases another within the park, while Altek Medical occupies one CLMT facility and owns another two facilities there.
“Both have operated in the park for several years, suggesting a deeper operational commitment to the location.
“At Senai Airport City, tenants have also invested their own capital expenditure to enhance the facilities, which should further support retention.
“Importantly, the five i-TechValley facilities are not CLMT’s first industrial acquisitions without pre-committed tenants.
“The three Senai Airport City facilities were similarly acquired without tenants and have since achieved full occupancy.
“This gives us greater confidence in CLMT’s ability to secure tenants for i-TechValley,” the research house said.
It added that the forward-purchase structure also limits CLMT’s exposure during construction.
Under this arrangement, only 10% of the consideration is payable upfront, with the balance upon completion, while the vendor bears the construction and financing costs.
TA Research said CLMT will still assume the leasing risk once the assets are completed, but its view has turned more positive after seeing the leasing progress across the group’s existing Johor portfolio.
“We also believe CLMT should benefit from CapitaLand’s broader regional network and established relationships with multinational occupiers in sourcing tenants for the new facilities,” the research house said.
TA Research noted that management ultimately targets industrial and logistics assets to account for around 20% of CLMT’s assets under management by the end of 2028, compared with about 11.5% after completion of the five i-TechValley facilities.
Based on the current asset base, the research house estimated this could require roughly another RM0.6bil of industrial/logistics acquisitions, assuming no material change in the rest of the portfolio.
“To get there, CLMT is actively looking for further acquisition opportunities in Johor and the Klang Valley.
“Beyond outright acquisitions, management is also exploring sale-and-leaseback transactions with business owners, which could widen its acquisition pipeline and provide access to assets with tenants already in place,” the research house said.
It added that the five i-TechValley facilities could lift earnings by around 1.5% in financial year 2027 (FY27) and about 3% in FY28, with contribution rising progressively as the assets are completed from March 2027 to January 2028.
TA Research maintained its “buy” call on CLMT with an unchanged target price of 81 sen, based on a 2027 target yield of 7% and a 3% environment, social and governance premium.
