PETALING JAYA: Retail and industrial-based KIP Real Estate Investment Trust
(REIT), which recently released its first quarter ended Sept 30, 2026 (1Q27) results, is focusing on portfolio enhancements over acquisitions in the near term after completing the RM435mil acquisition of KIPMall Setapak.
CIMB Research said following an analysts’ briefing that its near-term priority “is to extract further value from its existing portfolio rather than pursue new acquisitions”.
This would be through asset enhancement initiatives (AEIs), with no active acquisition opportunities currently under consideration.
It has maintained a “buy” call on the stock with a target price of RM1.08, noting that it offers attractive forecast dividend yields of 8.3% to 8.8% for the financial year ending June 30, 2027 (FY27) to FY28.
Its current 12-month forward distribution yield spread over the 10-year Malaysian Government Securities stands at 468 basis points (bps), in line with the five-year historical average, with key catalysts including stronger-than-expected rental reversion during its FY27 renewal cycle.
Among the AEIs planned for FY27, the REIT has reassured that there would be no issuance of new units for the RM160mil construction phase of AEON Mall Kinta City, and gearing would not be affected.
“Consequently, the REIT does not expect any interim dividend-per-unit (DPU) dilution, given that equity funding will only be required upon project completion, when the enlarged asset base is already generating rental income,” it said, adding that 90% of the construction costs would be financed by the contractor and settled via a lump-sum payment upon completion.
The research house shared that during the briefing, the REIT’s management clarified that the 8.2 sen DPU declared for 1Q27 was an advance distribution covering income accrued from July 1 to Aug 24 and was paid to unitholders on record before the private placement.
To recap, the REIT received approval for a private placement of up to 220 million units to fund the acquisition of KIPMall Setapak.
Distributable income generated for the remainder of 1Q27 would instead be carried forward and distributed in 2Q27 to the enlarged postplacement unit base.
The REIT’s management also attributed the 27.4% year-on-year increase in utilities expenses in 1Q27 to the 10% increase in the automatic fuel adjustment tariff and expects tariffs to remain at current levels.
The REIT expects KIPMall Setapak to generate net property income (NPI) of RM36mil in FY27, or 10% higher than the NPI forecast outlined in the acquisition circular. It expects anchor tenant Jaya Grocer to generate 40% higher rental income than the previous tenant, Econsave, way above the 6% to 10% rental reversion achieved in 1Q27.
