PETALING JAYA: Following the completion of KIPMall Setapak’s acquisition, which lifted its assets under management to RM2bil, KIP Real Estate Investment Trust
(KIP-REIT) is turning its attention to driving organic earnings growth through rental reversions and asset enhancement initiatives (AEIs).
UOB Kay Hian (UOBKH) Research said the REIT was shifting from acquisition-led expansion towards growing earnings from its existing properties, noting ample room for organic growth.
KIPMall Setapak, in particular, is already generating more income than initially expected, with further room to grow its net property income (NPI) through higher rents and lower operating costs.
“Its annualised NPI run-rate stood at about RM36mil as at the end of September 2026, 15% above the RM31.3mil disclosed in the acquisition circular for financial year 2025 (FY25),” the research house said.
It expects NPI growth to be driven by rental reversions and cost efficiencies, with 20% and 50% of the mall’s net lettable area (NLA) due for lease expiry in 2027 and 2028, respectively.
Management sees scope to secure 20% to 25% higher rents from new tenants, compared with historical rental reversions of about 5% under the previous owner.
UOBKH Research believes this target is achievable, citing KIP-REIT’s experience at D’Pulze Shopping Centre, where average rent rose 23% to RM6.18 per sq ft within a year of its acquisition.
“The consolidation of Setapak’s service contracts with the wider KIP-REIT portfolio should also generate cost savings,” it added.
AEIs are also expected to provide another avenue for organic growth, with the planned enhancement of KIPMall Masai projected to deliver a 10% return on investment, compared with the 6% achieved at KIPMall Tampoi.
For FY27, about RM5mil each has been allocated for AEIs at KIPMall Masai and KIPMall Kota Warisan.
The Masai project is expected to generate a yield of about 10%, supported by the creation of additional NLA.
UOBKH Research considers this target achievable, given Masai’s strong footfall of 6.7 million visitors between August 2025 and September 2026, making it one of the busiest malls in KIP-REIT’s portfolio, just behind Tampoi’s 6.9 million visitors.
Tampoi’s AEI, completed in February 2026, has also delivered encouraging results, with average daily footfall increasing from 17,000 to 20,000 before the enhancement to between 20,000 and 30,000 afterwards.
Separately, the delay in the RM160mil expansion of AEON Mall Kinta City is unlikely to exert significant pressure on KIP-REIT’s near-term financial position, with expected rental yield maintained at 8% on actual development costs. The expansion, initially targeted for completion in the first quarter of FY28 (1Q28), is awaiting regulatory approvals expected by the end of 2026.
Assuming construction begins in January 2027, UOBKH Research expects the project to be completed by the end of FY28, with rental contributions starting from FY29.
The research house said near-term funding requirements should remain minimal as the contractor would finance about 90% of construction costs, with payment due upon project completion.
Meanwhile, KIP-REIT’s distribution per unit is expected to normalise from 2Q27, when KIPMall Setapak makes its first full-quarter contribution.
The REIT had declared an advance distribution of 0.82 sen for the period from July 1 to Aug 24, 2026, ahead of the placement units being issued on Aug 27.
