PETALING JAYA: Sunway Real Estate Investment Trust
(Sunway-REIT) remains committed to reaching its RM14bil to RM15bil assets under management (AUM) target under its Transcend 2027 strategy, up from RM10.3bil currently, although the trust remains selective in pursuing acquisitions.
Hong Leong Investment Bank (HLIB) Research said the completion of Sunway Pier and the new Sunway Hotel Seberang Jaya would add RM600mil to its AUM, with acquisitions expected to bridge the remaining gap.
“For these, retail remains the priority – particularly integrated developments – with healthcare and education also of interest on a triple-net lease basis.
“On retail, Sunway Velocity Mall, Sunway Square Mall and Sunway Big Box remain the natural candidates under its right of first refusal over the sponsor’s completed commercial assets,” HLIB Research noted.
HLIB Research said Sunway Velocity Mall, valued at RM900mil as at end-2025, represents the largest near-term acquisition opportunity.
“Management shared that pricing remains the key consideration between Sunway-REIT and the sponsor. Any deal must at least maintain the distribution per unit, which translates into an acquisition yield of mid-6% to low-7%,” it said.
The research house noted sizeable acquisitions which may involve issuing new units, given the REIT’s gearing of 40.6% and its typical 60:40 equity-to-debt funding structure.
“More clarity on the growth path should come with its new strategic roadmap, due around mid-2027 when its current Transcend 2027 plan matures.”
Meanwhile, HLIB Research said Sunway-REIT remains cautious about acquiring data centres despite identifying the segment as a potential growth area.
“On data centres, however, management remains cautious, citing single-asset, single-tenant risk, lease terms that may not be fair to the landlord, the need for clarity on building specifications and the split of responsibilities between landlord and tenant, and vendors’ high price expectations in the last cycle,” it said.
The research house considers logistics properties a more likely near-term expansion avenue.
On existing operations, Sunway Pyramid continues to deliver resilient visitor traffic and tenant sales.
“Year-to-date footfall is still up year-on-year and tenant sales remain resilient, giving management confidence of securing single-digit reversions on the 35% of its net lettable area due for renewal in financial year 2027 (FY27).”
HLIB Research said Sunway Pier’s RM462mil redevelopment in Port Klang remains on track for completion in the second half of 2028.
“Management guides a long-term net property income (NPI) yield on cost of at least 6%, which, based on the RM462mil budget, implies an NPI of at least RM28m a year. This target will be reached after the second rental reversion, about six years after opening.”
Moreover, the new Sunway Hotel Seberang Jaya remains on track for completion by end-2027.
HLIB Research expects a third-quarter core profit of RM120mil to RM134mil, representing sequential growth of 7% to 19%, supported by the hotel segment’s seasonal peak.
“We raise our FY26, FY27 and FY28 earnings forecasts by 2.8%, 4% and 2.4%, respectively, after lifting hotel revenue assumptions on a stronger recovery at Sunway Resort Hotel and Sunway Putra Hotel.”
The research house maintained a “buy” recommendation and raised its target price to RM2.31 from RM2.24 previously.
