PETALING JAYA: Year-end festivities, tourism, positive rental reversions and asset enhancement initiatives (AEIs) are expected to underpin growth for Sunway Real Estate Investment Trust
(Sun-REIT) in the fourth quarter ending Dec 31, 2026 (4Q26), after reporting 3Q26 earnings that were within expectations.
Analysts remain optimistic of the company’s prospects, with most maintaining their earnings forecasts for the financial years ending Dec 31, 2026 (FY26) to FY28, while several trimmed their target price (TP) for the stock following a conference call with Sun-Reit’s management.
RHB Research sees improving medium-term prospects supported by a pipeline of targeted AEIs and opportunities to enhance rental productivity across existing assets. It said the company has an established track record in AEIs translating into strong net property income growth.
The research outfit noted that there could be further upside from owning integrated developments, where active tenant mix repositioning can generate positive spillovers across retail, hospitality and office components.
It has upgraded the stock to a “buy” from “neutral” but lowered the TP to RM2.35 from RM2.45 with 7% FY27 yield while maintaining FY26 to FY28 earnings. It added that the current unit price, after de-rating over the past six months, could be an attractive entry opportunity.
CIMB Research, which has maintained a “buy” call but lowered the TP to RM2.50 from RM2.55, expects earnings to strengthen quarter-on-quarter in 4Q26 supported by stronger year-end leisure travel demand for the hotel segment, festive-driven retail spending and continued positive rental reversions across the retail portfolio.
It has maintained FY26 to FY28 earnings forecasts, with a FY26 dividend per unit of 6.2%. Further upside could come from accretive mergers and acquisitions and potential injections of sponsor-owned assets while a key downside risk could be higher interest rates, as 58% of borrowings stem from floating-rate interest rate.
MBSB Research expects a stronger earnings outlook in FY27 underpinned by continued solid performance from the retail segment, with positive rental reversions across its key malls.
The hotel segment, especially Sunway Resort Hotel, would benefit from its role as the headquarters hotel for the 34th South-East Asian Games.
It has maintained a “buy” call with an unchanged TP of RM2.39 after maintaining earnings forecast for FY26 to FY28. “Meanwhile, gross distribution yield is attractive at 6.6%,” it noted.
Hong Leong Investment Bank Research shared that Sun-REIT’s management remains cautiously optimistic on its hotel portfolio supported by the year-end peak season.
For the retail segment, tenant sales per sq ft rose 2% year-on-year in the nine months to September with no decline in footfall, while retail rental reversions came in at 5% year-to-date.
“Management expects single-digit reversions, which we deem achievable for the remaining renewals in 2026, and plans to modernise the lower-yielding areas of Sunway Pyramid Mall in 2027,” it said, adding that utility costs should remain stable, with no additional pressure in 4Q26 compared with 3Q26.
Gearing rose to 43% in 3Q26 from 40.6% in 2Q26 as it pre-drew financing at competitive rates to refinance borrowings maturing in December.
“Management expects gearing to fall back below 40% next quarter once these are repaid,” it said. A “buy” call has been maintained with a TP of RM2.31.
TA Research has maintained a “buy” call but lowered the TP to RM2.32 reflecting a higher target yield of 6% for FY27 in expectations of a hike in the overnight policy rate (OPR) and a corresponding upward shift in required REIT yields.
“Capital management remains a key focus, with refinancing being undertaken ahead of maturities to lock in borrowing rates amid expectations of a potential OPR hike,” it said, highlighting that the outlook for the hotel segments remains cautiously positive on continued competition and external travel-related headwinds.
Kenanga Research has maintained an “outperform” call while lifting the TP to RM2.48 from RM2.27 after rolling over the valuation base year to FY27 from FY26 based on FY27 gross dividend per unit of 13.6 sen.
It believes Sunway Velocity Mall would be injected into Sun-REIT from the second half of 2027 onwards upon maturity of the assets while it expects the completion of Sunway 163 Mall’s AEI to bring higher rental reversions.
