Latest news with #IGB-REIT
The Star
30-06-2025
- Business
- The Star
IGB unlocks value with record REIT deal
Tan: We are confident Southkey will mirror Mid Valley City's growth success. THE long-anticipated move by IGB Bhd (IGB) to sell its Johor mall, held via indirect subsidiary Southkey Megamall Sdn Bhd, into the group's real estate investment trust (REIT), IGB-REIT, injected some excitement into an otherwise dull week on the local bourse. Analysts were quick to crunch the numbers, and nearly all issued glowing reports highlighting how the deal is accretive to IGB-REIT. Billed as RM9.73 for the 1st month then RM13.90 thereafters. RM12.33/month RM8.63/month Billed as RM103.60 for the 1st year then RM148 thereafters. Free Trial For new subscribers only
The Star
25-06-2025
- Business
- The Star
Buying frenzy of IGB-REIT amid rating upgrades
PETALING JAYA: IGB Real Estate Investment Trust 's (REIT) unit price hit an all-time high after the owner of Mid Valley Megamall announced the largest acquisition in the history of Malaysian REITs. At least six investment banks, including JP Morgan, have upgraded their ratings on the stock to 'buy'. This was following the news of IGB-REIT's proposed acquisition of the Mid Valley Southkey Mall (MVS) in Johor for RM2.65bil. Riding on the positive sentiment, shares of IGB-REIT's parent – IGB Bhd – also rose to a new record-high yesterday. The parent owns 47.87% of IGB-REIT. Analysts have revised their earnings forecasts of IGB-REIT upward, factoring in the future contributions from MVS Mall. As a result, target prices have also been raised. AmInvestment Research has the highest target price at RM2.81 per unit. IGB-REIT closed at RM2.49 yesterday after the stock rose by 9.2%. IGB Bhd, on the other hand, moved north by 6.4% to close at RM2.83. In a note, Kenanga Research said it is positive on the proposed acquisition, pointing out that it will strategically position IGB-REIT to benefit from key growth catalysts in Johor. The research house has maintained its earnings forecasts for the financial year of 2025 (FY25), considering the acquisition may only be completed in the fourth quarter ending Dec 31. Hence, the full earnings implication would be only seen from FY26. '(We) raise FY26's by 34% to incorporate the earnings contribution from the proposed acquisition. 'To exercise prudence, we are assuming flat growth in MVS Mall also to reflect macro headwinds such as the 8% sales and service tax on rental and upcoming RON95 subsidy removal. 'Based on our estimated FY26 net property income (NPI) of RM191mil from MVS Mall, it would make up 26% of IGB-REIT's NPI, behind Mid Valley Megamall's RM399.5mil (55%) and The Gardens Mall's RM137.7mil (19%),' Kenanga Research said. Kenanga Research has maintained its 'market perform' call on IGB-REIT, with a higher target price of RM2.40 per unit. Meanwhile, RHB Research upgraded its rating to 'buy' and raised the target price to RM2.60. 'We raise our FY26 to FY27 earnings forecasts by 36% for each year. 'However, after accounting for the higher share base, our distribution per unit estimates increased by 12.5% for FY26 to FY27.' RHB Research opined that the acquisition of the MVS Mall provides a key re-rating catalyst, offering IGB-REIT a significant bump via inorganic growth and the opportunity to diversify its earnings base in the long term. The acquisition of the property would significantly help diversify the REIT's earnings profile away from the more mature Klang Valley market to now include the growing Johor Baru market. Opened in 2019, MVS Mall has a net lettable area of 1.5 million sq ft as compared to Mid Valley Megamall's 1.8 million sq ft. On June 24, IGB-REIT announced that it will finance the acquisition of MVS Mall with a combination of borrowings and a unit placement. A total of RM1bil of the purchase price will be funded via medium-term notes, while the balance RM1.65bil will be raised from the issuance of 699 million new units at an issue price of RM2.36. Post-acquisition, IGB-REIT's gearing is expected to rise marginally to 0.26 times from 0.21 times at end-March. Regardless, Maybank Investment Bank Research (Maybank IB) said there will still be ample headroom for future acquisitions. 'We are upbeat on IGB-REIT's longer-term outlook, backed by its enlarged portfolio of high-quality retail assets. 'MVS Mall's injection has been long awaited. Its integration within the Southkey development, which includes office towers, hotels and residential units, is expected to drive consistent footfall and retail traffic, supporting occupancy and rental stability. 'Coupled with the mall's proximity to Singapore, we see upside to valuations over time.' Maybank IB raised its FY25, FY26 and FY27 net profit forecasts by 2.5%, 34.9% and 35.6%, respectively, to mainly reflect contributions from MVS Mall, offset partially by finance costs. It also upgraded its call to 'buy' and lifted target price to RM2.56 per unit.
The Star
23-06-2025
- Business
- The Star
REITs maintain steady outlook for this year
PETALING JAYA: Malaysian real estate investment trusts (REITs) delivered first quarter ended March 31, 2025 (1Q25) financial results that were in line with expectations, but softer consumer spending and the expansion of the sales and service tax (SST) may weigh on them in the second half of 2025 (2H25). CIMB Research said all REITs under its coverage – Axis–REIT, Al-Aqar–REIT, IGB-REIT, Sentral-REIT and Sunway-REIT – reported 1Q25 financial results that were in line with expectations, with core net profit growth of 13.3% year-on-year (y-o-y) and 14.2% quarter-on-quarter on an aggregate basis. It said active capital management initiatives were a key driver in the y-o-y earnings growth achieved by Axis-REIT, Sunway-REIT, and IGB-REIT. In contrast, the earnings decline at Sentral-REIT and Al-Aqar was mainly due to the loss of rental income. It has maintained a 'neutral' call on REITs, with the top pick being Axis-REIT for its highest potential upside to target price as well as distribution yields of 5.2% to 5.8% for the financial year ending Dec 31, 2025 (FY25) to FY27. 'In FY24, Axis REIT acquired eight properties for a total consideration of RM719mil, which we estimate contributed 14% to its 1Q25 revenue,' it added. The research house said there were signs of softening consumer spending, as reflected in weaker tenancy sales among retail REITs under its coverage. Sales per sq ft at Sunway-REIT declined 0.4% y-o-y, while IGB-REIT's Mid Valley Megamall recorded a 2% drop in gross monthly income per sq ft. 'This softness emerged despite the festive period falling within 1Q25 and the completion of refurbishment works at both Sunway Pyramid Mall and Mid Valley Megamall's anchor tenant spaces, where outgoing anchor tenants were replaced with a more diversified and higher-yielding tenant mix,' it said. Noting that headwinds were expected for REITs going into 2H25, it said the SST expansion that includes rental services would raise tenant operating costs and limit REITs' rental reversion potential, while also impacting consumer sentiment. A potential increase in electricity tariff would be another hurdle. 'We estimate that the current 12-month forward distribution yield spread against the 10-year Malaysian Government Securities stands at 1.9%, which is marginally above the 10-year historical average of 1.8%,' it said.
