News: M-REITs’ May Be Mostly Organic: Maybank IB Research

Jan 13, 2020

The research team at Maybank Investment Bank Bhd (Maybank IB Research) believes that Malaysia’s real estate investment trust (REIT) growth may be mostly organic this year. 

“We estimate M-REITs’ growths to be largely organic in 2020, via positive rental reversions and sustained occupancy rates while there are M-REITs that would record full-year rental income contributions from assets acquired in 2019,” said Maybank IB Research in a report.

“The oversupply of retail and office space in the Klang Valley (where most of the M-REITs’ key assets are located in) would remain a major challenge. Meanwhile, we expect direct earnings lift to M-REITs to be minimal from easing of financing costs of variable rate debts. Our economist forecasts the overnight policy rate (OPR) will be cut by 25bps to 2.75% in 2020.”

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Maybank IB Research also expects the acquisition pipeline for 2020 to stay subdued, only covering smaller size assets as major deals, with developments being unlikely until 2021.

“Our 2020 forecasts have only imputed Axis REIT’s RM439 million worth of industrial property development/acquisitions. Beyond the near term, YTLREIT, SunREIT and Axis are our preferred picks for acquisition-play,” it noted.

 

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