KIPREIT: Real Estate Investment Trust Achieves Strong Earnings Growth, Bolstered by Strategic Acquisitions and ESG Initiatives

A Real Estate Investment Trust (REIT) is projected to report robust financial performance for its second quarter of FY26, with realised net profit expected to surge by 44-60% year-on-year, ranging between RM18-20 million. This strong showing is anticipated to lift its first-half FY26 realised net profit to RM35.5-37.5 million, accounting for 52-55% of the full-year estimate.

The significant earnings growth is primarily attributed to the full-quarter contribution from its recently acquired assets, which include KIPMall Desa Coalfields, KIPMall Kuantan, and the Bintulu industrial assets. Additionally, the Pasir Gudang industrial property, completed in October 2025, is set to provide an initial contribution.

Operational Enhancements and Future Growth

The REIT is actively pursuing asset enhancement initiatives (AEIs) to optimize its portfolio. The AEI at KIPMall Tampoi is nearing completion and slated for a grand opening on February 8, 2026. While not significantly increasing net lettable area, this initiative is expected to drive rental uplift and operational efficiency through a refreshed neighbourhood mall concept. Income generation is set to benefit from broader gross turnover rent adoption, higher parking income, and the introduction of new tenants, alongside community-led activities. ESG-related upgrades, such as solar expansion, chiller upgrades, LED conversion, and improved ventilation, are also integral to this AEI, targeting GreenRE Gold certification.

The REIT is also making steady progress towards its target of RM2.0 billion in assets under management (AUM) by 2027. This goal is supported by a robust acquisition pipeline spanning both retail and industrial segments. To date, the REIT has completed four acquisitions in FY26, bringing its total AUM to RM1.7 billion across 18 income-generating properties. Further pipeline developments include the evaluation of KIPMall Masai for a potential next AEI project and the execution of a term sheet in October 2025 for the proposed expansion of AEON Mall Kinta City. The management’s proactive AEI strategy has a proven track record of delivering income uplift and asset value enhancement, as evidenced by the KIPMall Senawang AEI, which saw asset valuation increase by approximately 20% year-on-year and occupancy improve to 98%.

ESG Focus and Investment Outlook

TA SECURITIES has maintained its “Buy” recommendation for the REIT and raised its target price to RM1.12 per unit (from RM1.09), representing a 22.3% upside from its last traded price of RM0.92. This upward revision incorporates a 3% ESG premium into the valuation, reflecting an upgrade in the REIT’s ESG rating to ★★★★ from ★★★. The REIT’s improved ESG profile is marked by completed climate risk assessments, adopted ESG-linked financing, inclusion in the FTSE4Good Bursa Malaysia Index, and a Gold Award at the 2024 ESG Positive Impact Awards. Operationally, the REIT anticipates further energy cost savings from chiller upgrades, contributing to overall efficiency. TA SECURITIES maintains its FY26-28 earnings forecasts, underpinning a positive outlook for the REIT.