AMEREIT: REIT Delivers Strong Earnings on Cost Efficiencies, Target Price Raised

A leading Real Estate Investment Trust (REIT) has reported robust financial results, with its core earnings for the nine-month period ending December 2025 aligning perfectly with market expectations. The strong performance was primarily driven by strategic acquisitions and effective cost management, prompting TA SECURITIES to reiterate its “BUY” recommendation and raise its target price.

Performance Review

The REIT posted core earnings of MYR32.8 million for the nine-month period, marking an impressive 11% year-on-year increase. This figure met 73-75% of both the investment bank’s and consensus full-year forecasts. Revenue saw a significant surge of 21% year-on-year, reaching MYR45.8 million, largely attributed to income contributions from six newly acquired industrial properties and sustained positive rental reversions across its portfolio. The Net Property Income (NPI) margin remained resilient at approximately 91%, while distributable income per unit (DPU) also recorded a healthy 10% year-on-year growth.

Navigating Challenges and Enhancing Efficiencies

Despite an increase in financing costs to MYR7.6 million, necessitated by higher borrowings undertaken to fund acquisitions, the REIT’s overall gearing remains well within a comfortable range. This leaves ample headroom for further inorganic growth. Operational efficiency continues to be a strong point, with the portfolio maintaining high occupancy rates. Management is actively addressing financing costs by planning to progressively refinance debt towards a more fixed-rate profile, aiming to reduce the average profit rate from 4.24% to approximately 4.17%. This move is expected to modestly ease financing costs and enhance earnings predictability.

Future Outlook and Strategic Growth

Management maintains a positive outlook on both organic and inorganic growth prospects. A key strategic focus includes an annual acquisition target of MYR100 million, with particular emphasis on Klang Valley assets for the fiscal year 2027. Occupancy rates are projected to remain near full, driven by sustained demand for its industrial portfolio. Organically, the REIT anticipates further upside from the repricing of legacy leases; approximately 11% of leases are set to expire in FY27 and a further 4% in FY28. This visible runway for rental catch-up is expected to significantly boost future revenue assumptions.

Investment Recommendation

Based on the solid financial performance, strategic acquisitions, and clear growth trajectory, TA SECURITIES has reiterated its “BUY” recommendation for the REIT. The investment bank has also increased its target price to RM0.25, representing an attractive 25.0% upside from the last traded price of RM0.20, reflecting confidence in the REIT’s continued growth story and yield-accretive potential.