KIPREIT: Portfolio Expansion Fuels Robust Financial Performance, Positive Outlook

A leading investment bank has highlighted a real estate investment trust’s (REIT) robust financial performance, with its first-quarter FY26 realised net profit aligning with market expectations. The positive results were primarily driven by strategic portfolio expansion and strong operational efficiencies.

Performance Review

The REIT reported a realised net profit of RM17.5 million for the first quarter of FY26, marking a significant 73% year-on-year (YoY) increase and a 15% quarter-on-quarter (QoQ) growth. This performance was in line with both the investment bank’s and consensus full-year estimates, representing 26% of the forecasts. Concurrently, the distribution per unit (DPU) saw an 18% YoY rise to 1.8 sen, translating into an attractive dividend yield of 8.3% based on the last closing price.

Revenue and net property income (NPI) surged by 53% and 51% YoY, reaching RM40.8 million and RM29.7 million respectively. This impressive growth was attributed to stronger contributions from its existing seven KIP Malls and incremental income generated from newly acquired properties, including DPulze Shopping Centre, TF Value Mart, Cheras Jaya industrial property, KIPMall Desa Coalfields, and Bintulu industrial property. Sequentially, revenue and NPI experienced a modest uplift, primarily due to the contribution from KIPMall Desa Coalfields.

Strategic Acquisitions and Operational Improvements

During the quarter under review, the REIT completed three significant acquisitions: KIPMall Desa Coalfields, KIP Kuantan, and an industrial property in Bintulu. Furthermore, an additional industrial asset in Pasir Gudang, Johor, was acquired on October 17, 2025. These strategic additions have expanded the REIT’s portfolio to 18 income-generating properties across Peninsular Malaysia and Sarawak, with total assets under management (AUM) now standing at RM1.7 billion.

Management expresses a positive outlook, buoyed by resilient portfolio performance, proactive leasing strategies, and ongoing operational improvements. Enhancement works at KIPMall Tampoi, currently 40.3% completed, are on schedule for completion by January 2026. This RM22 million upgrade is expected to add 10,000 sq ft of net lettable area and feature improved infrastructure, upgraded F&B areas, digital elements, and sustainability initiatives to boost footfall and rental growth.

Future Outlook

The REIT anticipates minimal impact from the 8% Sales and Service Tax (SST) on commercial rentals, supported by strong occupancy rates (over 90%), improving footfall, and steady tenant sentiment. Management targets rental reversions of 5-10% for FY26. The trust remains committed to prudent capital management and sustainable returns, aiming to expand its AUM to RM2.0 billion by 2027 through strategic acquisitions in both the retail and industrial segments.

TA Securities maintains its “Buy” recommendation on the REIT, with an unchanged target price of RM1.09 per unit, based on a target yield of 6.5%.