REAL ESTATE investment trusts (REITs) generally delivered results in line with expectations for the fourth quarter of calendar year 2025 (4QCY25), with five of the six REITs under MBSB’s coverage posting earnings that matched forecasts.
However, Al-`Aqar Healthcare REIT recorded a slight shortfall, mainly due to expenses that came in higher than anticipated.
Overall, the sector still registered respectable growth for 2025, with earnings per unit (EPU) expanding between 0.8% and 26.7%.
Notably, Sunway REIT recorded highest EPU growth of +26.7% in financial year 2025 (FY25) due to the strong performance of retail division particularly Sunway Pyramid Mall and Sunway Carnival Mall.
“Going forward, we see that earnings outlook for REIT to remain stable in 2026 as positive rental reversion outlook for retail industry is largely intact which should be less impacted by the ongoing geopolitical tension,” said MBSB.
MBSB is turning POSITIVE on REIT as they see optimism in REIT in the short-term.
They see that REIT should remain favoured by investors during turbulent market periods due to defensiveness of REIT and earnings stability which will keep share prices of REIT supported.
Fundamentally, retail industry is expected to remain resilient in 2026 due to strong shopper footfall and tenant sales.
Meanwhile, the expected higher tourist arrivals from Visit Malaysia 2026 should improve occupancy rate of hotels and benefit REIT with exposure to hotel sector namely Sunway REIT, KLCCP Stapled Group and Pavilion REIT.
“We upgrade Pavilion REIT to BUY with an unchanged target price (TP) of RM2.00 as the recent share price weakness renders attractive upside,” said MBSB.
MBSB sees a stable outlook for Pavilion REIT as the retail and hotel division of Pavilion REIT will benefit from higher tourist arrival amid VMY2026.
They also have BUY call for Axis REIT with an unchanged TP of RM2.17 as earnings outlook for Axis REIT as earnings will underpin by the resilient income from industrial assets.
Rental reversion for industrial assets is expected to remain positive due to healthy demand for industrial assets in Malaysia. —Mar 16, 2026
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