Sunway REIT repositioning from retail-focused to diversified REIT

by TMR

Sunway Real Estate Investment Trust (REIT) will reposition its business strategy from being retail-focused to a more diversified REIT to boost growth opportunity amid rising operational cost.
 
Sunway REIT Management Sdn Bhd CEO Datuk Jeffrey Ng said in a statement yesterday the company is putting the building blocks to solidify Sunway REIT’s fundamentals going beyond the financial year 2019 (FY19).
 
“In today’s challenging property market environment, active acquisition strategy is the way to drive growth going forward. As a proactive REIT manager, we will explore non-conventional growth drivers such as venturing into greenfield developments and redevelopment opportunities,” Ng said.
 
Sunway REIT has targeted to double its property value to RM15 billion by FY2025 following its strategic review. For the first quarter ended Sept 30, 2018 (1Q19), Sunway REIT’s net profit declined by 7.8% year-on-year to RM73 million partly due to lower operational gains.
 
Retail segment recorded higher revenue of 1.3% YoY to RM104.9 million, supported by Sunway Pyramid Shopping Mall which benefited from the tax holiday period, but it was offset by softer performance in other malls. Its hotel segment’s revenue dipped 2.2% YoY to RM22.6 million largely affected by softer demand from leisure and business travelers on decline in tourist arrivals.
 
Sunway REIT proposed a distribution of 2.48 sen in 1Q that translates into an annualised distribution yield of 5.8% based on unit price of RM1.69 as at Sept 30, 2018.