Sunway-REIT lifted by stronger portfolio

PETALING JAYA: Sunway real estate investment trust (Sunway-REIT) expects its performance to remain resilient in the second half of financial year 2026 (2H26), underpinned by continued strength in its retail portfolio, improving hotel demand and better office leasing activity.

The REIT posted a realised profit attributable to unitholders of RM106.5mil for the second quarter ended June 30, 2026 (2Q26), up 10.3% from RM96.5mil in the same period a year earlier.

In 2Q26, earnings per unit stood at 3.11 sen, compared with 2.82 sen previously.

Distribution per unit (DPU) rose 10.6% to 6.28 sen, while revenue for the quarter increased 4.2% to RM220.3mil.

For 1H26, realised profit attributable to unitholders rose 10.5% to RM215.5mil, while DPU also increased 10.6%.

Net property income (NPI) for the six months rose 4.9% to RM327.4mil from RM312.1mil previously.

Sunway-REIT said the higher DPU was also supported by lower finance costs, mainly due to a lower borrowing sum and a lower average interest rate.

The retail segment remained the main growth driver, with revenue rising 11% year-on-year to RM177.1mil in 2Q26.

In a filing with Bursa Malaysia, Sunway-REIT said the increase was driven by the full reopening of the existing wing of Sunway Carnival Mall in May 2025, stronger performance at flagship Sunway Pyramid Mall and additional rental income from AEON Mall Seri Manjung following its acquisition in July last year.

Retail NPI rose 14% to RM130.4mil from RM114.1mil previously.

The REIT said the retail segment was expected to sustain its growth momentum, supported by healthy occupancy levels, positive rental reversions and the full-year contribution from AEON Mall Seri Manjung, as well as the newly refurbished Sunway Carnival Mall.

An analyst said continued healthy footfall at Sunway-REIT’s key malls should support rental growth, with mid-single-digit rental reversions in the financial year 2026 remaining within reach.

The analyst noted that the stronger retail contribution also reflected the benefit of assets that were either newly acquired or had undergone refurbishment, providing additional earnings support as these properties moved into a full-year contribution period.

The hotel segment also gained momentum, with revenue rising 8% to RM18.1mil in 2Q26, supported by stronger contributions from Sunway Resort Hotel, Sunway Lagoon Hotel and Sunway Putra Hotel.

Sunway-REIT said the improvement was supported by better international flight connectivity and robust demand from the meetings, incentives, conferences and exhibitions (Mice) market during the quarter. Hotel NPI rose 9% to RM17mil from RM15.6mil a year earlier.

While the hotel segment’s performance for the year was affected by a softer first quarter, Sunway-REIT expects the outlook for the second half to remain encouraging.

It said the business should benefit from Visit Malaysia Year 2026 (VM2026), the continued increase in international tourist arrivals and the recovery in business and leisure travel.

Mice activity is also expected to provide support for occupancy and room rates.

The office segment remained relatively stable, with revenue at RM20.4mil and NPI edging down 1% to RM12.1mill.

Portfolio occupancy remained above 80%. Leasing activity, however, has improved, with Wisma Sunway expected to reach full occupancy by 4Q26 which management expects to further support the segment’s performance.

The industrial and others segment also recorded improvement, with revenue rising 5% to RM4.7mil and NPI increasing 12% to RM3.6mil.

The stronger performance was mainly supported by higher occupancy at Sunway-REIT Industrial – Petaling Jaya 1.

Sunway-REIT Management Sdn Bhd chief executive officer Derek Teh Wan Wei said the REIT delivered a resilient performance in 2Q26, driven primarily by the continued strength of its retail segment, complemented by improved contributions from its hotel and industrial assets and the steady performance of its office portfolio.

“The retail segment remained the primary growth driver, supported by improved footfall and stronger tenant sales across our retail portfolio, reflecting resilient consumer spending and the sustained appeal of our malls,” Teh added.

Furthermore, he noted that the hotel segment also delivered encouraging growth on the back of recovering international travel and healthy Mice demand, while the office portfolio remained resilient with stable occupancy and improving leasing activity.

Looking ahead, Sunway-REIT said it would continue to focus on proactive asset management, tenant retention and selective growth opportunities while maintaining a prudent approach to capital management.

Within the retail portfolio, management plans to continue initiatives including digital transformation, expanding food and beverage offerings and reconfiguring space to accommodate high-performing tenants.

These initiatives are aimed at strengthening the appeal of its malls, supporting footfall and tenant demand, and sustaining rental growth.

The group also expects the hotel segment to benefit from stronger tourism activity in 2H26, including VM2026, while the year-end festive season, peak leisure travel and continued recovery in Mice activities are expected to support hotel occupancy and room rates.