IGB Commercial-REIT banks on Mid Valley resilience for growth

PETALING JAYA: IGB Commercial Real Estate Investment Trust (IGB Commercial- REIT) is expected to sustain steady earnings growth, supported by stable occupancy and modest rental increases, according to RHB Research.

“Despite rising competition from incoming office supply, we believe established integrated developments such as Mid Valley City remain relatively resilient, supported by strong connectivity and amenities,” it said.

It said this reflects near-full occupancy of 98.8% and an average rent of RM7.14 per sq ft, above the Kuala Lumpur city fringe average of MYR5.90 per sq ft based on Knight Frank’s report. This indicates sustained tenant demand despite higher rents.

“Management’s build-to-suit strategy further strengthens its appeal to multinational companies seeking ready-to-occupy offices without the complexities of fit-out works and regulatory approvals,” it said.

With portfolio occupancy at 95%, organic growth should increasingly depend on rental reversions.

“As such, we see the sponsor’s Mid Valley Southkey office portfolio as a potential second leg of growth through acquisitions once these assets have stabilised, supported by the REIT’s RM800mil of debt headroom,” the research house added.