SUNWAY Real Estate Investment Trust’s (Sunway REIT) hotel division is experiencing “slight headwinds” from booking cancellations, driven by rising airfares and ongoing conflict in the Middle East, according to MBSB Research.
In the financial year 2025 (FY25), foreign guests accounted for 55% of total occupancy, leaving the segment exposed to external shocks.
“In view of the ongoing Middle East tensions, the strategy for hotel operations is now to focus on domestic travellers and intra-ASEAN travel to boost occupancy rates. Additionally, rising inflationary pressures could lead to lower MICE activities. In a nutshell, the hotel division is expected to be weaker in FY26 if elevated oil prices persist,” the research house said.
Despite this, the impact on the broader REIT is expected to be limited.
“Overall, we see the potential weakness in the hotel division as a marginal drag on Sunway REIT in the near term, as it contributed 14% to total net property income in FY25. Nevertheless, long-term prospects remain stable, supported by resilient earnings from its retail division,” it added.
MBSB Research, a unit of MBSB Investment Bank Bhd, maintained its “neutral” call on Sunway REIT, while revising its 52-week target price to RM2.39 from RM2.48 previously. At 9.40am today, the counter was down 3 sen to RM2.30.
Sunway REIT owns a diversified portfolio of hotels in Malaysia, primarily within integrated developments in Sunway City Kuala Lumpur, Kuala Lumpur city centre and Penang. Its key assets include Sunway Resort Hotel, Sunway Pyramid Hotel, Sunway Lagoon Hotel, Sunway Putra Hotel, Sunway Hotel Georgetown and Sunway Hotel Seberang Jaya.
The report noted that the REIT’s acquisition yield remains at 6.5% to 7%.
“Sunway REIT is looking to grow its asset portfolio via acquisitions. However, management does not rule out asset divestments where upside is limited. Future acquisitions will focus on retail assets, with targeted yields of 6.5% to 7%.
“Meanwhile, the REIT is also exploring potential entry into the data centre space as part of its Transcend 2027 growth strategy, alongside opportunities in logistics and services,” it said. — TMR
Source: The Malaysia Reserve
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