Listed on Bursa Malaysia in 2010, Sunway REIT is a diversified real estate investment trust with a strong focus on the retail segment. As of end-2024, its property portfolio was valued at RM10.4 billion, comprising 28 properties: 13 retail assets, six hotels, five office buildings, three industrial sites, and one education asset. The REIT is currently in the process of disposing of its education asset and has been more active in acquisitions and divestments over the past two years. In 2024, it achieved record highs in revenue, net property income, and distribution per unit.
Here are 10 things I learnt from the 2025 Sunway REIT AGM.
1. Revenue increased 7.2% year-on-year to RM767.1 million in 2024, driven by contributions from newly acquired assets and strong performance from the retail and hotel segments. Likewise, net property income increased 8.1% year-on-year to RM569.7 million over the same period. Distribution per unit increased 7.5% year-on-year from 9.3 sen in 2023 to 10.0 sen in 2024.
2. Sunway REIT has recalibrated its TRANSCEND 2027 strategy to focus more on its core strength: the retail segment. This represents a slight departure from its previous emphasis on the services and logistics sectors. In 2024, the REIT aggressively acquired assets totalling almost RM1 billion which included six hypermarkets, Sunway 163 Mall, Sunway Kluang Mall, and Sunway REIT Industrial – Prai. The acquired properties had yields ranging between 7.0% and 8.1% at the time of purchase.
The REIT has begun expanding its retail footprint beyond the Klang Valley, incorporating hypermarkets, and strengthening its industrial presence in both the Klang Valley and Penang. In alignment with its TRANSCEND 2027 strategy, the management aims to grow the REIT’s assets under management to between RM14 billion and RM15 billion by 2027, representing at least 34% growth from the 2024 AUM. The REIT holds growth potential, provided that future acquisitions are accretive to its existing yield, DPU, and NAV, and their current assets continue to to deliver stable performance.
3. There are further tailwinds for this REIT, with the occupancy of Sunway REIT Industrial – Petaling Jaya 1 expected to increase from 31% in 2024 to 75% by 2H 2025. Additionally, the hotel segment is anticipated to benefit from the upcoming Visit Malaysia 2026 campaign, which is currently under preparation. The management has guided a rental reversion between high single-digit and low-teens for 2025 (6.4% in 2024).
4. In January 2025, the REIT announced the proposed acquisition of AEON Mall Seri Manjung in Perak from YNH Property’s wholly owned units for RM138 million. The property yield of this acquisition stands at 6.5% initially and is expected to rise to an average of 6.9% over the remaining term of the triple-net lease to AEON Co (M) Bhd until December 2027. The acquisition is anticipated to be completed in Q2 2025.
5. The proposed acquisition will be funded through the disposal of the Sunway university & college campus for RM613 million to Sunway College (KL) Sdn Bhd, a price above its market value of RM586 million. Its property yield at the point of disposal was 6.3%. This asset was originally acquired for RM550 million in 2019. Proceeds from the disposal will be used to pare down borrowings, with gearing anticipated to decline from 41.4% in 2024 to 37.8% post-disposal (inclusive of perpetual securities, gearing would decline from 46.4% in Q1 2025 to 42.7%). Annual finance cost savings of approximately RM24 million are estimated, with any surplus cash to be retained for future acquisition opportunities. CEO Clement Chen stated that the management is comfortable with the overall gearing level to optimise shareholder returns and support growth.
6. A unitholder highlighted the potential decline in DPU from 10.00 sen in 2024 to 9.66 sen post-disposal, given that this asset was the third-highest contributor to the group’s net property income in 2024. The management, however, views this as an opportunity to recycle assets. This DPU impact is expected to be cushioned by the full-year contributions from recently acquired assets, the aforementioned organic growth, and ongoing asset enhancement initiatives offering higher returns.
7. Since 2023, Sunway REIT has earmarked nearly RM1 billion for three major asset enhancement initiatives (AEIs).
- Sunway Pyramid – Oasis Precinct: The first AEI involved a RM190 million refurbishment of the Oasis precinct at Sunway Pyramid, carried out between Q3 2023 and Q4 2024. Following completion, footfall rose by 10%, and the average rental rate per square foot surged by 250%. Consequently, the property’s valuation increased from RM3.9 billion in 2023 to RM4.2 billion in 2024.
- Sunway Carnival Mall – Existing Wing: The second initiative is a RM360 million refurbishment of the existing wing of Sunway Carnival Mall, which began in Q3 2023. With its opening brought forward to Q2 2025, the mall has seen a sharp increase in footfall.
- Sunway Pier – Seafront Development: The third project, with a budget of RM400 million, is the development of Sunway Pier—a unique seafront destination featuring a seafood market, duty-free shops, and F&B offerings. To date, RM52 million has been spent, and the project is expected to be completed by the second half of 2027.
8. Contrary to a unitholder’s concern, Sunway Hotel Georgetown has been one of the better-performing assets, with a property yield of 7.2% in 2024, according to Chen. However, the office segment continues to face headwinds, particularly due to the ongoing supply glut in the Klang Valley. Although the occupancy rate at Sunway Tower rose to a five-year high of 42% in 2024, it remains significantly below the Klang Valley average of 74%, despite management’s turnaround efforts. To enhance unitholder returns, the REIT is exploring strategic options for the property, including asset recycling. Meanwhile, Sunway Putra Tower saw its occupancy decline from 80% in 2023 to 69% in 2024 following the exit of a major tenant.”
9. Sunway REIT’s 3.9% cost of debt was one of the lowest in the industry in 2024. The management has also successfully refinanced RM340 million of perpetual notes with new RM500 million sustainability-linked perpetual notes at 4.63%, a reduction from the previous rate of 5.85%. Separately, the litigation with Metroplex Holdings remains ongoing and is still subject to appeal, and the REIT has remitted RM8.1 million to the counterparty as determined by the court.
10. In Q1 2025, revenue climbed 22.6% year-on-year to RM218.9 million, driven by the newly acquired assets in 2024 as well as additional contribution from the Oasis precinct of Sunway Pyramid. Likewise, net property income increased 20.4% year-on-year to RM157.2 million over the same period and was partially offset by softer hotel (during the Ramadan period) and office segmental performance.
The fifth perspective
Sunway REIT is poised for continued growth, driven by its asset enhancement initiatives, recently acquired assets, and future acquisition opportunities. However, potential business headwinds persist, including US-imposed tariff measures, higher sales and service tax, and fuel subsidy rationalisation, which may dampen consumer spending. Furthermore, the supply glut in office space could continue to affect its office segment. Also, the REIT’s gearing remains slightly elevated.
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