Top 10 Real Estate Investment Trusts Companies in Malaysia 2024

As we navigate through the dynamic landscape of the Malaysian share market, the Real Estate Investment Trusts (REITs) sector emerges as a beacon of opportunity for investors seeking a stable and lucrative investment avenue.

Top 10 Malaysian REITs to Invest in Jul 2024

As we navigate through the dynamic landscape of the Malaysian share market, the Real Estate Investment Trusts (REITs) sector emerges as a beacon of opportunity for investors seeking a stable and lucrative investment avenue.

The data is based on market performance as of Jul 2024.

Why Invest in Malaysian Real Estate Investment Trusts Companies?

If you are considering investing in real estate investment trust companies in Malaysia, there are a multitude of compelling reasons for you to explore this opportunity. Here are some of the key incentives for considering Malaysian real estate investment trust companies in 2024.

Accessibility and Affordability

Real estate investment trust companies democratize real estate by allowing investors to purchase shares at a fraction of the cost of traditional property investments. For instance, with approximately 1,000 Malaysian Ringgit, you can own a part of billion Ringgit properties like Mid Valley, which would be otherwise unaffordable for your individual investment.

Liquidity

Unlike direct property investments that may take time to liquidate, REITs are traded on Bursa Malaysia, providing investors with the ability to buy and sell quickly, thus offering high liquidity.

Professional Management

Each REIT is expertly managed by teams responsible for the strategic acquisition, management, and divestment of properties, ensuring they are well-maintained and strategically positioned to generate income, such as the renowned The Gardens Mall.

Diversification

REITs provide a portfolio that spans across various sectors including retail, office, industrial, and hospitality, effectively spreading risk and cushioning against market volatility in any single sector. An investment in Sunway REIT, for example, diversifies across multiple property types and geographical locations.

High Dividends and Tax Benefits

Malaysian real estate investment trust companies enjoy tax transparency, and by distributing at least 90% of their taxable income to shareholders, they are exempt from a 25% income tax. This structure typically results in high dividend yields, with the majority of earnings being distributed back to investors.

Stable Income Stream

REITs offer a steady income stream similar to dividends, derived from the rental income of the properties they hold, providing investors with a predictable and regular source of earnings.

Transparency and Regulation

The strict regulatory environment ensures that trust companies operate transparently, with robust financial reporting, safeguarding investor interests and bolstering market confidence.

Inflation Protection

With long-term leases and rent escalation clauses, many REITs offer protection against inflation, ensuring a steady increase in rental income that outpaces the rate of price increases.

6 Important Factors that Affect Real Estate Investment Trusts Investment Industry

The Real Estate Investment Trusts (REITs) industry is influenced by a variety of factors that can impact the performance and investment potential of REITs. Staying updated with the latest market data and trends is crucial for making informed investment decisions in the REIT industry. Here are six important factors to consider:

1. Interest Rates: One of the most significant factors affecting REITs is the level of interest rates. Since REITs often use leverage to enhance returns, changes in interest rates can affect their cost of borrowing and, consequently, their profitability and dividend payouts.

2. Economic Conditions: The health of the economy has a direct impact on the REIT industry. During economic downturns, reduced consumer spending and business activity can lead to lower demand for commercial properties, affecting rental income and property values.

3. Property Market Cycles: The performance of REITs is closely tied to the property market cycles. Oversupply or a slowdown in the property market can lead to reduced rental yields and property valuations, impacting REIT returns.

4. Regulatory Environment: Changes in tax laws, REIT regulations, and other government policies can significantly affect the industry. Tax incentives for REITs and the regulatory framework governing their operations are crucial for their profitability and investor appeal.

5. Demographic and Social Trends: Shifts in population, urbanization, and lifestyle preferences can influence the demand for different types of properties. For example, an aging population may increase demand for healthcare and senior living facilities, benefiting REITs in those sectors.

6. Technological Advancements: Technology can disrupt traditional real estate models, offering new opportunities for REITs to enhance property management, tenant engagement, and operational efficiencies. For instance, the rise of e-commerce has increased demand for logistics and warehouse space.

Top 10 Malaysian Real Estate Investment Trusts Companies

As we delve into the Malaysian REIT landscape in 2024, the maturity of the real estate investment trust companies within the Malaysia share market is palpable. The top ten Malaysian REITs, handpicked based on the market capitalization data from the moomoo MY platform as of July 9, 2024, exemplify the industry's robustness. These trust companies have distinguished themselves through their strategic property portfolios and unwavering commitment to delivering value to their unitholders. They have not only shown resilience across economic cycles but have also adeptly responded to the market's evolving demands. In the forthcoming section, we will dissect each of these leading REITs, showcasing their unique market strengths and the diverse properties that constitute the bedrock of their success.

Source: (Moomoo PC app, July 9, 2024)

KLCC (5235SS. MY)

KLCC Property Holdings Berhad, a cornerstone of the KLCCP Stapled Group, is a Malaysian real estate company with a significant footprint in the heart of Kuala Lumpur. It is the custodian of some of the city's most iconic properties, including the globally recognized Petronas Twin Towers, which serves as the corporate headquarters for many multinational companies. The group also manages Menara ExxonMobil, Menara 3 Petronas, and Menara Dayabumi, all of which contribute to a robust portfolio of commercial and retail spaces. These properties are strategically located, offering unparalleled access to business and consumer traffic, thereby maximizing rental yields and occupancy rates. In addition to its property management, KLCC Property Holdings Berhad also offers Real Estate Investment Trust (REIT) services, providing investors with the opportunity to participate in the ownership and income generation of these prime properties.

Recent Financial Performance： In the first quarter of the financial year ending 2024, KLCC Property Holdings Berhad reported a modest increase in net profit, rising to RM188.03 million from the previous year's RM180.56 million. This growth was supported by a 7.4% uptick in revenue to RM408.9 million. The company's commitment to rewarding shareholders is evident in the declared dividend of nine sen per stapled security, which represents a 5.9% increase from the previous year. The group's financial performance and strategic outlook reflect a resilient approach to navigating the economic landscape, with a focus on maintaining and growing its investment in prime real estate.

IGBREIT (5227. MY)

IGBREIT (5227. MY) refers to IGB Real Estate Investment Trust, a Malaysian Real Estate Investment Trust (REIT) that is listed on the Bursa Malaysia. IGBREIT is known for its investments in a diversified portfolio of properties, particularly in the retail and office sectors. Its initial property portfolio included notable assets such as the Mid Valley Megamall and The Gardens Mall, both significant retail destinations in Malaysia.

Recent Financial Performance： IGB Real Estate Investment Trust (IGB-REIT) reported Q1 2024 results that met expectations, with a net profit of RM102.3 million, aligning with projections. Revenue and net property income (NPI) saw a year-on-year increase of 5.1% and 4.8%, respectively, boosted by higher rental income. The NPI yield for the quarter was up 8% compared to the previous quarter, attributed to higher upgrading costs in Q4 2023.

SUNREIT (5176. MY)

Sunway Real Estate Investment Trust is a retail-focused real estate investment trust with a portfolio in Greater Kuala Lumpur, Penang, and Perak regions of Malaysia. It includes Retail, Hotel, Office, and Others segments. SUNREIT's portfolio comprises around 10 assets, including retail malls, hotels, offices, and a medical center. Notable assets in its portfolio. Its notable assets include Sunway Medical Centre, Sunway Resort Hotel and Spa, Menara Sunway, Sunway Pyramid Hotel East, and Sunway Pyramid Shopping Mall.

Recent Financial Performance： Sunway REIT's net profit fell by 10% to RM86.98 million in 1Q24, mainly due to higher marketing expenses and the sale of a medical center. Net property income (NPI) declined by 5.6% to RM130.54 million, with revenue down 2.3% at RM178.59 million. Despite a 3% NPI drop in retail due to increased marketing costs, the company expects a boost from recent hypermarket acquisitions. The portfolio, valued at RM9.5 billion, remains the second-largest in Malaysia's REIT sector. NPI from hotels and offices grew by 3%, but the services division saw a 40% NPI decrease due to asset disposal. The industrial segment showed a significant 48% NPI increase, and rental contributions from educational properties rose by 2.3%.

PAVREIT (5212. MY)

Pavilion Real Estate Investment Trust is a Malaysian REIT that was listed on December 7, 2011. It is known for having the largest exposure to the retail sector among Malaysian REITs, with a portfolio valued at RM5.9 billion as per the appraised value. The most prominent asset in its portfolio is the Pavilion Kuala Lumpur Mall, situated in the bustling Bukit Bintang area of Kuala Lumpur, Malaysia. The trust's principal investment policy is to invest, directly and indirectly, in a diversified portfolio of income-producing real estate primarily for retail purposes, including mixed-use developments with a retail component, within Malaysia and the Asia-Pacific region.

PAVREIT operates Pavilion Tower, Da Men Mall, Intermark Mall, and Pavilion Mall. Intermark Mall is a six-story podium with approximately 225,000 square feet, located at the intersection of Jalan Tun Razak and Jalan Ampang. Da Men Mall is a five-story retail mall with over 420,920 square feet, located in the vicinity of Subang. Pavilion Tower is an office building situated in the heart of Kuala Lumpur, offering ample space for international and local corporations.

Recent Financial Performance： Pavilion Real Estate Investment Trust (PavREIT) reported a 33.2% YOY increase in NPI to RM136.02 million in 1Q24, driven by the acquisition of Pavilion Bukit Jalil and higher retail revenue. Despite a 52% rise in operating expenses, the REIT announced a 2.48 sen/unit distribution. The positive performance was partly offset by challenges like increased living costs.

AXREIT (5106. MY)

Axis Real Estate Investment Trust is a real estate investment trust listed on the Main Board of Bursa Malaysia Securities. It was the first REIT to be established in Malaysia, with a listing date of 3rd August 2005. Recognized as an Islamic REIT since 11th December 2008, all of AXREIT's acquisitions are in compliance with Shariah principles.

AXREIT boasts a diversified portfolio of 62 properties strategically located across the Klang Valley, Johor, Penang, Pahang, Negeri Sembilan, and Kedah. The portfolio's occupancy rate stands at 89%, with a Weighted Average Lease Expiry (WALE) of 5 years.

Recent Financial Performance： Axis Real Estate Investment Trust (Axis REIT) experienced a significant increase in net trust income for the first quarter of the financial year ending March 31, 2024 (1QFY2024), with a 39.5% jump. This surge is largely due to contributions from the post-development phase of the Bukit Raja Distribution Centre 2 and new tenancies in the Shah Alam Distribution Centre 3. The net trust income increased to RM42.27 million from the previous year's RM30.30 million, while property income also saw a 7.6% year-on-year growth to RM75.54 million.

YTLREIT (5109. MY)

YTL Hospitality REIT is a real estate investment trust based in Malaysia that focuses on the hospitality sector. It operates as an income and growth type fund, with a portfolio that includes a range of hospitality assets, from business to luxury hotels, located across various global destinations. The group's business activities are divided into two segments: property rental and hotels. The property leasing segment involves leasing hotel properties, while the hotel segment involves the operation of hotel business. Geographically, it has a presence in Malaysia and the Australia region.

Recent Financial Performance： In the third quarter of the financial year 2024, YTL REIT reported robust results. The net profit for this period increased by 35.5% year-on-year to RM33.73 million, up from RM24.89 million. Revenue also rose by 17.1% to RM148.59 million from RM126.90 million.

CLMT (5180. MY)

CapitaLand Malaysia Trust is a real estate investment trust listed on the Main Market of Bursa Malaysia Securities Berhad since July 16, 2010. CLMT is focused on a long-term investment in a diversified portfolio of income-producing real estate assets in Malaysia, primarily for retail, commercial, office, and industrial uses. The trust's portfolio includes six retail properties and two logistics properties, strategically located across key urban centers in Malaysia, offering a total net lettable area of 4.3 million square feet. Managed by CapitaLand Malaysia REIT Management Sdn. Bhd., a subsidiary of CapitaLand Investment Limited, CLMT is committed to enhancing its retail offerings and improving the tenant mix through proactive asset management.

Recent Financial Performance： In Q1 2024, CapitaLand Malaysia Trust (CLMT) achieved strong financial results. Gross revenue increased significantly to RM111.9 million, driven by the full quarter impact of Queensbay Mall and higher occupancies. Net property income jumped by 63.0% to RM64.0 million compared to the previous year. The trust also saw positive rental reversion of +9.1% and increased its retail occupancy to 92.4%, while its overall portfolio occupancy rate stood at 93.1% by March 31, 2024. Tenant sales and shopper traffic both showed year-on-year growth of 16.0% and 8.6%, respectively.

IGBCR (5299. MY)

IGB Real Estate Investment Trust is a real estate investment trust listed on the main board of Bursa Malaysia. The Trust's primary investment policy is to invest directly and indirectly in a portfolio of income properties, primarily for commercial purposes, in Malaysia and overseas. This includes holdings in Mid Valley City Properties and KL City Centre Properties, located in the heart of Kuala Lumpur.

Recent Financial Performance： IGB Real Estate Investment Trust (IGB REIT) has reported a 4.79% increase in its first-quarter net property income (NPI) for the period ending March 31, 2024. This growth is primarily attributed to higher rental income, with the NPI rising to $RM124.24 million from the previous year's $RM118.55 million. In addition, the revenue for 1QFY2024 has increased by 5.14% to $RM162.56 million, up from $RM154.62 million in 1QFY2023.

ALAQAR (5116. MY)

Al-Aqar Healthcare REIT is a real estate investment trust listed on the Main Board of Bursa Malaysia Securities Berhad. It focuses on investing in Shariah-compliant healthcare-related properties. The fund is managed by Damansara REIT Managers Sdn Berhad, with a focus on investing at least 75% of its total assets in Shariah-compliant real estate, single-purpose companies, and real estate-related or liquid assets, with at least 50% of its total assets invested in real estate for healthcare purposes. ALAQAR Healthcare REIT also manages a private healthcare group with a network of hospitals in Malaysia, Indonesia, and Australia.

Recent Financial Performance：In the first quarter of 2024, Al-Aqar Healthcare REIT (ALAQAR) reported a revenue of RM29.84 million, which shows a slight decrease compared to the corresponding quarter of the previous year that had a revenue of RM30.21 million, resulting in a decline of 1.22%. At the same time, the profit attributable to ordinary equity holders of the parent for the current quarter was RM16.41 million, indicating a 5.00% reduction from the RM17.27 million recorded in the first quarter of 2023.

SENTRAL (5123. MY)

Sentral Real Estate Investment Trust (SENTRAL REIT) is a Malaysian real estate investment trust listed on the Main Board of Bursa Malaysia Securities. It focuses on investing in a diverse portfolio of income-generating real estate assets, mainly within the commercial sector. These assets may include offices, industrial properties, and other commercial uses.

Recent Financial Performance： Sentral Real Estate Investment Trust (REIT) reported a first-quarter net income increase to RM19.9 million, attributed to higher revenue of RM49.69 million compared to RM37.48 million in the previous year. The REIT attributed the revenue increase to realized gains from properties and contributions from Menara CelcomDigi, after accounting for higher property expenses and finance costs. Additionally, it successfully renewed 93% of expiring leases and maintains a stable 88% portfolio occupancy rate as of March 31, 2024.

Conclusion

In conclusion, the Malaysian Real Estate Investment Trusts (REITs) sector offers investors a compelling blend of stability, income, and growth potential within the Malaysia share market. With the benefits of accessibility, liquidity, professional management, and diversification, real estate investment trust companies can be an attractive addition to an investment portfolio.

However, it is important for investors to remain vigilant about the risks associated with REITs, such as fluctuations in interest rates, economic conditions, property market cycles, regulatory changes, demographic shifts, and technological advancements. A prudent approach to investing in trust companies involves understanding these risks and conducting thorough due diligence to make informed decisions.