PETALING JAYA: Sentral Real Estate Investment Trust

’s (Sentral-REIT) disposal of Wisma Sentral Inai located along Jalan Tun Razak in downtown Kuala Lumpur is being viewed as a strategic move to free up capital for future acquisitions and at the same time lift the overall occupancy rate of the REIT’s office and retail properties.

Analysts were largely positive on the RM135mil disposal to Turiya Bhd

, which was announced last week, as they pointed out that the property has been vacant since July 2022 and would save the REIT up to RM1.2mil in annual operating expenses. The property was last valued at RM150mil.

Hong Leong Investment Bank Research (HLIB Research) views the disposal as a prudent move by the REIT as it will be yield accretive to the portfolio given that the asset has been loss-making.

“While sold at a relatively fair value, we believe it is a strategic move for the long term, as it frees up capital for future acquisitions, potentially reducing reliance on equity funding,” HLIB Research added.

The research house has maintained a “buy” call on the stock with a higher target price of 83 sen from 82 sen.

“We continue to like Sentral-REIT, despite challenges in the oversupplied Klang Valley office market, as it has demonstrated resilience, registering a five-year earnings compound average growth rate of 2.1%,” the research house said.

CIMB Research, which has maintained a “hold” rating on the stock with a target price of 80 sen, said the move “is unsurprising” given that the REIT had announced its intention to dispose of the asset but views the acquisition of Arcorise Plaza from UEM Sunrise Bhd

for RM70mil positively as this would boost its core net profit forecast for next year (FY26) by RM3.3mil.

RHB Research has raised its FY26 and FY27 earnings forecast for Sentral-REIT by 5% each year to reflect lower borrowing cost after the disposal.

The research house has maintained a “buy” rating on the REIT with a higher target price of 97 sen from 93 sen.

“The divestment removes a drag on the portfolio, with the blended occupancy rate expected to improve to 94% from 85%, while also unlocking capital that can be redeployed into yield-accretive assets or used to pare down borrowings and lower financing costs,” the research house said.

Maybank Investment Bank Research has maintained a “buy” call on the REIT and target price of 88 sen. According to the research house, Sentral-REIT offers the highest yield among Malaysian REITs under its coverage.