Sentral REIT’s sale of long-vacant Wisma Sentral Inai to improve portfolio, balance sheet—analysts

• If the disposal of Wisma Sentral Inai goes through, the real estate investment trust will see its overall occupancy rate rise to 94% from 85%, while improving its yield, according to analysts’ estimates, as the loss-making property has been vacant for more than three years now.

KUALA LUMPUR (Aug 18): The proposed sale of Wisma Sentral Inai will immediately improve Sentral REIT’s (KL:SENTRAL) portfolio and boost its balance sheet for future acquisitions, analysts said. 

If the disposal of Wisma Sentral Inai goes through, the real estate investment trust will see its overall occupancy rate rise to 94% from 85%, while improving its yield, according to analysts’ estimates, as the loss-making property has been vacant for more than three years now.

“We are positive on the disposal, which serves as a long-awaited catalyst for Sentral REIT,” RHB Research said and kept its “buy” call. “The divestment removes a drag on the portfolio.”

Last Friday (Aug 15), Sentral REIT announced that it is selling the 12-storey office building for RM135 million to Turiya Bhd (KL:TURIYA). The asset is over three decades old and requires repair, even though it is generally in good condition.

Sentral REIT expects a RM4 million net loss from the sale of the property that had a carrying value of RM150 million as at December 2024. The trust’s gearing would also improve and drop to 41.93% from 44.58%, if the proceeds are used to repay borrowings.

“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,” said Hong Leong Investment Bank (HLIB).

Further, the REIT will also no longer incur losses from maintaining this building, the house noted.

Both RHB Research and HLIB have the stock on a “buy” call, in line with the majority of research houses covering the stock. The average target price is now 87 sen, according to Bloomberg, implying a potential upside of about 7% from its last price.

Sentral REIT was unchanged at midday break on Monday. The trust has rebounded from its April lows during the global market turmoil, and is now largely back to the level where it started this year.

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