Sunway REIT posts 10% rise in 1Q profit, retail segment leads recovery

PETALING JAYA (May 14): Sunway Real Estate Investment Trust (Sunway REIT), one of Malaysia's largest diversified REITs with 28 properties valued at RM10.2 billion and a market capitalisation of RM7.9 billion, recorded a 10% year-on-year (y-o-y) increase in profit before tax to RM114.8 million in the first quarter ended March 31 (1Q2026), driven by a stronger retail segment performance and lower finance costs.

It said in its statement yesterday that revenue rose 2% y-o-y to RM223.0 million from RM218.9 million in 1Q2025, while net property income (NPI) grew 5% to RM164.4 million from RM157.2 million in the same period last year. 

Basic earnings per unit rose to 3.18 sen from 2.88 sen a year earlier. Sunway REIT did not declare a distribution per unit (DPU) for 1Q2026, as the trust distributes income on a semi-annual basis.

Retail drives the gains

The retail segment was the standout performer, with revenue jumping 10% to RM185.0 million from RM168.4 million in 1Q2025. NPI for the segment surged 17% to RM136.3 million, up from RM116.8 million a year earlier, according to its Bursa announcement.

The strong showing was attributed to the completion of Sunway Carnival Mall's refurbishment of its existing wing in May 2025, a full quarter's contribution from AEON Mall Seri Manjung — acquired on July 25, 2025 — and lower utilities costs following the implementation of new electricity tariff rates from July 2025.

Sunway Carnival Mall was a particular highlight, with retail sales per sq ft growing more than 16% y-o-y in 1Q2026, cementing its position as the preferred retail destination on mainland Penang.

Hotels soften on seasonality and geopolitics

The hotel segment recorded a 19% decline in revenue to RM13.0 million in 1Q2026, with NPI falling 21% to RM11.8 million. 

The weaker performance was attributed to softer travel activity following the year-end peak season and the Ramadan period, compounded by ongoing Middle East conflicts that disrupted flight activity and pushed up travel costs.

Two properties bucked the trend — Sunway Putra Hotel, which benefited from stronger group bookings from China and India, and Sunway Hotel Seberang Jaya, supported by stable demand from medical travellers linked to the adjacent Sunway Medical Centre Penang.

Office stable, industrial surges

The office segment recorded a marginal 1% decline in revenue to RM20.3 million, primarily due to lower occupancy at Wisma Sunway. NPI remained stable at RM12.4 million. A replacement tenant has been secured, and Wisma Sunway is expected to reach full occupancy by 4Q2026.

The industrial and others segment posted the sharpest growth in the quarter, with revenue rising 15% to RM4.8 million and NPI climbing 21% to RM3.9 million, driven by higher occupancy at Sunway REIT Industrial – PJ 1.

Management outlook

Sunway REIT Management Sdn Bhd CEO Derek Teh Wan Wei said the trust's diversified portfolio provided stability despite softer hotel conditions.

"While the Hotel segment faced softer operating conditions due to seasonality, subdued travel activity and external geopolitical uncertainties, our diversified portfolio continued to provide stability and resilience to the overall performance of Sunway REIT," he added.

On finance costs, Teh noted that profit before tax benefited from a 10% decline in borrowing costs, driven by a lower borrowing sum and a reduced average interest rate.

Looking ahead, Teh said the manager remains cautiously optimistic, with continued focus on operational excellence, asset enhancement initiatives, tenant mix optimisation, and sustainability-driven improvements.

"The Manager will continue to focus on operational excellence, proactive asset enhancement initiatives, tenant mix optimisation, and sustainability-driven improvements to strengthen the long-term competitiveness of our assets and deliver sustainable value creation for our unitholders," he said.

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