Sentral REIT sees improving occupancy levels as it posts marginal gains for 1Q earnings

KUALA LUMPUR (May 14): Sentral Real Estate Investment Trust (KL:SENTRAL) sees improving occupancy levels and steady leasing activity for 2026 as its Klang Valley office portfolio navigates a competitive tenant-driven market and mounting cost pressures.

In a Bursa Malaysia filing, Sentral REIT said its portfolio occupancy rose to 89% as at the end of its first quarter, as it saw a marginal increase in its net profit.

For its first quarter ended March 31, 2026 (1QFY2026), Sentral REIT posted a marginal gain of 1.1% in net profit, which is RM19.82 million versus RM19.61 million a year earlier.

Revenue rose 2.27% to RM48.54 million from RM47.46 million in the year prior. This was driven by full-quarter contribution from Arcoris Mont Kiara following its acquisition in late 2025, alongside improved performance from existing assets.

Property operating costs rose to RM12.5 million due to the inclusion of Arcoris Plaza and higher operational expenses, while manager’s fees increased by 10%.

During the quarter under review, it saw more lease renewals and securing tenants in the IT, e-commerce and shared services sectors.

The REIT said that of the roughly 451,000 square feet of net lettable area due for renewal this year, about 83,400 square feet have been renewed, while negotiations are still ongoing for the remaining space.

However, it noted that the Klang Valley office market continues to face headwinds from cost inflation and expansion but demand for well-located Grade A assets is still steady, said Sentral REIT.

“While we remain cautiously optimistic on the near-to-medium-term office market outlook, we see demand opportunities in well-located and well-connected properties with good amenities,” said CEO Tay Hui Ling in a press statement.

The REIT said that its financial position showed improvement compared to the prior quarter as aggregate leverage declined slightly to 45.3%, while the average borrowing cost eased to 4.22%.

The interest coverage ratio stayed at 2.58 times, and the debt maturity schedule is well-distributed over the next four years, says Sentral REIT.

No income distribution was declared for the quarter as the group's distribution of income is paid on a half-yearly basis, said the group.

“Our focus remains on optimising tenant mix, asset enhancement initiatives and portfolio diversification to ensure stable revenue generation while reinforcing long-term growth,” said Sentral REIT chairman Tan Sri Saw Choo Boon.

Shares of Sentral REIT were down by half a sen or 0.7% to 70.5 sen on Thursday’s noon break. At its last price, the group has a market capitalisation of RM842.8 million.

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