PETALING JAYA : IGB Real Estate Investment Trust (IGB-REIT), owner of Mid Valley Megamall and The Gardens Mall, is poised to deliver resilient occupancy rates and sustained rental growth following recent asset reconfigurations.
According to CGS International (CGSI) Research, IGB-REIT maintained an impressive average occupancy rate of nearly 100% for the first quarter ended 31 March 2025 (1Q25), supported by steady footfall and growth in tenant sales.
The gross monthly rental rate at Mid Valley Megamall rose from RM18.10 per sq ft in the financial year 2024 (FY24) to RM19.45 per sq ft in 1Q25, aided by the completion of the South Court reconfiguration in September 2024. The project saw the conversion of a large net lettable area (NLA) previously occupied by anchor tenant Metrojaya into multiple smaller, higher-yielding tenants.
For The Gardens Mall, the gross monthly rental rate also improved, rising from RM14.94 per sq ft in FY24 to RM16.63 per sq ft in 1Q25.
CGSI Research noted that IGB-REIT’s 1Q25 core net profit of RM110.6 million was in line with expectations, representing 27%–28% of both its and Bloomberg consensus full-year forecasts. Management reiterated its rental reversion guidance of mid-single digits for FY25 and expressed confidence in achieving a high renewal rate for leases expiring this year.
As at 31 March 2025, 17.4% of Mid Valley Megamall’s NLA and 51.5% of The Gardens Mall’s NLA are scheduled for renewal in FY25, including several key anchor tenants.
While management flagged potential softer results in the second quarter due to seasonally weaker tenant sales, it expects FY25 earnings growth to be underpinned by full-year contributions from the South Court reconfiguration, continued rental rate increases, and potential gains from gross turnover rent.
CGSI Research maintained its “Hold” rating on IGB-REIT, with a target price of RM2.21.
Meanwhile, Kenanga Research reported that overall tenant sales at Mid Valley Megamall and The Gardens Mall remained stable in 1Q25, even as some rival malls saw declines. Following a recent site visit, Kenanga expressed optimism that the new higher-yielding tenants occupying the reconfigured Metrojaya space would continue supporting rental and sales growth throughout FY25.
Kenanga also maintained its earnings forecasts, RM2.20 target price, and “Market Perform” rating.
The revitalisation of the malls saw the introduction of around 20 new tenants, including brands such as Urban Revivo and Love, Bonito in the fourth quarter of 2024. With approximately 10% of the total NLA now fully occupied by these higher-yielding tenants since November 2024, the reconfiguration is expected to be a key earnings driver in the coming year.
Kenanga Research added that the potential injection of Mid Valley Southkey into IGB-REIT remains a medium-term catalyst.
At the time of writing, shares of IGB-REIT were trading at RM2.29.
–The Star
