“IGB REIT and IGB Commercial REIT report stronger 1QFY2025 earnings, but warn of headwinds from economic uncertainty, fuel subsidy cuts, and office oversupply.“
Kuala Lumpur, 24th Apr 2025, 02.56pm – IGB Real Estate Investment Trust (IGB REIT) and IGB Commercial REIT posted stronger earnings in the first quarter ended March 31, 2025 (1QFY2025), supported by improved rental income and higher occupancy rates. However, both REITs cautioned investors of looming economic challenges that may impact future performance.
In separate filings with Bursa Malaysia on Wednesday, the REIT managers noted that factors such as economic uncertainty, potential fuel subsidy cuts, and an oversupply of office space could weigh on consumer sentiment and office demand.
IGB REIT: Retail Performance Strengthens, Cautious Outlook Ahead
Retail-focused IGB REIT, which owns Mid Valley Megamall and The Gardens Mall, reported a 7.1% year-on-year increase in net property income (NPI) to RM133.1 million, up from RM124.2 million in the previous corresponding quarter. Revenue also rose 5.4% to RM171.4 million from RM162.6 million.
The REIT attributed its stronger performance to higher rental contributions from its flagship malls, supported by steady footfall and resilient tenant sales.
Distributable income for the quarter came in at RM118.1 million, including:
- RM110.6 million in realised profit
- RM4 million in fair value gains on investment properties
- RM7.2 million in management fees payable in units
A distribution per unit (DPU) of 3.19 sen was declared, compared to 2.96 sen in 1QFY2024. The DPU represents an annualized yield of 5.75%, based on the REIT’s closing price of RM2.25 as of March 31. Payment is scheduled for May 29, 2025.
IGB Commercial REIT: Office Occupancy Rebounds
Meanwhile, IGB Commercial REIT, which manages a portfolio of office assets including Menara IGB, GTower, and Menara Tan & Tan, reported a solid quarter with a 13.5% increase in NPI to RM38.9 million, from RM34.2 million a year earlier.
Revenue climbed 11.4% to RM62.3 million, driven by:
- A rise in average occupancy to 89% (up 8.7 percentage points)
- A 1.5% increase in average rental rates to RM6.42 per square foot
Distributable income stood at RM26.3 million, comprising RM24 million in profit and RM2.2 million in adjustments for management fees partially settled in units. The REIT declared a DPU of 1.07 sen, up from 0.96 sen last year, also payable on May 29, 2025.
Market Reaction and Forward Guidance
On Wednesday, IGB REIT shares edged down one sen to RM2.29, giving it a market capitalisation of approximately RM8.3 billion. IGB Commercial REIT gained half a sen to close at 52 sen, valuing it at around RM1.3 billion.
Despite the positive quarterly performance, both REITs acknowledged the challenges ahead. IGB REIT noted that rising costs of living and potential government policy changes could curb retail spending. Meanwhile, IGB Commercial REIT flagged persistent oversupply in the office sector and shifting demand toward newer and more sustainable office buildings as ongoing concerns.
