KUALA LUMPUR: Sentral Real Estate Investment Trust (Reit) is expected to see improved performance in financial year 2026 (FY26), as the occupancy rate at Menara Shell should recover to around 88 per cent, according to RHB Research.
The firm said disposal proceeds from Wisma Sentral Inai will strengthen the Reit's balance sheet and provide capacity for further yield-accretive acquisitions, helping the trust diversify beyond the office sector.
Coupled with a full-year earnings contribution from its newly acquired retail asset Arcoris Plaza, acquired in December 2025 and expected to add around three to four per cent to net property income (NPI), this is expected to drive an earnings uplift in FY26.
"We remain watchful on the vacancy at Sentral Building 2, as replacement leasing may take time, given the current market conditions.
"A recovery may be likely only after the third quarter of 2026. Rental reversion is expected to still be a low-to-mid single digit, reflecting already-high base rental rates," it said in a note.
RHB Research added that the proceeds from the Wisma Sentral Inai disposal will strengthen Sentral Reit's balance sheet and provide capacity for yield-accretive acquisitions.
"We see improved headroom for Sentral Reit to continue pursuing asset acquisitions this year in the non-office segments, likely within the RM80–100 million, thereby supporting its diversification strategy," it said.
Following its FY25 results, RHB Research trimmed the Reit's FY26 earnings forecast by three per cent to reflect slower-than-expected tenant replacements at Sentral Building 2.
The firm also lowered its target price to 91 sen from 92 sen while maintaining a "Buy" call, implying roughly 13 per cent upside and an estimated FY26 dividend yield of 8 per cent.
Sentral Reit posted a core net profit of RM77.3 million for FY25, down 3.1 per cent year-on-year (YoY), meeting 96 per cent of RHB Research's and 95 per cent of consensus full-year estimates. Distribution per unit (DPU) fell 3.3 per cent YoY to 6.2 sen.
Reported net profit, however, dropped 25.6 per cent YoY due to a one-off disposal loss of RM17.9 million from the Wisma Sentral Inai sale, which fetched RM135 million. Gearing remained stable at around 46 per cent.
Revenue for FY25 declined 0.9 per cent YoY to RM189.4 million, mainly due to lower occupancy at Menara Shell following the exit of a key tenant.
NPI fell 1.9 per cent YoY to RM143.9 million, affected by higher operating expenses from one-off maintenance works, while the core profit margin held steady at 40.8 per cent (FY24: 41.8 per cent).