Sunway REIT reported a remarkable 15% year-on-year (y-o-y) increase in revenue to RM166.5 million in Q2 2023, compared to RM144.5 million in Q2 2022. The growth was driven by outstanding performance in the Hotel segment, resilient earnings in the Retail segment, and steady performance in the Office, Services, and Industrial & Others segments.
Hotel Segment Surge
The Hotel segment of Sunway REIT experienced a substantial surge in revenue, reaching RM17.5 million in Q2 2023 from RM6.0 million in Q2 2022. The segment’s net property income (NPI) also rose significantly to RM16.5 million in Q2 2023, compared to RM5.0 million in Q2 2022. This impressive growth was attributed to improved average occupancy rates, the full-quarter contribution from Sunway Resort Hotel, and the gradual recovery of the tourism industry.
Retail Segment Growth
The Retail segment registered a 9% y-o-y increase in revenue to RM110.9 million in Q2 2023, driven by sustained retail sales and increased footfall, particularly in Sunway Pyramid Mall and Sunway Carnival Mall. However, despite the revenue growth, NPI for the Retail segment experienced a slight contraction of 3% due to increased operating expenses.
Office and Other Segments
The Office segment saw marginal revenue growth of 4% y-o-y, with NPI growing in tandem. The Services segment reported increased revenue of RM16.0 million due to annual rental reversion. The Industrial & Others segment maintained stable revenue at RM1.7 million in Q2 2023.
Sunway REIT’s gearing stood at 38.1% as of June 30, 2023, compared to 37.6% as of December 31, 2022. The increase in gearing contributed to higher finance costs, which rose from RM43.6 million in 1H 2022 to RM65.9 million in 1H 2023. The Manager expressed that a gradual normalization in interest rates is manageable and should not significantly impact Sunway REIT’s financial performance.
Sustainability and Achievements
Sunway REIT entered a collaboration with HSBC Bank Malaysia Berhad for a sustainability-linked cross-currency swap worth RM200 million. This initiative demonstrates Sunway REIT’s commitment to advancing sustainable finance in the Malaysian REIT industry, with over 90% of its borrowings converted into sustainable finance to align with Environmental, Social, and Governance (ESG) goals.
RAM Rating Services Berhad reaffirmed a P1(s) rating for SUNREIT Capital Berhad, reflecting the robust credit profile and financial performance of Sunway REIT.
Outlook and Future Plans
Sunway REIT’s Chief Financial Officer, Ng Bee Lien, expressed optimism about the sustained growth momentum in the Hotel segment for the second half of 2023, driven by positive developments in the tourism sector recovery. Additionally, the Phase 2 refurbishment of Sunway Carnival Mall, targeted for completion between early 2024 and end 2025, is expected to attract stronger brands and retailers, contributing positively to Sunway REIT’s future earnings.
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