KUALA LUMPUR: Maybank Investment Bank Research is upbeat on IGB Real Estate Investment Trust (IGB REIT) and believes dividend per unit growth will continue to be supported by both malls’ resilient occupancy rates and positive rental reversions.

“Our earnings forecasts and dividend discount model (DDM)- target price of RM1.85 are unchanged. IGB REIT is still our top pick for the sector,” the research house said.

“We maintain our earnings forecasts for now. Our forward earnings growths of 3% to 4% (FY17-19) are largely premised on sustained occupancy rates and positive rental reversions at both malls,” it said.

Maybank noted that IGB REIT’s tenant sales in 2016 had commendable, single-digit year-on-year (YoY) growth while most of the leases expiring in 2017 have been renewed in 2016 whereby 40% of net lettable area were up for renewal at Mid Valley and The Gardens Mall respectively in 2017.

Additionally, it said demand for their retail space has remained strong. Hence, IGB REIT expects to maintain its favourable, positive rental reversions in the near-term.

Maybank opined that both malls were able to sustain their high occupancy rates due to its strategic location and multiple wide catchment areas.

“We believe the recent proposed takeover of IGB REIT’s parent, IGB Corp Bhd by Goldis Bhd would have no impact on IGB REIT. The deal would mainly amalgamate and streamline IGB Corp and Goldis’ operations,” it said.

Goldis owns 73% in IGB Corp and indirectly owns 36% in IGB REIT.

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