MBSB optimistic on REIT sector in short-term

KUALA LUMPUR: MBSB Investment Bank Bhd is turning "positive" on the real estate investment trust (REIT) sector as it sees optimism in REITs in the short-term.

It said REITs should remain favoured by investors during turbulent market periods due to their defensive nature and earnings stability, which would help keep their share prices supported.

"Fundamentally, the retail industry is expected to remain resilient in 2026 due to strong shopper footfall and tenant sales," the investment bank said in a research note today.

Meanwhile, it said the expected higher tourist arrivals from Visit Malaysia 2026 (VM2026) should improve hotel occupancy rates and benefit REITs with exposure to the hotel sector, namely Sunway REIT, KLCCP Stapled Group and Pavilion REIT.

"We upgrade Pavilion REIT to 'buy' with an unchanged target price (TP) of RM2.00 as the recent share price weakness renders attractive upside.

"We see a stable outlook for Pavilion REIT as the retail and hotel division of Pavilion REIT will benefit from higher tourist arrivals amid VM2026," it said.

The investment bank also has a "buy" call on Axis REIT, with an unchanged TP of RM2.17, due to a promising earnings outlook underpinned by resilient income from industrial assets.

"Rental reversion for industrial assets is expected to remain positive due to healthy demand for industrial assets in Malaysia," it added.