Asia Square Tower 2 acquisition lifts IOI Properties' recurring income, REIT profile — analysts

KUALA LUMPUR (April 21): IOI Properties Group Bhd’s (KL:IOIPG) acquisition of Asia Square Tower 2 in Singapore from CapitaLand Integrated Commercial Trust is expected to position the group for a stronger recurring income base, according to analysts.

TA Securities estimated that the acquisition of Asia Square Tower 2 could contribute about RM50 million annually in core earnings, translating into a roughly 4% uplift to its earnings forecast once the acquisition is completed by the end of the third quarter of 2026.

Similarly, Hong Leong Investment Bank (HLIB) projects even higher accretion, with the acquisition expected to contribute roughly RM108 million in profit by the financial year ending June 30, 2028 (FY2028), whereas CGS International estimated that the office asset could bring about RM65 million in incremental recurring net profit in FY2027.

Beyond immediate earnings, the acquisition enables IOI Properties to now control close to S$10 billion (RM31 billion) of prime central business district assets. 

Analysts said this could set the stage for a sizeable Singapore real estate investment trust (REIT) launch as early as 2027.

On April 10 this year, the group confirmed the listing of its Malaysian REIT on the Main Market of Bursa Malaysia. IOIPG Malaysia REIT will consist of retail, office and hotel assets worth a total of RM7.58 billion.

Both HLIB and TA Securities have ‘buy’ calls on the counter, while CGS International maintains its ‘add’ recommendation.

There are now six ‘buy’ and three ‘hold’ calls on the stock, with an average target price of RM4.09, according to the nine analysts tracked by Bloomberg.

At the time of writing on Tuesday, shares of IOI Properties were up by three sen or 0.8% to RM3.86, giving it a market capitalisation of RM21.3 billion.