IOI Properties confirms REIT plan as it declares higher dividend on stronger underlying profit

KUALA LUMPUR (Aug 26): IOI Properties Group Bhd (KL:IOIPG) confirmed that it is planning a real estate investment trust, to be listed on Bursa Malaysia's Main Market, as it announced on Tuesday the incorporation of a subsidiary to be the REIT's manager. On the same day, it posted a 145% year-on-year surge in its fourth-quarter underlying profit before tax, as revenue grew.

In a filing, the group said IOIPG REIT Management Sdn Bhd (IRMSB), a wholly-owned subsidiary, has been incorporated to serve as the management company for the proposed REIT.

In June, The Edge Malaysia reported that the group was eyeing the setting up of a REIT to trim its debt from acquisitions, citing analysts. At the time, UOB Kay Hian said IOI Properties had appointed an adviser for a potential RM6 billion to RM8 billion REIT, possibly including IOI City Mall Phases 1 and 2, Malaysian hotels and office assets.

IOI Properties has been weighing a REIT plan as far back as October 2023, when group CEO Lee Yeow Seng spoke to The Edge Singapore, though he was considering a Singapore listing then, saying a Singapore-listed office REIT “makes sense”, given investor familiarity.

Meanwhile, the group said its underlying profit before tax, a measure of its profitability from core operations, leapt to RM214.1 million in its fourth quarter ended June 30, 2025 (4QFY2025) from RM87.3 million in 4QFY2024. Revenue rose 13.7% to RM890.21 million from RM782.61 million due to improved performance across all segments.

The sharp improvement was driven by stronger contributions from its property development business and strategic expansion into the hospitality and leisure segment. Key milestones included the acquisition of IOI Mall Damansara and Courtyard by Marriott Penang, alongside the launch of Sheraton Grand Hotel, Xiamen.

This underlying profit strips away one-off items such as the fair value gains from investment properties and asset write-downs, items which were included in its net profit for 4QFY2025, which came in at RM823.93 million, down 46.7% from RM1.55 billion in 4QFY2024. Besides lower fair value gains, the lower net earnings were due to higher interest expense following the start of operations of its IOI Central Boulevard Towers.

The group booked a fair value gain of RM915.6 million on investment properties in 4QFY2025, as opposed to RM1.89 billion in 4QFY2024.

It declared an interim dividend of 8 sen per share for the quarter under review, up from 5 sen a year ago, to be paid on Sept 25.

For the full year FY2025, IOIPG recorded revenue of RM3.06 billion, up 4.6% from RM2.94 billion in FY2024. Growth was led by the property investment and hospitality and leisure segments, which rose 46% and 70% respectively, offsetting softer performance in property development which fell 18.1%.

However, net profit for FY2025 fell 48.5% to RM1.06 billion from RM2.06 billion in FY2024, due to lower fair value gains and a sharp increase in interest expense to RM418.16 million, following the operational launch of IOI Central Boulevard Towers.

“Our diversified offerings across three countries, sizeable recurring income stream, and the favourable outlook for hospitality and leisure provide a solid foundation for sustained earnings,” said Lee.

In FY2025, the group’s property development sales totalled RM1.81 billion, with Malaysian projects contributing RM1.62 billion (89%). Klang Valley led with RM946.8 million, driven by IOI Resort City and 16 Sierra, while Johor contributed RM663.8 million, supported by Bandar Putra Kulai and Taman Kempas Utama.

Completed inventories declined from RM1.92 billion to RM1.27 billion, reflecting targeted marketing and strategic product positioning. The group said it remains focused on monetising these inventories to support ongoing development.

Meanwhile, recurring income from investment properties remained strong, with IOI City Mall and IOI Mall Puchong registering fair value gains of RM651.4 million and RM61.1 million, respectively. It also said the IOI City Tower One is now fully leased and is expected to boost footfall and complement the broader IOI Resort City ecosystem.

Tourism momentum also lifted performance in the hospitality segment, with higher occupancy and room rates across the group’s hotel portfolio. IOIPG expects the upcoming Visit Malaysia 2026 campaign to further strengthen this segment and create positive spillover effects for its investment properties.

In China, despite macroeconomic and geopolitical challenges, its Sheraton Grand Xiamen Jimei — launched in March 2025 — has seen a steady rise in occupancy. In Singapore, IOI Central Boulevard Towers achieved an 88% leasing commitment, while priority previews have begun for W Residences Marina View, with construction reaching the 14th floor. 

Shares of IOI Properties closed up two sen or 1% to RM2.10, giving it a market capitalisation of RM11.56 billion. Year to date, the stock has declined 6.3%