Sentral REIT Records Lower 3Q Earnings as Repair Costs and Operating Expenses Increase

KUALA LUMPUR (Nov 6, 2025) — Sentral REIT, which owns a portfolio of high-value office and commercial properties across the Klang Valley and Penang, reported a dip in its third-quarter earnings as higher maintenance and equipment replacement costs weighed on income.

For the three months ended Sept 30, 2025 (3QFY2025), the real estate investment trust (REIT) posted a net property income (NPI) of RM36.34 million, compared to RM37.59 million a year earlier. Net distributable income also declined to RM19.69 million, from RM20.5 million in the same quarter last year.

Despite this, quarterly revenue rose slightly to RM48.27 million from RM47.89 million, supported by steady rental contributions from its office property portfolio. Sentral REIT did not declare any income distribution for the quarter.

Market Challenges and Cost Pressures

Sentral REIT attributed the weaker quarterly performance to one-off repair and replacement expenses across several assets, combined with higher operating costs.

Chairman Tan Sri Saw Choo Boon noted that broader economic conditions — such as the expanded Sales and Service Tax (SST), electricity tariff revisions, and ongoing global trade uncertainties — are expected to continue affecting the trust’s financial performance in the near term.

“While market headwinds persist, our consistent results demonstrate the resilience and quality of our assets. We remain committed to optimising operations and strengthening portfolio positioning to meet evolving tenant needs,” he said.

This cautious sentiment mirrors wider trends across commercial property in KL, where rising utility costs and a “flight to quality” among occupiers are reshaping the office leasing landscape.

Portfolio Overview and Financial Stability

As of Sept 30, 2025, Sentral REIT’s portfolio comprised 10 landmark properties, including Menara Shell, Menara CelcomDigi, and Sentral Buildings (SB1–SB4), with a combined market value of RM2.52 billion.

The REIT maintained an occupancy rate of 86% and a weighted average lease expiry (WALE) exceeding four years, reflecting stable tenancy despite supply competition within the Klang Valley office market.

Chief executive officer Derek Teh Wan Wei said Sentral REIT continues to prioritise capital management and cost efficiency.

“Our debt maturity profile remains steady at 2.81 years, with an improved average cost of debt at 4.33% as of 3QFY2025,” he said, adding that prudent financial discipline remains key amid rising borrowing costs.

Nine-Month Performance

For the nine months ended Sept 30, 2025 (9MFY2025), Sentral REIT’s NPI declined 3.4% to RM109.78 million from RM113.66 million a year earlier, while net distributable income eased 2.45% to RM59.43 million.

Revenue for the nine-month period stood at RM143.42 million, slightly lower than RM146.61 million previously. The drop was mainly due to reduced contributions from Menara Shell, Platinum Sentral, and Sentral Building 3, along with adjustments under MFRS 16 Leases. However, this was partially offset by stronger rental performance at Plaza Mont Kiara, SB1, SB2, and SB4.

Outlook

Industry observers note that while the office space sector in Kuala Lumpur faces moderate pressure, prime buildings with strong sustainability credentials continue to attract tenants seeking efficiency and prestige. This pattern also mirrors demand seen in office spaces in Bukit Jalil, industrial properties in the Subang area, and factories in Puchong, where corporate occupiers are increasingly prioritising energy-efficient and technology-integrated environments.

Sentral REIT’s continued focus on operational discipline and portfolio enhancement places it in a stable position to navigate Malaysia’s evolving commercial real estate landscape.