KUALA LUMPUR (July 23): KIP Real Estate Investment Trust (KL:KIPREIT) capped a record financial year on Thursday with its highest annual distribution since listing, as unitholders approved its RM435 million acquisition of Setapak Central Mall, paving the way for the retail-focused REIT’s next phase of growth.

The proposed acquisition, together with a private placement of up to 220 million new units to partly fund the deal, is expected to lift KIP REIT’s assets under management to RM2.1 billion, exceeding its RM2 billion target ahead of schedule.

Its market capitalisation currently stands at about RM810 million, compared with its RM1 billion target.

Chief executive officer Valerie Ong Pui Shan said the acquisition is targeted for completion by the end of September, with the mall expected to begin contributing to earnings from Oct 1.

"We have already achieved our RM2 billion assets-under-management target one year earlier than planned. Moving forward, our focus will be on quality growth through asset enhancement initiatives," she told The Edge after the extraordinary general meeting where unitholders approved the approval.

The REIT declared a distribution of 7.26 sen per unit for the financial year ended June 30, 2026 (FY2026), surpassing its previous high of 6.80 sen in FY2025.

Net property income (NPI) grew 34.1% to RM129.86 million from RM96.82 million in the previous year, as revenue rose 30.1% to a record RM177.10 million from RM136.13 million.

For the fourth quarter, KIP REIT's NPI increased 26.2% to RM35.41 million from RM28.05 million,  while revenue rose 20.9% to RM48.22 million from RM39.89 million. The income distribution for the quarter was 2.03 sen per unit, against 2.01 sen a year earlier.

The stronger performance was driven by higher contributions from KIP REIT's existing retail portfolio as well as newly acquired assets, including KIPMall Desa Coalfields, KIP Kuantan, and industrial properties in Bintulu and Pasir Gudang. Retail assets remained the group's main earnings driver, contributing 93.4% of total revenue.

Looking ahead, Ong said KIP REIT will prioritise upgrading its existing malls instead of pursuing rapid expansion. Planned projects include asset enhancement works at KIPMall Masai and KIPMall Kota Warisan, while the expansion of AEON Mall Kinta City is currently undergoing tender.

She also revealed that Setapak Central's supermarket anchor tenant will change, with Jaya Grocer replacing Econsave in the first quarter of next year. This, she said, will free up additional retail space that can be subdivided into smaller lots and leased at higher rates, while increasing the mall's exposure to gross turnover rent.

In addition, Oriental Kopi Holdings Bhd (KL:KOPI) will open an outlet at Setapak Central as part of KIP REIT's plans to refresh the mall's tenant mix, she said.

KIP REIT units closed unchanged at 84.5 sen on Thursday.