PETALING JAYA, 22 August: Malaysian real estate investment trusts (REITs) are expected to see a short-term positive impact from the Pokemon Go craze on the back of higher footfalls at shopping malls.
“Since the release of Pokemon Go in Malaysia on Aug 6, retailers in the local shopping malls have been taking advantage of the Pokemon Go craze. One of the most common ways used by the retailers is by activating the ‘Lure Module’ which attracts Pokemon to the PokeStop for 30 minutes.
“As a result, we expect increased footfalls at the shopping malls, especially in the Klang Valley, as those malls have become hotspots for Pokemon players,” MIDF Research said in its report last Friday.
It said the impact is slightly short-term positive to the REITs with established malls in the Klang Valley, namely KLCCP Stapled Group (Suria KLCC), Sunway REIT (Sunway Pyramid), IGB REIT (Mid Valley Mega Mall & The Gardens), Pavilion REIT (Pavilion KL) and CapitaLand Malaysia Mall Trust (Sungei Wang Plaza and The Mines).
“We reckon that higher footfalls at the malls might benefit food and beverage (F&B) tenants as Pokemon players would likely spend on F&B during their stay at the mall. However, we do not expect the higher footfalls to significantly boost the sales of fashion retailers as Pokemon players tend to be engrossed in the game,” it said.
MIDF Research does not expect any changes to the rental revision outlook for REITs.
Pure retail REITs or REITs with high exposure to the retail division, such as IGB REIT, are potential beneficiaries due to higher spending on F&B.
IGB REIT’s percentage of variable rent over total rental income is also the highest (at double digit) among peers (at single digit) which suggests higher profit sharing from higher tenants’ sales.
MIDF Research maintained its “neutral” call on the REIT sector as the Pokemon Go craze may be short-lived and may fizzle out in one to two months’ time, hence the impact on REITs is expected to be muted.
It maintained its “buy” calls for CapitaLand Malaysia (target price RM1.72) and Sunway REIT (target price RM1.86).
As such, MIDF Research said, the earnings impact on REITs from the Pokemon Go craze is expected to be minimal.In addition, most REITs may not be able to capitalise on the higher revenue of F&B tenants as most of the rental are fixed.