Impact Growth Real Estate Investment Trust: Muted growth, solid yield
- Soft 1QFY26 after a drop in OR, while 2QFY26F performance to be soft q/q from seasonality, flattish y/y due to macroeconomic uncertainties
- Management maintains challenging revenue growth guidance of 5%-10%, but we are more conservative
- Securing IMPACT Arena lease mitigates competition risks while potentially limiting future growth
- HOLD with unchanged TP of THB11.20 on decent dividend yield of 6.1% and IRR of 8.8%
Soft 1QFY26 performance. IMPACT posted 1QFY26 (ended June 2025) net investment income of THB357mn, down 5% y/y – mainly due to a 4% decline in revenue attributed to a drop in overall occupancy rate owing to a high base from non-repeated events. The softer revenue negatively impacted net investment income margin, which fell from 58.5% in 1QFY25 to 57.9% in 1QFY26.
Blended occupancy rate slid from 49% in 1QFY25 to 44% in 1QFY26. Blended occupancy was weighed down by a lower occupancy rate for IMPACT Challenger (-12ppt y/y to 54%) and IMPACT Exhibition Centre (-1ppt y/y to 34%) following a high base from non-repeated events.
The occupancy rates of the other two assets improved, with the stronger performance seen at IMPACT Arena (+19ppt y/y to 69%) followed by IMPACT Forum (+4ppt y/y to 20%). Average rental rate grew 3% y/y to THB89/sqm/day in 1QFY26. Net-net, revenue inched down 4% y/y.
DPU of THB0.22 for 1QFY26. This implies a 91% payout ratio. Ex-dividend date (XD) is set for 28 August 2025, with dividend payable on 12 September 2025.
Outlook
Entering low season in 2QFY26. We expect the REIT’s performance to drop q/q, primarily due to seasonal impacts, while the y/y performance is expected to remain relatively flat. We believe that in 2QFY26, performance will continue to be weighed down by macroeconomic uncertainties, border conflicts, and political factors, which will likely result in lower demand for events. Nonetheless, we expect the REIT’s performance to improve q/q in 3QFY26, driven by better seasonality.
REIT maintains full-year guidance. Despite the weaker y/y performance in 1QFY26F, IMPACT maintains its full-year target of 5%-10% revenue growth with the occupancy rate ranging between 39%-42% (vs. 38% in FY25). For the rest of the year, management expects growth to be driven by a strong event pipeline in 2H26, particularly in 3Q, where large exhibitions and concerts should help offset the soft start. Currently, our outlook is more conservative than the company’s targets, as we project a 34% occupancy rate and rental rate contraction of 1.7% for FY26.
IMPACT Live Nation leases postponed to 1 Jan 2026 (from 1 Oct 2025). IMPACT has secured stable long-term income through a new lease arrangement. The long-term lease of IMPACT Arena (contributed c.13% of IMPACT’s revenue in FY25) to Impact Live Nation (ILN) for 20 years was recently approved at IMPACT’s EGM. Under this agreement, ILN will pay a fixed annual rental of THB200mn, with a 5% escalation every three years. ILN will also be responsible for IMPACT Arena’s cost of services and operating expenses.
Although we observe that the revenue contribution from this agreement is lower than IMPACT Arena’s operating profit over the past two years and would limit its future revenue growth, the agreement should provide steady and predictable cash flow to the REIT, regardless of intensifying competition. We note increasing competition from similar venues for concerts in Bangkok, including the opening of Bangkok Arena with a planned capacity of 18,000 seats—much higher than IMPACT Arena’s 12,000 seats.
Bangkok Arena’s proximity to Suvarnabhumi airport, BTS lines, and higher density residential areas could enhance its attractiveness. This could gradually divert larger concerts away from IMPACT once the facility opens in 2028.
We currently assume the agreement will be effective from 1 January 2026, from 1 October 2025 previously.
ILN lease agreement expected to help mitigate impact of unexpected events. The agreement could lessen the downside risk to operations even if unforeseen events trigger widespread cancellations of concerts and exhibitions. We note that over the past 10 years, the REIT has delivered steady top-line growth y/y, with exceptions in FY17 and FY20-22, when the REIT experienced cancellations during a mourning period in FY17 and the pandemic years (FY20-22).
In the event that the government prohibits festival activities, a key driver of IMPACT’s Areana revenue, the lease agreement with ILN outlines clear terms. Should the government formally announce a prohibition lasting more than 90 days, IMPACT’s rental revenue obligation will be waived for the affected period. However, if the prohibition is shorter than 90 days, ILN is required to continue paying the fixed THB200mn rental fee to IMPACT.
Generally, in cases of cancellations, IMPACT typically provides flexibility by allowing clients to roll over deposits for future events, thereby partially cushioning the financial impact. However, if cancellations arise from the organiser’s own decision (e.g., foreign artists cancelling tours), deposits are generally forfeited. While the financial policy helps mitigate income volatility, large-scale event cancellations would still pressure near-term earnings.
Recommendation
Maintain HOLD with unchanged TP of THB11.20. Our FY26F earnings forecasts slide by 1% after we shift the Impact Arena contracts to start from 1 January 2026 (vs. 1 October 2025 previously). Our TP of THB11.20, based on a DCF valuation, remains unchanged. The stock now offers a moderate yield of 6.1% and an IRR of 8.8%.
FY Mar | 1Q2025 | 4Q2025 | 1Q2026 | % chg y/y | % chg q/q |
Gross revenue | 643 | 487 | 617 | (3.9) | 26.9 |
Property expenses | (83.5) | (64.4) | (82.8) | (0.9) | 28.5 |
Net Property Income | 559 | 422 | 535 | (4.4) | 26.7 |
Other Operating expenses | (150) | (188) | (151) | 0.5 | (19.5) |
Other Non Opg (Exp)/Inc | 1.03 | 24.1 | 1.25 | 21.0 | (94.8) |
Associates & JV Inc | 0.0 | 0.0 | 0.0 | nm | nm |
Net Interest (Exp)/Inc | (34.2) | (29.0) | (27.7) | 19.0 | 4.7 |
Exceptional Gain/(Loss) | 3.08 | 33.3 | 2.96 | N/A | N/A |
Net Income | 379 | 263 | 360 | (4.9) | 37.0 |
Tax | 0.0 | 0.0 | 0.0 | N/A | N/A |
Minority Interest | 0.0 | 0.0 | 0.0 | N/A | N/A |
Net Income after Tax | 379 | 263 | 360 | (4.9) | 37.0 |
Total Return | 376 | 230 | 357 | (4.9) | 55.6 |
Non-tax deductible Items | 15.2 | 15.2 | 15.2 | 0.0 | 0.0 |
Net Inc available for Dist. | 1,112 | 949 | 0.0 | (100.0) | (100.0) |
Ratio (%) |
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Net Prop Inc Margin | 87.0 | 86.8 | 86.6 |
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Dist. Payout Ratio | 98.6 | 91.1 | 106.2 |
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