Affin Investment Bank initiated coverage on IGB Real Estate Investment Trust (REIT), which is set to be Malaysia's largest REIT by retail asset value and market capitalization, with a target price of RM1.43 and an "add" recommendation.

Affin also named IGB as its top pick for the sector.

The target price is a 14 percent premium to the company's offer price of RM1.25. It is due to list next Friday, boasting two prominent retail malls worth a total of RM4.6 billion (US$1.49 billion) as assets.

Affin said the two assets have enjoyed a high occupancy rate and projects an annual rental growth of 6 to 7 percent for the next two years, buoyed by strong tourist arrivals and a positive outlook for the retail market.

The research house added that IGB's gearing rate of 26 percent is below the statutory ceiling of 50 percent and below the sector average of 30 percent. "IGB may leverage up by a further RM1.1 billion for immediate yield accretive acquisitions," said Affin. -- REUTERS