KUALA LUMPUR (Nov 15): Hektar Real Estate Investment Trust (Hektar REIT)’s third quarter net property income (NPI) rose 77.2% to RM18.31 million from RM10.34 million a year earlier, mainly due to higher revenue recognition and improved NPI margin, besides reversal of impairment losses of trade receivables.
Revenue for the quarter ended Sept 30, 2022 (3QFY22) climbed 62.4% to RM31.07 million from RM19.13 million previously, according to the group’s bourse filing.
The higher revenue was due to recovery of the retail sector and the reopening of borders for economic activities, compared to last year, when high rental support was provided to tenants as the businesses were hit hard by Covid-19, said Hektar REIT.
For the cumulative nine-month period, Hektar REIT’s net property income increased 40.4% to RM48.64 million from RM34.64 million in the same period last year, as revenue grew 25% to RM89.55 million from RM71.62 million.
Hektar REIT said the Malaysian retail landscape showed steady recovery, as it inches back to the pre-pandemic levels, and this is evident across the REIT’s portfolio.
Shopping malls recorded a higher footfall of 269% year-on-year in 3QFY22, along with a 152% higher vehicle count, in tandem with the continuous improvement in tenants’ sales performance at the REIT’s malls, thus providing headroom for rental growth.
Hektar REIT said its manager Hektar Asset Management Sdn Bhd noted that retail activities remained strong in 3QFY22, with recovery in consumer-related subsectors including leisure, international tourism and hospitality continuing to aid in the overall performance of the retail industry.
Hektar Asset Management’s chief executive officer Johari Shukri Jamil said Hektar REIT’s malls are well-positioned as neighbourhood malls and leverage the proximity to the community, catering to all their basic needs, as well as an increased desire for food and beverage, and social offerings such as entertainment options to be enjoyed together with their family and friends.
“Despite the Malaysian economy’s strong performance, we remain cautious of the outlook for the coming quarters, given the volatile economic landscape driven by hawkish monetary policy in response to inflationary pressure, uncertain consumer sentiments, as well as lingering supply-chain and logistics issues stemming from geopolitical concerns.
“We will continue adopting prudent financial management, cost optimisation, and enhancing our asset efficiencies to help cushion the impact,” he said.
Johari Shukri added that the REIT is also actively exploring avenues for growth by ensuring a strong portfolio of retail brands in its malls that can optimise sustainable returns and defensible income through active tenancy remixing and rejuvenation of the centres.
“We will continue to look for ways to enhance and improve the look and condition of our malls, as part of longer-term strategies to improve our dividend yields.
“To improve on revenue and debt recovery post-pandemic, our team has been consistently tracking tenants’ ongoing performance to carefully structure our new tenancies and renewals, apart from aggressively looking at strategies to manage rental collection,” he said.
Hektar REIT, which is Malaysia’s first listed retail-focused REIT, was listed on the Main Market on Dec 4, 2006 and currently owns two million square feet of retail space in four states, with assets valued at RM1.16 billion as at Sept 30, 2022.
Hektar REIT’s portfolio of commercial properties includes Subang Parade in Subang Jaya; Mahkota Parade in Melaka; Classic Hotel in Muar; Central Square in Sungai Petani; Kulim Central in Kulim and Segamat Central in Segamat.
Shares in Hektar REIT finished 2.68% or one and a half sen higher at 57.5 sen on Tuesday (Nov 15), valuing the REIT at RM271 million.