KUALA LUMPUR (Aug 7): Sentral Real Estate Investment Trust (KL:SENTRAL), or Sentral REIT, posted a 30% increase in its net property income for the first six months (1HFY2024) to RM76.06 million, from RM58.49 million a year ago, underpinned by stronger contribution from its newly added property Menara CelcomDigi, as well as existing key properties, namely Building 4 and Platinum Sentral.

However, its earnings per unit after manager’s fees amounted to 3.38 sen, up slightly from 3.29 sen in 1HFY2023.

This was due to dilution from a placement exercise in December 2023.

The REIT's distribution per unit totalled 3.21 sen in the period, from 3.19 sen in the same period last year.

Gross revenue rose 26.5% to RM96.24 million from RM76.09 million, its bourse filing showed.

Net income grew at a slower pace of 14.5% to RM40.42 million from RM35.29 million, due to higher finance costs and fees for its trustee and manager.

Finance costs rose 44.5% higher to RM26.5 million from RM18.33 million mainly due to the issuance of debt to part finance the acquisition of Menara CelcomDigi in December 2023 and higher cost of debt.

Average cost of debt is now 4.41% per annum in the quarter, versus 4.44% in the same period last year.

Three quarters of the REIT’s debt is on a floating rate.

53% of Sentral REIT’s portfolio by valuation is located in KL Sentral, followed by Petaling Jaya (18% of portfolio), Cyberjaya (13%), Penang (6%) and Kuala Lumpur City Centre (6%).

In the second quarter ended June 30, 2024 (2QFY2024), its net property income rose 29.8% to RM37.91 million from RM29.21 million a year ago, on higher contribution from its key properties.

Gross revenue rose 25.4% to RM48.12 million from RM38.37 million.

However, net income grew at a slower pace of 16.4% to RM20.53 million from RM17.63 million, due to higher finance costs and fees for its trustee and manager.

Quarterly Finance costs rose to RM13.13 million from RM9.22 million, as average cost of debt rose to 4.45% per annum in the quarter, from 4.44% in the same period last year.

In a filing statement, Sentral said 14% of its total committed net lettable area (NLA) or about 282,000 sq ft is due for renewal in 2024, with about 60% or 170,000 sq ft due in 1H2024.

So far, the REIT has achieved a renewal rate of 39.4% for these leases due in 1H2024.

It has recorded a lower average occupancy rate of 84% in June against 88% in March.

Nevertheless, Sentral REIT chief executive officer Derek Teh Wan Wei said: “Our leasing activities remain robust with targeted marketing initiatives implemented to identify new tenants for these vacated spaces, while negotiations for tenancies due in the last quarter and in 2025 have commenced ahead of time.”

At time of writing, Sentral REIT was 2.5 sen or 3.21% higher at 80 sen per unit, valuing the REIT at RM956.4 million.