MRCB-Quill REIT sees marginal growth in net property income in 3Q

KUALA LUMPUR (Oct 26): MRCB-Quill Real Estate Investment Trust (MQREIT) saw a marginal 0.2% growth in net property income to RM25.53 million in the third quarter ended Sept 30, 2016 (3QFY2016) from RM25.49 million a year ago, dragged down by higher property operating expenses due to higher repairs and maintenance costs incurred.

Net income fell 3.2% to RM15.23 million or 2.3 sen a unit in 3QFY2016 from RM15.73 million or 2.38 sen a unit in 3QFY2015, mainly due to higher manager's fee, trustee’s fee, valuation fee and administrative expenses.

Revenue, however, rose 2.2% to RM32.5 million from RM31.81 million, thanks to additional revenue from Platinum Sentral, higher rental income due to step up rent adjustments from QB2, QB3 and Wisma Technip.

For the cumulative nine months (9MFY2016), MQREIT's net property income jumped 20.8% to RM76.68 million compared with RM63.48 million in 9MFY2015.

Net income also rose 21.8% to RM45.85 million from RM37.65 million, while revenue grew 18.3% to RM97.72 million from RM82.6 million.

In a statement today, MRCB Quill Management Sdn Bhd (MQM), the manager of MQREIT, said MQREIT plans to establish a 20-year medium term notes (MTN) programme by the end of this year.

"This MTN Programme will act as a long-term debt financing platform to cater for immediate and future opportunistic acquisitions as well as its future refinancing requirements," it said.

As at Sept 30, 2016, MQREIT’s gearing ratio was 42.8% and its average cost of debt was at 4.4% per year.

MQM chief executive officer Yong Su-Lin said another growth opportunity that will augment MQREIT’s income stream is the proposed acquisition of Menara Shell.

"The Securities Commission Malaysia had on Sept 27, 2016 granted MQREIT the approval for the valuation of Menara Shell and the issuance, listing of and quotation for the new MQREIT units on Bursa Malaysia pursuant to the proposed placement and the proposed authority," she said.

"The proposed acquisition is slated to be completed by end of 4QFY2016 and would increase the number of properties under the trust to a total of 11. The completion of this acquisition exercise is expected to contribute to a stable and sustainable income stream with effect from 1QFY2017,” Yong added.

In terms of renewal of existing leases, 64% of MQREIT's leases due up to 3QFY2016 had been renewed, while 8% of leases were not renewed.

"We are now on target to finalise the renewal of the balance 28% of leases that are due in the last quarter of 2016. MQREIT’s average occupancy rate as Sept 30, 2016 continues to be resilient at 97.2% in terms of net lettable area,” said Yong.

MQM expects the performance of MQREIT's portfolio to remain stable, adding that it will continue to focus on its tenant retention strategy and explore acquisition opportunities to grow the trust.

Currently, MQREIT owns 10 buildings comprising five in Cyberjaya, three in Kuala Lumpur, one each in Shah Alam and Penang, valued at RM1.57 billion as at Dec 31, 2015.

MQM is owned by Malaysian Resources Corp Bhd (41%), Quill Resources Holding Sdn Bhd (39%) and Global Jejaka Sdn Bhd (20%).
 
As at 3.21pm, MQREIT units were traded up one sen or 0.79% at RM1.28, with 882,500 units done. Its market capitalisation stood at RM846.57 million.