MRCB-Quill REIT 2Q net income up 43%, declares 4.23 sen DPU

KUALA LUMPUR (Aug 11): MRCB-Quill Real Estate Investment Trust's (MQREIT) realised net income rose 43.3% to RM22.04 million in the second quarter ended June 30, 2017 (2QFY17) from RM15.39 million a year ago, on higher realised net income attributable to rental reversions from several properties and the recognition of income from Menara Shell here.

Earnings per share was marginally lower at 2.26 sen in 2QFY17 from 2.33 sen in 2QFY16, due to the increase in MQREIT's weighted average units in circulation arising from the issuance of 406.619 million placement units pursuant to a placement exercise completed in December 2016.

Quarterly net property income was also up by 37.5% year-on-year to RM33.44 million, while revenue for 2QFY17 rose 39.8% to RM43.61 million in 2QFY17 from RM31.19 million in 2QFY16.

MQREIT also declared a distribution per unit (DPU) of 4.23 sen for the six-month period from Jan 1, 2017 to June 30, 2017 (1HFY17), payable on Sept 18.

The annualised 1HFY17 DPU translates to a yield of 6.46% based on MQREIT's closing price of RM1.31 on June 30.

For 1HFY17, MQREIT saw realised net income increased 47.6% to RM45.21 million from RM30.63 million a year ago, while revenue grew 38.9% to RM90.18 million from RM64.95 million in 1HFY6.

Net property income also grew 38.7% y-o-y to RM70.58 million.

In a statement today, MRCB Quill Management Sdn Bhd chairman Tan Sri Saw Choo Boon said it is of the view that consumer and business sentiments are still expected to remain cautious in the near term.

"The operating environment for the office market remains challenging with the anticipation of more office supply entering the market. To mitigate this impact on MQREIT's operations, the manager is steadfast in exploring ways to reinforce its leasing strategies to meet the challenging demands of the Klang Valley office market," he said.

"With these ongoing efforts coupled with a healthy weighted average lease expiry of 5.6 years, we remain optimistic that MQREIT's portfolio of quality assets will continue to perform and correspondingly, MQREIT would be able to deliver stable income distribution to unitholders for 2HFY17," Saw added.

MRCB Quill Management chief executive officer Yong Su-Lin said the trust's committed occupancy rate stood at 96.5% as at end-June 2017.

"We will endeavour to maintain this healthy occupancy rate through active negotiations with tenants for the balance of the leases due in the second half of 2017. These negotiations are progressing as scheduled and we are confident in renewing the bulk of these leases," she added.

As at June 30, MQREIT's aggregate gearing was 37% and average cost of debt was 4.4% per year.

The trust has no refinancing requirements in 2017. About 76% of its borrowings are pegged at fixed rates.

At 3.16pm, MQREIT units were up 2 sen or 1.54% at RM1.32 today, with 367,300 units traded, bringing a market capitalisation of RM1.4 billion.

The stock has been trading in a 52-week range of RM1.18 to RM1.35. — theedgemarkets.com

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