KUALA LUMPUR (April 2): Real estate investment trust (REIT) Amanah Harta Tanah PNB (AHP), which is managed by Pelaburan Hartanah Nasional Bhd, is looking for suitable assets to grow its portfolio mix despite the current unexcited property market.

Pelaburan Hartanah Nasional is a wholly-owned unit of Permodalan Nasional Bhd (PNB).

Its chief executive officer Hafidz Atrash Kosai Mohd Zihim said AHP is actively looking to acquire either retail or industrial assets that could offer a good return and tenant mix.

“The decision [to acquire assets] will be in the near future once we manage to finalise the process of negotiating and identifying the right property.

“Currently office building is not giving us the best yield because it is a compressed market so we are looking for others, like retail and industrial.

“Having said that, we won’t limit ourselves to that (retail and industrial) and we’re open to any good opportunity to invest and mostly it could be in the Klang Valley,” Hafidz told The Edge Financial Daily in an interview after its annual general meeting last week.

At the same time, AHP intends to dispose of a few of its non-performing assets, which the REIT will finalise the list later.

“We are synergising our portfolio to dispose of non-performing assets and to acquire new assets. But we have to look back at our portfolio because we haven’t made any announcement to Bursa Malaysia and need to go through our board for approval.

“We might consider disposing of our office or small shophouses. Previously, we bought the shophouses because of ASNB (Amanah Saham Nasional Bhd) branches, but now ASNB is no longer there so we have to either think of a new tenant or to dispose of [the shophouses],” he explained.

Properties that are in AHP’s portfolio include Plaza Vads, Bangunan AHP, Sri Impian (a four-storey office building in Taman Setiawangsa), and Mydin Mall Seremban 2 in Negeri Sembilan.

AHP also owned three shophouses, of which two were in Kuala Lumpur — a three-storey shop office in Taman Tun Dr Ismail and a four-storey office in Taman Melawati plus two floors of an office block in Kota Kinabalu in Sabah.

Hafidz said on average the REIT’s occupancy rate for all the buildings is about 85%. However, he noted that Bangunan AHP’s still needs to improve as the occupancy rate is only about 50%.

“The other buildings are either fully occupied or almost fully occupied, unlike our Bangunan AHP. We are trying to get a new and quality tenant for it; because of the [soft] property market it is difficult to find a good tenant that can pay the right kind of rental,” he said.

AHP’s fourth quarter ended Dec 31, 2017 (4QFY17) registered a net rental income of RM12.29 million versus RM1.89 million a year earlier, bringing its full-year net rental income to RM29.71 million versus RM9.26 million in FY16.

For FY17, the total income distribution stood at 5.2 sen a unit, which included an interim income distribution of 2.7 sen a unit which was paid on Aug 30, 2017, and a final income distribution of 2.5 sen a unit that was paid on Feb 28.

The total dividend paid out translated into 6.23% distribution yield for FY17, according to its annual report.

Going forward, Hafidz said the property market would not “collapse” but it is expected to remain “unexcited” partly due to the oversupply of office buildings.

“The office buildings are quite competitive and challenging because of the oversupply and we are chasing for the same kind of tenants.

“So we must be creative to either sustain our rental or increase it as well as to find quality tenants,” said Hafidz.

AHP’s share price has been drifting lower over the past 12 months; it has fallen 24% to 76 sen last Friday. At the current level, it has a market capitalisation of RM167.2 million.

This article first appeared in The Edge Financial Daily, on April 2, 2018.

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