MQREIT 1Q NPI falls 7% on lower revenue, higher opex

KUALA LUMPUR (May 17): MRCB-Quill REIT (MQREIT) saw its net property income (NPI) for the first financial quarter ended March 31, 2018 (1QFY18) fell by 7% to RM34.5 million from RM37.1 million in the corresponding quarter a year ago.

The drop in NPI is due to property operating expense for the quarter growing by 3.4% to RM9.76 million compared to RM9.44 million in 1QFY17, according to the REIT's filing with Bursa Malaysia.

The increase in its operating expense was mainly due to slightly higher routine operating expenses incurred for some properties.

The revenue recorded in 1QFY18 by MQREIT was also lower by 4.9% to RM44.3 million as compared to RM46.6 million recorded in 1QFY17, mainly due to lower revenue generated from Platinum Sentral and Menara Shell.

The note filed with Bursa also said the manager's fees incurred for 1QFY18 were at RM3.33 million, which is marginally lower by 1.4% compared to RM3.38 million in 1QFY17, in line with the lower NPI and total asset value.

"Finance costs incurred for 1QFY18 of RM9.7 million were 0.3% lower than 1QFY17, mainly due to lower amortization of transaction costs incurred. Higher administrative expenses incurred in 1QFY18 by RM600,000 were mainly attributed to the costs incurred for the proposed disposal of QB8-DHL (XPJ)," it added.

In a separate filing, MRCB Quill Management Sdn Bhd, the manager of MQREIT, announced that MQREIT has achieved a distributable income of RM22.4 million or 2.1 sen per share for 1QFY18, which is slightly lower than the RM23.2 million or 2.17 sen per share announced in 1QFY17.

On its prospect moving forward, MQREIT said 28% of its total net lettable area is due for renewal in 2018 with 16% of these leases due in the first quarter of the financial year.

"We have successfully renewed approximately 81% of these leases due in 1QFY18," it noted.

With the Klang Valley office market expected to continue to remain challenging in 2018, MQREIT will focus on asset management and leasing strategies that are centred on tenant retention to overcome the challenging operating environment.

As of writing, MQREIT's share price was unchanged at RM1.12 with about 35,200 shares traded, giving it a market capitalisation of RM1.2 billion. —

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