KIP REIT reports marginal NPI growth for 1Q

KUALA LUMPUR (Oct 16): KIP Real Estate Investment Trust (REIT) announced a marginal 3.3% year-on-year growth in net property income (NPI) for the first quarter ended June 30, 2018 (1QFY19) to RM9.94 million, from RM9.62 million previously, as rental fee and occupancy rates eked out modest improvements.

In a Bursa Malaysia filing yesterday, the retail REIT said its gross revenue grew 2% to RM15.59 million, from RM15.3 million, attributable to an increase in occupancy rate from 83% a year ago to 86.3% in the quarter under review.

KIP REIT said its community-centric retail centres, KIP Marts — contributing 76.1% to its revenue — saw improved performances due to the revised rental per sq ft, from RM5.10 last year to RM5.14 currently.

KIP Mall, contributing the remaining 23.9% of KIP REIT’s revenue, saw a notable improvement in its occupancy rate, from 78.6% in the same quarter last year to 86.2% currently, it added.

The total comprehensive income attributable to unitholders stood 4.6% lower at RM7.26 million in the quarter under review, compared with RM7.66 million earlier. The fund said this was due to a higher management fee charged, at 0.6% of its total asset value, compared with 0.4% in the same quarter last year.

The management declared an interim distribution per unit of 1.45 sen, amounting to RM7.33 million, payable on Nov 13 and representing a 100% distributable income.

“I am pleased with the fund’s steady financial performance, despite the absence of festivities during the quarter under review. This reflects KIP’s stability and its defensive nature,” KIP REIT Management Sdn Bhd managing director Datuk Chew Lak Seong said in a separate statement.

“We will put more creativity into our advertising and event activities, as well as upgrading our food and beverage segments, to offer a better dining experience for the community at large. This would inevitably further improve the occupancy rate of KIP REIT’s properties. We will also continue to undertake asset enhancement initiatives to ensure our properties continue to generate a strong performance,” he added.

Overall, KIP REIT said under the current market conditions, retail spaces at all its properties are expected to stay resilient in occupancy and rental rates. As at June 30, the properties recorded an average occupancy rate of 86.3% and could improve further through upgrading the food and beverage segments, it added.

The management also plans to enlarge KIP REIT’s asset portfolio in the near future by acquiring other properties from promoters.

“The manager is exploring KIP Mall Kota Warisan, which has been completed and commenced operations on Aug 29, 2017 and is currently under the right of first refusal held by the trustees, if it meets KIP REIT’s investment objective.

“Currently, the manager is exercising the acquisition of AEON Kinta City Mall in Ipoh from the third party which will contribute a gross yield of 7.8% per annum to KIP REIT,” it said.

This article first appeared in The Edge Financial Daily, on Oct 16, 2018.

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