Pavilion REIT's net property income falls 36% in 1Q

KUALA LUMPUR (June 11): Pavilion Real Estate Investment Trust (Pavilion REIT) registered a 36% fall in net property income to RM65.12 million in the first quarter ended March 31, 2020 compared with RM101.51 million in the same year-ago period, on lower earnings from its retail and office portfolio, mainly the result of a 14-day rent free period because of the Covid-19 pandemic.

In a bourse filing today, the REIT attributed the lower earnings to the March 18-31 rent free period given to tenants that were not able to provide essential services and supplies during the movement control order (MCO) period. 

Net profit for the quarter halved to RM34.6 million from RM69.23 million, on the back of lower revenue of RM116.41 million, a 23% year-on-year decline from RM150.92 million before.

“Total property operating expenses was higher by RM1.9 million or 4% as compared to Q1 2019, mainly due to the contribution of face masks to the Government to support Malaysia’s fight against the Covid-19 pandemic and higher costs incurred for Chinese New Year promotional campaigns. This was offset by lower maintenance costs incurred during the MCO period in March 2020,” the REIT said.

Given that the retail mall business is one of the main casualties of the pandemic, the group acknowledged that its financial performance for 2020 will be impacted due to rental support initiatives, potential increase in doubtful debts, as well as potential loss on revaluation on its properties as a result of lower net property income.

“However, Pavilion REIT is committed to remain resilient throughout this pandemic period and is dedicated to create long term value for its stakeholders,” it said.

Shares of Pavilion REIT have gained 10% over the past two and a half months. It closed today at RM1.66, valuing the company at RM5.05 billion.

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