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Challenging year ahead for retail, hospitality segments, says KLCC REIT

KUALA LUMPUR (March 19): KLCC Real Estate Investment Trust (KLCC REIT), which is part of KLCCP Stapled Group with KLCC Property Holdings Bhd, foresees a challenging outlook for the retail and hospitality segments going into 2021, given the ripple effect from the Covid-19 pandemic.

In its 2020 annual report, KLCC REIT chairman Tan Sri Ahmad Nizam Salleh said the second Movement Control Order, which came into effect on Jan 13, 2021, is expected to delay recovery in the retail and hospitality sectors.

For its retail mall Suria KLCC, he said the mall will continue to leverage its core strengths in understanding customers’ needs and retailer partnerships whilst creating an engaging and safe environment for mall visitors.

Amidst the uncertainty surrounding the pandemic and expectations of Malaysian borders opening only in mid-2021, Mandarin Oriental Kuala Lumpur (MOKL Hotel) will continue to focus on strengthening its position as the most desired hotel for staycations.

For FY20 as a whole, MOKL Hotel achieved an average occupancy rate of 19% against 64% a year earlier.

With the battle against Covid-19 being far from over and its impact continuing to unfold, he said the availability of vaccines and the concerted effort to provide this to the public is indeed encouraging news.

“It is our hope that the vaccine roll-out, which has already commenced in February 2021, will lift consumers’ confidence, providing the much-needed boost in the retail and hotel segment,” he added.

He also said the group’s focus will continue to be on strengthening its core competencies as they adapt and pivot seamlessly to the new norm.

For its office segment, he noted that all its offices are fully occupied, and expects the segment to remain stable on the back of the long-term profile of office leases and high-quality tenants.

“I remain confident that together, KLCCP Stapled Group will be looking to drive positive momentum towards a sustainable future. We will continue to deliver value to our stakeholders and steer through this challenging environment,” said Ahmad Nizam.

On the impact of the pandemic on the group's business operations, Ahmad Nizam said it achieved cumulative revenue of RM1.24 billion in the financial year ended Dec 31, 2020 (FY20), a decrease of 12.9% from RM1.42 billion last year on the back of a stable office segment, lower revenue from retail reflecting the tenant assistance provided to its retail partners coupled with the unprecedentedly low volume of business and almost non-existent Meetings, Incentives, Convention and Exhibition (MICE) events in the hotel segment.

The profit attributable to equity holders of the group, excluding fair value adjustments, declined 25.3% from RM732.8 million in FY19 to RM547.1 million in FY20, mainly owing to the significant impact on the retail and hotel segments.

Despite the challenging business environment, the group distributed 98% of its distributable income to its shareholders, bringing the total distribution to 30 sen per stapled security for the year.

At noon break, KLCCP Stapled Group was one sen or 0.14% higher at RM7.01, bringing it a market capitalisation of 12.66 billion. There were 16,900 shares traded.

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