Tower REIT 2QFY23 NPI down 17% as operating costs, interest expense weigh

• The REIT, whose portfolio consists of Menara HLX, Plaza Zurich and Menara Guoco, declared distribution per unit of 0.31 sen for 2QFY23, versus 1.2 sen in the previous corresponding quarter.

KUALA LUMPUR (Jan 30): Tower Real Estate Investment Trust (REIT) saw its net property income fall by 17% in the second quarter ended Dec 31, 2022 (2QFY23) due to higher operating costs arising from increase in minimum wages and electricity costs.

Net property income fell to RM3.88 million in 2QFY23, from RM4.7 million a year ago, while net income declined 93% to RM108,000 from RM1.53 million amid higher interest expense.

The REIT, whose portfolio consists of Menara HLX, Plaza Zurich and Menara Guoco, declared distribution per unit of 0.31 sen for 2QFY23, versus 1.2 sen in the previous corresponding quarter.

For the first half of FY23 (1HFY23), NPI eased 18% to RM8.1 million from RM9.89 million in the previous corresponding period while net income fell 74% to RM959,000 from RM3.66 million in 1HFY22.

Tower REIT said the office rental market remains challenging with the over-supply of office space particularly in the Klang Valley. On top of that more organisations, especially multinational corporations, are continuing to re-evaluate their workplace strategies and requirements.

“This situation is further exacerbated by inflation of input costs, rising interest rates and surging labour costs. Whilst there are improvements in rental activities, tenants remain cautious to make commitments,” it said in a stock exchange filing on Monday (Jan 30).

Nevertheless, Tower REIT said it will continue to take proactive steps to improve its offering to target markets, enhance its service level, adopt strategies and operational measures to manage costs and progressively improve overall performance.