AmFIRST REIT’s 4Q NPI slips to RM15.7 mil on higher property expenses

• The group said property expenses for 4QFY2023 were higher by 18.6% from a year ago due to lower rebate on service charges for The Summit Subang USJ and bigger utility expenses caused by a rise in electricity surcharge.
• AmFIRST REIT added that its realised gross revenue was marginally higher in 4QFY2023 due to higher average occupancy rates recorded in The Summit Retail and Office, Wisma AmFIRST and Prima 9, coupled with the absence of rental rebates and higher carpark income.

KUALA LUMPUR (April 14): AmFIRST Real Estate Investment Trust (AmFIRST REIT) saw its net property income (NPI) for the fourth quarter ended March 31, 2023 (4QFY2023) slip by 2.36% to RM15.73 million, from RM16.11 million a year ago, due to higher property expenses.

The expenses offset the 4.8% increase in revenue to RM25.67 million, from RM24.5 million a year ago, its filing to Bursa Malaysia on Friday (April 14) showed.

The group did not declare an income distribution per unit (DPU) for the quarter under review.

The group said property expenses for 4QFY2023 were higher by 18.6% from a year ago due to lower rebate on service charges for The Summit Subang USJ and bigger utility expenses caused by a rise in electricity surcharge.

AmFIRST REIT added that its realised gross revenue was marginally higher in 4QFY2023 due to higher average occupancy rates recorded in The Summit Retail and Office, Wisma AmFIRST and Prima 9, coupled with the absence of rental rebates and higher carpark income.

“However, the increase was offset partially by exclusion of gross revenue from Menara AmFIRST as a result of the disposal of the property effective from Nov 15, 2022,” it said. 

The REIT disposed of the 22-storey building in Petaling Jaya, Selangor for RM62 million cash to Forever Backup Sdn Bhd, and incurred a realised capital loss of RM4.6 million.

For the full year ended March 31, 2023 (FY2023), the group’s NPI decreased by 0.6% to RM58.91 million, from RM59.26 million a year earlier. Its revenue for FY2023 was higher by 3.8% to RM103.43 million, from RM99.65 million a year earlier.

Earlier, it had declared a final income distribution of 1.56 sen per unit for the six-month period from Oct 1, 2022 to March 31, 2023 amounting to RM10.71 million, paid on May 30, 2022.

“Property expenses were higher by 10.2% (for FY2023) mainly due to lower rebate on service charges for The Summit Subang USJ, higher utility expenses caused by higher electricity surcharge, as well as higher repair and maintenance costs incurred,” AmFIRST REIT said.

The group attributed the higher revenue to improved occupancy rates in The Summit Retail and Office, Prima 9, Wisma AmFIRST and Menara AmBank, coupled with absence of rental rebates in FY2023.

It also said the realised capital loss from the disposal of Menara AmFIRST has offset the increase in FY2023 revenue.

On its prospects, AmFIRST REIT said the office market remains competitive amidst widening imbalances between supply and demand as more organisations, especially multinational corporations (MNCs), continue to re-evaluate their workplace strategies.

The trust said while the retail sector has seen recovery in footfall and retail sales, rising inflation coupled with expected slower economic growth may dampen consumer sentiments.

“At the Trust’s level, the increase in operating costs arising from higher utility charges due to the increase in electricity tariff, implementation of higher minimum wages and rising interest rate environment will lower the net realised income of the Trust,” AmFIRST REIT said.

In another bourse filing on Friday, the REIT booked a fair value loss of RM2.6 million following the revaluation of several properties, in line with regulatory requirements.

It said that Prima 9 reported the largest revaluation deficit at RM1.2 million, followed by Prima 10 (RM483,920), Bangunan AmBank Group (RM141,461) and Menara Ambank (RM127,869).

On the other hand, Mydin Hypermall reported the highest revaluation surplus at RM1.1 million, followed by The Summit Subang USJ (RM784,682), Jaya 99 (RM247,861) and Wisma AmFIRST (RM239,700).

“The Trust conducted revaluations of its investment properties and recorded an unrealised fair value gain of RM400,000. However, with the adjustment of accrued lease receivable of RM3 million, the net fair value change is deficit of RM2.6 million,” AmFIRST REIT said.

The valuation of these properties were done by independent firms Messrs KGV International Property Consultants (M) Sdn Bhd and Messrs Cheston International (KL) Sdn Bhd.

“Based on the unaudited results as at March 31, 2023, the net asset value per unit (before income distribution) of AmFIRST REIT will be RM 1.1726 upon incorporation of the total fair value gain on investment properties,” it said.

AmFIRST REIT unit price closed unchanged at 33.5 sen on Friday, valuing the group at RM229.94 million.