KIP REIT's 1Q profit falls 3%, weighed down by higher costs and fees

• At end-September, the retail segment contributed about 94% to the REIT’s total revenue while occupancy rates of the seven KIPMalls stood at 90.3%.

KUALA LUMPUR (Oct 22): KIP Real Estate Investment Trust (KL:KIPREIT) reported a 3% decrease in its net profit to RM10 million for the first quarter ended Sept 30, 2024 (1QFY2025), from RM10.39 million, dragged by higher operating expenses, as well as higher manager's management fee and borrowing cost.

For 1QFY2025, the REIT declared a distribution of 1.52 sen per unit, slightly lower than the 1.55 sen per unit declared a year ago. The distribution was payable on Nov 26, 2024.

For the reporting period, KIP REIT’s quarterly revenue grew 19.2% to RM26.7 million from RM22.4 million a year ago, underpinned by higher revenue in its retail segment, specifically the contribution from KIPMall Kota Warisan that was acquired in February 2024.

At end-September, the retail segment contributed about 94% to the REIT’s total revenue while occupancy rates of the seven KIPMalls stood at 90.3%.

In terms of expenses, for 1QFY2025, KIP REIT saw its property operating expenses increase 20.2% to RM7.03 million, manager’s management fee jump 83.8% to RM3.3 million, and borrowing costs increase 34.3% to RM5.16 million.

In terms of the acquisition of DPulze Shopping Centre, KIP REIT said it has successfully obtained approval at its annual general meeting in October.

“As our largest acquisition to date, DPulze will further strengthen the group’s retail portfolio, with the asset estimated to provide a yield of approximately 7%. This will increase our earnings and long-term income stability,” said chief executive officer Valerie Ong Pui Shan in a statement.

She said its outlook for the current financial year remains positive, driven by its disciplined approach to capital management and focus on identifying and acquiring accretive assets.

“We are confident that our strategic initiatives will continue to enhance our portfolio, providing long-term value to our unitholders. Our commitment to sustainable growth positions us well to capitalise on emerging opportunities in both the retail and industrial sectors,” Ong added.

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