Pavilion REIT’s 2Q net property income up 8%, but flags margin pressure

• The trust, which mainly manages retail and hospitality assets, declared an interim income distribution of 0.32 sen per unit, amounting to RM12.5 million, payable on Aug 27.

KUALA LUMPUR (July 22): Pavilion Real Estate Investment Trust or Pavilion REIT (KL:PAVREIT) on Wednesday cautioned that its operating margins may come under pressure moving forward due to higher service taxes on commercial rentals, minimum wage hikes and subsidy rationalisation.

“Businesses in the retail industry adopt a cautious stand, given that cost pressures remain elevated. The manager will continue its proactive management of Pavilion REIT’s investment properties to give its unitholders steady distributions,” Pavilion REIT said in a filing with the stock exchange.

Pavilion REIT’s net property income (NPI) rose 8.2% to RM129.83 million in the second quarter ended June 30, 2025 (2QFY2025), compared with RM120.03 million last year, thanks to higher contributions from Pavilion Bukit Jalil and advertising revenue from Elite Pavilion Mall.

Revenue for the quarter rose 6% to RM213.34 million from RM201.30 million a year ago, supported by higher occupancy rates and additional income from exhibition and advertising spaces at Pavilion Bukit Jalil.

The trust, which mainly manages retail and hospitality assets, declared an interim income distribution of 0.32 sen per unit, amounting to RM12.5 million, payable on Aug 27.

Besides Pavilion Bukit Jalil and Elite Pavilion Mall, the REIT also owns Pavilion Kuala Lumpur Mall, Pavilion Tower, DA MEN Mall (now known as Easyhome Mall), Intermark Mall, Banyan Tree Kuala Lumpur and Pavilion Hotel Kuala Lumpur.

For the first half ended June 30, 2025 (1HFY2025), Pavilion REIT’s NPI rose 6.5% to RM272.58 million from RM256.05 million in the same period last year, while revenue grew 5.2% to RM441.52 million from RM419.82 million.

Compared to the preceding quarter, Pavilion REIT’s NPI fell 9.1% from RM142.75 million, while revenue declined 6.5% from RM228.18 million due to lower rental revenue.

Shares in Pavilion REIT settled down one sen or 0.58% to RM1.71 on Tuesday, giving the group a market capitalisation of RM6.71 billion.

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