Sunway REIT sees 6.8% NPI rise in 1Q on resilient retail, plans 2.27 sen DPU

KUALA LUMPUR (Oct 27): Sunway Real Estate Investment Trust (Sunway REIT) achieved a 6.8% year-on-year rise in its net property income for the first quarter ended Sept 30, 2016 (1QFY17), supported by resilient performance from its retail segment.

It posted a net property income of RM96.07 million for the quarter, compared with RM89.94 million previously.

It also proposed an interim income distribution of 2.27 sen per unit (DPU) — a 7% rise in DPU, from the 2.12 sen declared last year. The proposed payout represents a full distribution of its realised distributable income of RM66.85 million, compared with RM62.33 million previously.

Revenue for the period was up 6.3% year-on-year at RM128.88 million, from RM121.22 million, though net profit was a marginal 0.6% lower at RM64.14 million, versus the RM64.51 million it recorded previously.

The retail segment registered a revenue growth of 14.5%, said the REIT in a statement, contributed by higher average net rental for the Sunway Pyramid Shopping Mall, completion of the remodelling of a new food and beverage area on the second floor of Sunway Carnival Shopping Mall, and higher average occupancy in Sunway Putra Mall.

Its hotel segment, however, saw a decrease in revenue and NPI by 20.5% and 21.5% y-o-y respectively, primarily due to closure of Sunway Pyramid Hotel (formerly known as Sunway Pyramid Hotel East) since April 2016 for a 12-month refurbishment, with estimated completion to be in third quarter financial year ending 2017 (3QFY17).
 
Performance in the office segment of Sunway REIT was also compromised by the low occupancy rates in Sunway Tower and Sunway Putra Tower.

"I am pleased that the new financial year started on a firm ground; however, we remain cautious on the prospects for the financial year, on the back of continuous soft economic outlook affecting consumer sentiment and business confidence," said chief executive Datuk Jeffrey Ng said.

"The oversupply situation in the various property sub-sectors will also pose pressure on occupancy and rental rates. In all, the operating environment is expected to remain challenging for this financial year,” he added.