AmFIRST reports 6% drop in net profit for 1Q

KUALA LUMPUR: AmFIRST Real Estate Investment Trust (AmFIRST) reported a net profit of RM9.9 million for the first quarter result of its financial year ending March 31, 2011, a drop of 6% from RM10.5 million reported in the same quarter a year earlier due to due to higher provision for doubtful debts and higher interest funding costs.

AmFIRST said on Wednesday, Aug 11 that revenue increase of 6% to RM25.1 million in the quarter under review compared to RM23.6 million in the same period a year earlier mainly due to renewal of tenancies at higher rental rates and new lettings. Earnings per share stood at 2.32 sen compared to 2.47 sen a year ago.

The company said that the commercial property market is expected to remain soft with average rental rates facing downward pressure, and that the Trust continues to look at strategies to fill vacancies to attract new tenants and offering various incentives.

“Office rents will continue to face downward pressure due to new supply in Klang Valley that will come on stream in the next few years. This may have an impact on the income. However, current tenancy profile and diversity of the tenants mix is expected to mitigate the impact of the bottom-line in the remaining period of the financial year,” it said.

AmFIRST said that the Asset Enhancement Initiatives, an upgrading and enhancement programmes of properties, are in place and scheduled to commence in near future. It added that these activities will maintain AmFIRST's competitiveness in the market and increase its current level of occupancy.

The six properties under its portfolio are Bangunan AmBank Group, Menara AmBank, AmBank Group Leadership Centre, Menara Merais, Kelana Brem Towers and The Summit Subang USJ.

The Asset Enhancements Initiatives includes a refurbishment exercise for  Bangunan AmBank Group that would be undertaken to improve the building’s lifts and lobby, cafeteria and washroom. The work is expected to commence within the second quarter.

The Summit Subang USJ Retail is scheduled to undergo upgrading of its basement car parks in early September and to be completed by end November 2010. Meanwhile, the Summit Hotel’s refurbishment exercise is expected to be fully completed within this month with all 332 rooms renovated.

Early this year, AmFIRST completed the refurbishment of Menara Merais. The asset enhancements initiatives would enhance its competitiveness in the market and increase its current level of occupancy.

In a separate filling with Bursa, the Chief Executive Officer  of Am ARA, the manager of AmFIRST, Lim Yoon Peng, said that during the three months period under review, the overall occupancy rate of AmFIRST’s property portfolio recorded a slight increase, from 82.36% to 82.9%.

“This was resulted from new lettings at The Summit Subang USJ,” he said, adding that the occupancy rates for AmFIRST’s three buildings located within the Golden Triangle stood well above 95% with two of it, Bangunan AmBank Group and AmBank Group Leadership Centre registered 100% occupancy.

“Our asset management team, together with the appointed property managers are actively promoting the existing vacant space at Menara Merais, Kelana Brem Towers and The Summit Subang USJ.

Judging from the feedback and enquiries received from potential tenants, we hope to seal a few tenancies within the second quarter period ended 30 September 2010,” Lim said, and added that a more aggressive leasing effort will be undertaken amidst the growing competition and supply of office and retail space.
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