Hektar REIT 4Q net property income up 10.3%

KUALA LUMPUR: Hektar Real Estate Investment Trust (REIT), a retail-focused REIT, recorded a 10.3% year-on-year  increase in net property income (NPI) to RM20 million for its fourth quarter ended Dec 31 of financial year 2013 (4QFY13). Gross revenue for the quarter rose 4.7% to RM30.4 million.

Realised net income stood at RM13.15 million for the quarter under review, up 21.7%.

For its full FY13, realised net income rose 16% to RM46.1 million. This was on the back of a 16.5% increase in gross revenue at RM120.2 million, contributed by the two new shopping malls acquired by the REIT in Kedah in late 2012.

Hektar declared a distribution per unit (DPU) of 2.7 sen for 4QFY13, payable on March 17. This represents a yield of about 7% based on the closing price of RM1.50 on Dec 31, 2013.

Hektar Asset Management Sdn Bhd chief executive officer Datuk Jaafar Abdul Hamid said the occupancy rate for the portfolio as at Dec 31, 2013 reduced slightly to 95%, mainly due to the asset enhancement initiatives (AEI) currently taking place at Central Square.

“Excluding Central Square and Landmark Central, the average occupancy rate for the remaining three malls has improved from 97.9% last year (Dec 31, 2012) to 98.6% this year,” he said.

Besides Central Square and Landmark Central, both located in Kedah, the REIT also owns Subang Parade in Subang Jaya, Selangor, Mahkota Parade in Melaka, and Wetex Parade in Muar, Johor.

Jaafar said Subang Parade remains its flagship shopping centre, generating the highest NPI growth for the REIT in FY13.

“Coupled with a steady reversion rate, the valuation for Subang Parade has increased significantly this year, by 39.6% as compared to last year,” he said.

However, Jaafar highlighted that the fair value gain for the portfolio is reported to be lower than FY12’s as Hektar had undertaken capital expenditure on the ongoing AEI at Central Square, which has yet to be imputed into its valuation.

Hektar recorded RM12.6 million in fair value gain in properties in 2013, compared with a gain of RM18.7 million  in 2012.

Jaafar said Hektar’s main focus for this year remains Central Square’s AEI, which is expected to be completed by the latter part of this year.

“Together with the AEI, our leasing team is also aggressively carrying out tenant remixing exercises at both Central Square and Landmark Central. This has resulted in double digit reversion rates as reported in our 4QFY13 results,” he said.

Hektar REIT has five shopping malls in its portfolio, with an asset value of RM1.05 billion as at December 2013.


This article first appeared in The Edge Financial Daily, on February 13, 2014.