Hektar REIT 4Q profits drop 70%, declares dividend

KUALA LUMPUR: Hektar Real Estate Investment Trust (REIT)’s fourth quarter profits for the financial year ending Dec 31, 2009 dropped 70% to RM9.57 million from RM32.63 million in the same period a year ago, according to a statement to Bursa Malaysia.

Fourth quarter revenue also decreased to RM21.53 million from RM22.26 million in the same corresponding period a year ago and basic fourth quarter earnings per share dropped to 2.99 sen from 10.2 sen in the same quarter a year ago. The company declared a final dividend of 3.1 sen per share amounting to RM9,920,031, which will be made on March 5, 2010.

Revenue for the entire financial year 2009, however, increased slightly to RM87.71 million from RM84.09 million in the corresponding period in 2008, and yearly profits dropped to RM37.14 million from RM60.35 million.

The company said that it will not be taxed on its profits because it intends to distribute at least 90% of the distributable income to unitholders for the financial year ending Dec 31, 2009. REIT companies are fully exempted from income tax provided at least 90% of their income is distributed to unitholders with effect from the year of assessment 2007.

Meanwhile, Hektar is cautiously optimistic about the Malaysian retail sector in 2010 following the financial crisis and its relative impact on the country.

The company said it will continue to optimise its property portfolio, improving capital values by refurbishing Hektar REIT’s existing malls. It aims to complete the refurbishment of Mahkota Parade by the second quarter of 2010.

The statement also said that it will continue to explore and negotiate potential acquisition opportunities this year.

On another matter, in a separate announcement, the company said it had carried out a revaluation exercise on two of its shopping complexes – Subang Parade (Subang Jaya, Selangor) and Makhota Parade (Melaka); and another shopping complex cum hotel – Wetex Parade (Muar, Johor).

The revaluation exercise was conducted by Messrs. Khong & Jaafar Sdn Bhd and was done to determine current market values of the three buildings for accounting purposes as per Financial Reporting Standard 140.

The latest market valuation for Subang Parade and Makhota Parade rose to RM343 million and RM257 million from RM331.4 million and RM252 million respectively, while the valuation for Wetex Parade dropped to RM120 million from RM130 million. Total valuations for the three properties rose to RM720 million from RM713.4 million in 2008.

The company said the revaluation has no material impact on Hektar’s Net Asset Value. The company added that it will conduct a revaluation of all its properties every year to meet financial accounting standards.