Hektar REIT posts 7% increase in revenue for 3Q2009

KUALA LUMPUR: Hektar Real Estate Investment Trust (REIT) on Nov 4 posted a 7% increase in revenue of RM66.3 million for the cumulative 3Q2009 compared with the preceding year’s corresponding period. Revenue for 3Q2009 reached RM22.57 million, or 1.8% higher over the preceding quarter. Its 3Q net income stands at RM9.59 million or three sen per unit for the three months ended Sept 30, 2009, as announced by manager Hektar Asset Management Sdn Bhd.

According to the company’s statement to Bursa, the 7% increase in revenue was primarily due to Wetex Parade’s nine-month performance in 2009 compared with a five-month performance in 2008 (Wetex was acquired in May 2008). Nevertheless, despite higher revenue, net income of RM27.6 million was marginally lower than the preceding year’s corresponding period due to higher operating costs arising from an increase in electricity tariff and high borrowing costs arising from the full blown impact of the additional loan obtained to acquire Wetex Parade. Wetex Parade is located in Muar, Johor, and has a net lettable area of 167,550 sq ft.

Hektar Asset Management expects 4Q2009 to be as challenging as the first three quarters of the year. The statement states that the prevailing uncertain economic conditions have negatively impacted the performance of some retailers in Hektar REIT’s shopping complexes, resulting in premature terminations of a few tenancies and rental reduction in others. It also declared a 3Q Dividend Per Unit (DPU) of 2.40 sen.

Hektar Asset Management CEO Datuk Jaafar Abdul Hamid says overall occupancy in its portfolio is relatively stable despite concerns over the retail segment in the earlier part of the year. “The refurbishment of Mahkota Parade in Melaka continues and remains on track for completion next year. Overall, the feedback and response from retailers have been very encouraging and we look forward to showcasing the revitalised Mahkota Parade by 2Q2010.

“We believe our efforts to improve our assets and maintain high-quality service standards in our shopping centre portfolio will continue to sustain consumer interest and investor confidence in Hektar”, he concludes.

Hektar REIT is Malaysia’s first retail-focused REIT and its portfolio includes shopping centres in Subang Jaya, Melaka and Muar with a combined value of RM713.4 million as at Dec 31, 2008.