Sunway REIT 3Q gross revenue, NPI up on retail segment

KUALA LUMPUR (April 29): Sunway Real Estate Invstment Trust (Sunway REIT)’s gross revenue rose 2.4% to RM110.7 million while its net property income (NPI) rose 3.2% to RM83.2 million for the third financial quarter ended March 31, 2015 (3QFY15).

In a statement released today, Sunway REIT said the retail segment of its portfolio continued to underpin growth, despite a more difficult operating environment.

It added that the REIT was nonetheless affected by lower contributions from the hotel and office segments.

Sunway REIT has proposed a distribution per unit (DPU) of 2.13 sen for the quarter which brings the cumulative DPU to 6.68 sen, a 5.5% increase from a year ago.

“Sunway REIT continued to remain resilient despite [an] increasingly challenging operating environment on the back of intensifying competition as well as weakening business and consumer sentiment,” said Sunway REIT Management Sdn Bhd CEO Datuk Jeffrey Ng in the statement.

“Our tenancy mix in the malls [which] comprise more non-discretionary offerings where demand is less elastic, should help to mitigate the impact of weaker consumer sentiment.

“It is the survival of the fittest to weather through these sub-sector property cycles. The competitive edge and key differentiating factors lie in the experience and skills of the asset managers and strong rapport with tenants over the years,” he said.

For the nine months ended March 31, 2015 (9MFY15), Sunway REIT’s NPI rose 5.9% to RM256.4 million while its gross revenue rose 6.3% to RM338.5 million on the back of a solid performance from the retail segment.

“The strong performance of Sunway Pyramid Shopping Mall and Sunway Carnival Shopping Mall, being the two key assets, is mainly attributable to higher average net rental rates, higher average occupancy rates and increase in service and promotion charges with effect from June 2014,” said Sunway REIT.

Meanwhile, its hotel segment saw NPI and gross revenue fall 3.9% and 5.3% from a year ago due to lower performance across the hotels, while its office segment saw a 9.3% drop in gross revenue owing to lower average occupancy levels at Sunway Tower and Sunway Putra Tower.

“The reopening of Sunway Putra Mall in May 2015 and new income stream following the completion of acquisition of Sunway Hotel Georgetown on 28 January 2015 and Wisma Sunway on 23 March 2015 will cushion the lower performance of the office segment. In all, the manager expects moderate growth in DPU for FY2015,” he said.