Hektar Asset Management Sdn Bhd, the Manager of Hektar Real Estate Investment Trust announced that Hektar REIT recorded a higher revenue of RM34 million for the second quarter ended 30 June 2018 (“2Q18”), up 10% from the corresponding period (“2Q17”). Net Property Income (“NPI”) reached RM19.5 million, an increase of 8% for 2Q18 from the preceding year quarter, 2Q17.
“We are pleased that our portfolio optimization exercise which is being carried out throughout all of our 6 shopping malls in our asset portfolio is showing results. This was done on top of active leasing, aggressive marketing and value creation initiatives to improve long-term yields,” said Chief Executive Officer Datuk Hisham bin Othman.
Hektar REIT declared a second interim distribution per unit (“DPU”) of 2.30 sen. Based on the closing price of RM1.22 on June 30, 2018, the annualised DPU for the year represented a distribution yield of approximately 7.5%.
Hektar REIT maintains a distribution policy of at least 90% of distributable net income, which typically excludes items such as capital allowances and revenue arising from Financial Reporting Standards 117, an accounting standard adopted in FY2010. The Book Closing Date is on September 4, 2018 and payment of the distribution will be made on September 24, 2018.
In the last quarter, Hektar REIT secured 45 new and renewed tenancies representing 10.6% of the portfolio’s Net Lettable Area. “This quarter saw the overall portfolio achieved a healthy rental reversion of 7.8%, with majority of the assets under the portfolio recording a high single digit or double-digit growth.
This was mainly due to the renewed tenancies in Kulim Central post-refurbishment, as well as the successful renewals of tenants in Mahkota Parade, Wetex Parade, Central Square and Segamat Central,” said Hisham, concluding, “We will continue our best efforts to improve the tenancy mix of our centres and ensuring they remain relevant to the communities they serve.”
The portfolio remains stable, with realised income slightly lower by 1% compared to the preceding year quarter which was largely due to the temporary increase in utilities cost and interest expense with the completion of Kulim Central Asset Enhancement Initiative (“AEI”) and the on-going AEI at Subang Parade.
Looking at 1H 2018 set against 1H 2017, however, the realised income for Hektar REIT was 5% higher and its NPI is 9% higher than the previous year corresponding period.
Hektar REIT’s portfolio consists of mostly neighbourhood shopping centres, which in general are more resilient and defensible during economic downturns. Hektar REIT’s total portfolio has a combined net lettable area of 2.0 million square feet and has a healthy 92.9% overall occupancy. Hektar REIT’s portfolio of shopping malls include Subang Parade in Subang Jaya, Selangor, Mahkota Parade in Melaka, Wetex Parade in Muar, Johor, Central Square in Sungai Petani, Kedah and Kulim Central in Kulim, Kedah, and Segamat Central, Segamat, Johor. The portfolio’s catchment serves a market size of 3.0 million shoppers.
