KUALA LUMPUR: Hektar Real Estate Investment Trust (Hektar REIT) foresees positive rental reversions for financial year 2020 onwards from four shopping centres namely Wetex Parade, Kulim Central, Segamat Central and Central Square.
Hektar Asset Management Sdn Bhd executive director and chief executive officer Datuk Hisham Othman said last year, the company had seen positive rental reversions from three malls - 24.8 per cent growth for Wetex Parade, 15.6 per cent growth for Kulim Central and 10.6 per cent growth for Segamat Central.
"Coincidentally, these malls are considered to be the only mall in their respective towns of Muar, Kulim and Segamat.
"The bottom line is that despite the challenges facing mall operators in crowded markets like the Klang Valley, the performance of malls in tier-two markets can be positive," he told the New Straits Times.
He said Central Square in Kedah, achieved 9.2 per cent positive rental reversion.
Central Square is a 23-year old mall acquired by Hektar in 2012 and refurbished in 2015.
Four years after refurbishment, Central Square is still generating positive rental reversions, indicating that retailers are still willing to open in the Sungai Petani market.
Therefore, the positive effect on rental reversions can last years after the last refurbishment, he said.
"Even in our malls within the Klang Valley such as Subang Parade, now have a positive momentum. We have signed with Village Grocer to create an upmarket grocer for Subang Parade. This will be a 26,000 sq ft grocer committed to bring high quality products from around the world. This will provide a positive catalyst for Subang Parade.
"We are therefore optimistic that our leasing work can continue to perform well in the less crowded markets
outside the Klang Valley. Of course, we are mindful of the economy and other factors which can impact consumer spending and sentiment," Hisham said.
Hektar REIT posted a revenue of RM137.1 million, up 1.5 per cent for the year ended 31 December 2019 (FY19) compared to the same period last year.
Net property income was reported at RM75.4 million, a slight 4.2 percent dip from the previous year while realised income was recorded at RM35.8 million which was 15.1 per cent lower than FY2018.
Overall, the market valuation of the Hektar REIT portfolio increased by RM15.0 million in 2019.
The portfolio managed to achieve a positive 0.5 per cent growth in rental reversion despite the challenges in the retail industry.
For the fourth quarter, Hektar REIT recorded higher revenue of RM34.9 million, an increase of 2.9 per cent compared to same period in 2018 (4Q18).
Net property income stood at RM19.7 million and realised income before taxation was RM9.2 million.
Overall occupancy for 2019 remained steady at 92.5 per cent, a marginal increase compared to previous year’s occupancy which stood at 92.1 per cent at year’s end.
Overall visitor traffic at its portfolio remained stable at 32.3 million visits in 2019, slightly higher than the previous year.
The increase was mainly boosted by the encouraging visitor traffic in Kulim Central which climbed 15.0 per cent this year following the refurbishment and asset enhancement initiatives which were completed in 2017.
The main decline was in Subang Parade, due to initiatives in anticipation for the new supermarket anchor.
For FY2019, the overall portfolio registered a 0.5 pe rcent increase in rental growth through 146 new and renewed tenancies on over 420,983 square feet or 20.6 per cent of the net lettable area.
"Overall, we are positive about the portfolio performance especially with the four shopping centres Wetex Parade, Kulim Central, Segamat Central and Central Square recording positive rental reversion growth.
"These malls have been recently acquired or have successfully undergone asset enhancement initiatives within the last few years. We hope to see the same effect once Subang Parade completes its tenancy remixing and asset enhancement exercise," Hisham said.