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Hektar REIT readies for 2021, positive spillover effect from Village Grocer in Subang Parade

KUALA LUMPUR: Hektar Real Estate Investment Trust (Hektar REIT), posted RM26.0 million in revenue for the third quarter (3Q) ended September 30, 2020 (FY20), a decline of 23.8 per cent same quarter last year.

Revenue fell mainly due to the rental income, carpark income and lower hotel occupancy, consistent with other retail

and hospitality REITs that were affected because of the pandemic outbreak.

However, compared to the second quarter (2Q) FY20, revenue had increased by 5.7 per cent mainly from casual leasing, car park income and turnover rent which was believed to be signs of recovery during the Recovery Movement Control Order (RMCO) period.

Property operating expenses continued to decrease for the 3Q, falling 14.2 per cent compared to same quarter in FY19.

However, net property income (NPI) declined by 31.6 per cent to RM12.9 million.

Notwithstanding the fall in revenue and NPI, recovery plans are on-track as Subang Parade welcomed premium supermarket Village Grocer as a new anchor tenant in September 2020 and Parkson reopened in July 2020 following the refurbishment of the lower ground floor.

Hektar Asset Management Sdn Bhd (HAM) chief executive officer Datuk Hisham bin Othman said the 3Q has shown that there is pent-up demand among consumers although understandably, it is going to be a slower than expected recovery.

"It is with this in mind that we welcomed the opening of the Village Grocer premium supermarket at Subang Parade and the reopening of Parkson in the same mall after refurbishment to its lower ground floor space.

"We are pleased that our rejuvenation plans for Subang Parade are on track and is positive that having good anchor tenants

and the right mix will continue to attract visitors to our malls and will also contribute to a spillover effect for other tenants as it is beginning to have for Subang Parade with the opening of Village Grocer," he said in a statement today.

HAM is the manager for Hektar REIT.

While gross rental income (GRI) has dropped compared to 3Q last year, it has improved from 2Q mainly from casual leasing, car park income and turnover rent, a sign of nascent recovery during the RMCO period.

The REIT manager has also actively engaged with tenants in all six shopping centres to help promote their business while playing its part in ensuring the health and safety of all visitors to the shopping centres as well as all tenants together with their employees in regards to the government's standard operating procedures for the Covid-19 pandemic.

Hektar REIT recorded earnings per unit (EPU) of 0.98 sen for 3Q FY20.

While Hektar REIT is committed to paying at least 90 per cent of distributable net income to unitholders for financial year ending December 31, 2020, it has also secured a moratorium on its debt facilities for a period of six months from May 1 to October 31, 2020 that obliges it to not pay any dividend until the deferred interest under the moratorium period has been repaid.

Hisyam said despite portfolio leasing activities that continued to be affected by the RMCO and in tandem with the fall in economic activities, Hektar REIT's portfolio of properties remained steady with an occupancy rate of 88.5 per cent.

"There was a total of 14 rental reversions in the 3Q representing 2.3 per cent of net lettable area (NLA).

"Among the new tenants were Village Grocer in Subang Parade, while key renewed tenants for the mall included Bata and MOG Eyewear.

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