Retail sector to recover this year: Hektar REIT

KUALA LUMPUR: Hektar Real Estate Investment Trust (Hektar REIT) expects the retail sector to regain this year due to improved consumer sentiment, backed by stronger economic growth and the rollout of the Covid-19 vaccine.

Chief executive officer Datuk Hisham Othman said 2020 has been an extraordinarily challenging year due to the pandemic, but the company would remain cautious for 2021 as the situation was still evolving.

"However, we begin to see traffic returning to shopping malls, including ours, since the lifting of mobility restrictions as pent-up demand for shopping, dining and entertainment is unleashed," he said in a statement after the company's ninth annual general meeting with investors today.

Hisham said Hektar REIT will continue to support its tenants and prioritise measures to ensure the safety and health of its employees, shoppers, tenants and vendors.

"The Covid-19 pandemic has impacted the retail industry significantly and the REIT has also not been spared. However, we remain committed to steering our portfolio into recovery this year," he added.

Hektar REIT's revenue for year ended December 31, 2020 (FY20) decreased 18.9 per cent to RM111.1 million from RM137.1 million due to plunging rental, car park and food court income resulted from the pandemic and the various mobility restrictions imposed throughout the year.

Its FY20's property operating expenses declined RM3.5 million or savings of 5.7 per cent, while net property income dropped 29.8 per cent to RM53.0 million.

Hektar REIT declared an income distribution of RM4.2 million, equivalent to 0.9 sen per unit, for the fourth quarter (Q4) ended December 31, 2020.

Hektar REIT saw a slight decline in overall occupancy rate to 88.4 per cent for FY20, compared to the overall occupancy rate of 92.5 per cent in FY19 as the pandemic took its toll on the retail sector.

However, despite the decline, the overall portfolio registered 80 new and renewed tenancies representing net lettable area (NLA) of 64,014 sq ft.

It said 17.8 per cent of the overall NLA has reached out to eligible tenants by providing them with support through rental assistance and engaged with shoppers in the respective malls to help boost tenant sales through physical and digital platforms.

Hektar REIT's two largest malls, Subang Parade and Mahkota Parade, saw reaffirmed commitments from its long-term anchor tenant, Parkson as they refurbished its lower ground space at Subang Parade and also renewed its tenancy at Mahkota Parade.

Subang Parade also saw the entry of new anchor tenants namely premium supermarket Village Grocer in the third-quarter and EcoShop in the fourth quater.

Hektar REIT said the entry of new anchor tenants is a testament to the confidence of these retail operators in the long-term prospects of these malls, despite the negative impact of the pandemic on the retail sector.

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