KUALA LUMPUR: Malaysia's real estate investment trust (REIT) industry this year is expected to be challenging, although the retail REITs have begun their recovery, said Hektar REIT manager Hektar Asset Management Sdn Bhd chief corporate officer Zarina Halim.
"There are certain non-controllable factors that are affecting the entire industry. One of them is inflation, although currently Bank Negara Malaysia is keeping it stable. Of course, there are also global economic challenges as well," she said.
Zarina cited wars and the trade situation between US and China which had yet to be resolved as part of the challenges that the REIT industry must be prepared to overcome.
Last year saw a recovery of tenant sales to pre-pandemic values, with shopper traffic having stabilised at around 75 per cent of pre-pandemic levels.
Hektar chief executive officer Johari Shukri Jamil said this indicated that the economy was back on track, and retail REITs continued the promising trajectory this year.
Despite the uneven recovery, Hektar REIT's portfolio performance registered an overall portfolio occupancy rate of 82 per cent.
"Our results for FY2022 have shown that our strategies are yielding the desired results. We are actively exploring avenues for growth by ensuring a strong portfolio of retail brands in our malls with the aim of achieving higher occupancy rates," said Johari.
For the financial year 2022 (FY2022), Hektar REIT's revenue increased 21.6 per cent to RM117.5 million from RM96.6 million from the previous year, with a realised net income of RM36.4 million, up 186.3 per cent from RM12.7 million in FY21.
Its net property income (NPI) saw a 24.8 per cent gain to RM58.7 million compared to RM47 million in the preceding year.
Hektar REIT reduced its borrowings as part of its financial and capital management strategy, consequently reducing its gearing ratio to 44.6 per cent in FY2022 from 47.2 per cent in the previous financial year.
Hektar REIT also managed to pay out higher dividends in FY2022, with a dividend yield of 11.4 per cent.
This was higher than FY2019 with a significant 60.8 per cent annual return based on share price performance.
There was a notable increase in the portfolio valuation by RM41.6 million, increasing the value of assets under management to RM1.21 billion.
Hektar REIT plans to rejuvenate Subang Parade with plans for capital expenditure investment in building improvements, facade changes and facilities, as well as investing in placemaking areas by identifying and improving communal gathering areas.
Hektar REIT also plans to explored suitable niche retail offerings and services to complement Subang Parade's existing offerings.
As part of its cost and capital management, besides financial management and cost optimisation initiatives, Hektar REIT intends to enhance its liquidity via an income distribution reinvestment plan, as well as improving the REIT's overall gearing ratio and creating competitive funding platforms.
In terms of ESG, Hektar will be adding more EV charging bays, creating further awareness and introducing enhanced measures for effective waste management and embarking on renewable energy initiatives such as installation of solar panels across its malls.