Mahkota’s Parade Hektar Reit weakened

0

KUCHING: Hektar Real Estate Investment Trust’s (Hektar Reit) performance for the previous financial year was weak due to the poor performance arising from rental income of Mahkota Parade.

MAHKOTA PARADE: The mall has been underperforming due to refurbishment in progress.

MAHKOTA PARADE: The mall has been underperforming due to refurbishment in progress.

Mahkota Parade’s performance continued to languish in the fourth quarter of the last financial year posting a negative 23 per cent rental rate reversion and a slightly lower occupancy rate.

OSK Research Sdn Bhd (OSK Research) said in its report that the ongoing refurbishment of the mall was partly to blame for its weaker performance.

Moreover, Mahkota Parade had been absorbing the risk that the Malaka Market was facing since early last year from some of the bigger newer malls like Dataran Pahlawan amid weaker consumer spending.

However, Hektar Reit’s other malls saw commendable improvement with Subang Parade occupancy currently at 100 per cent with a positive 3 per cent rental rate reversion for the previous financial period.

Similarly, Wetex Parade reported the most improvement with occupancy now at 90.1 per cent from the previous 83.1 per cent. The mall achieved a positive 20 per cent rental reversion in the last quarter of the previous financial period.

AmResearch Sdn Bhd (AmResearch) in its research report maintained its cumulative core net income of Hektar Reit at RM36.7 million.

According to the report, Hektar Reit achieved a core net income of RM9.2 million for its fourth quarter of the previous financial period.

On a yearly basis the core net income grew by one per cent on the back of a four per cent jump in gross rental income which was driven by the Wetex Parade’s full year’s contribution.

However, AmResearch reported that quarter-on-quarter (q-o-q) core net income dropped by four per cent mainly due to the lower rental income of Mahkota Parade which was under refurbishment.

Furthermore, despite the steady occupancy the portfolio suffered a negative rental revision of five per cent due to Mahkota Parade’s rental reversion of negative -23 per cent.

Nonetheless both research reports believed the performance of Mahkota Parade would improve after the refurbishment as new tenants would patronize the revitalized mall.

AmResearch pegged the share price of Hektar Reit at a fair value of RM1.23 per unit. Hektar Reit was providing a yield of 10 per cent to its Distribution per Unit (DPU) of the previous financial year’s forecast.