Hektar Reit’s property portfolio down RM8mil

Three out of five properties have lower book value after revaluation

PETALING JAYA: Hektar Real Estate Investment Trust (Hektar REIT) has revealed that the investment properties under its portfolio have registered a total deficit of RM7.99mil following a revaluation exercise.

In a filing with Bursa Malaysia, the company said three of its five properties, namely, Subang Parade, Mahkota Parade and Landmark Central, had audited book/market values of RM427.20mil, RM322.40mil and RM112mil, respectively, as at Jan 31, 2017.

However, following the latest market valuation, Subang Parade, Mahkota Parade and Landmark Central have a lower book value of RM426mil, RM321mil and RM110mil, respectively.

Its other two properties, Wetex Parade and Central Square, saw an increase in book value under the revaluation exercise.

“The total revaluation deficit of RM8mil represents 0.7% over the unaudited net book value of RM1.2mil as at Sept 30, 2017 (before revaluation).

“Based on the unaudited results as at Sept 30, 2017, the net asset value per unit of RM1.3957 dropped to RM1.3784 upon incorporation of the revaluation deficit of RM8mil or equivalent to RM0.0173 per unit,” Hektar Reit said.

The company’s sixth property, Segamat Central, was not considered for revalution as the acquisition was completed on Sept 18, 2017.

Hektar REIT said the revaluation was conducted to determine the current market values of Subang Parade (Selangor), Mahkota Parade (Malacca), Wetex Parade (Johor), Central Square (Kedah) and Landmark Central (Kedah) for accounting purposes as per financial reporting standard (FRS) 140.

“Based on the fair value method from FRS 140, the fair value of the investment property shall reflect market conditions at the balance sheet date. This necessitates the revaluation of investment properties on an annual basis.

“Since it has adopted the fair value method from FRS 140, Hektar REIT will undertake an annual revaluation of all investment properties under its portfolio.”

Hektar Reit said the valuations of Subang Parade, Mahkota Parade and Wetex Parade were carried out by independent professional valuer, Messrs Savills (Malaysia) Sdn Bhd.

The valuations of Central Square and Landmark Central, meanwhile, were carried out by independent professional valuers Messrs Henry Butcher Malaysia (Seberang Perai) Sdn Bhd and Messrs Henry Butcher Malaysia (Kulim) Sdn Bhd, respectively.

“For Subang Parade, Mahkota Parade, Wetex Parade, Cental Square and Landmark Central, the cut-off date for the revaluation was Sept 30, 2017.”

Last week, Bursa Malaysia launched the Bursa Malaysia REIT Index – with the aim of increasing the profile of Malaysian Reits and serving as a benchmark to gauge their overall performance.

There are currently 18 REITS listed on Bursa Malaysia, including four syariah-compliant ones, accounting for 2.4% of total market capitalisation.

As at Sept 30, 2017, the market capitalisation for REITS stood at RM44bil compared with just RM5bil in 2007.