Hektar REIT sees lower Q1 profit

PETALING JAYA: Hektar REIT’S net profit for the first quarter ended March 31 dropped 20.62% to Rm7.08mil on the back of a 7.9% drop in revenue to Rm30.71mil, as it was impacted by the movement control order (MCO) to contain the Covid-19 pandemic.

Earnings per share reduced to 1.53 sen from 1.93 sen previously. Hektar REIT has decided not to declare a first interim distribution per unit in the current quarter.

Nonetheless, it remains committed to maintaining the distribution policy of paying at least 90% of distributable net income to unitholders.

Hektar REIT chief executive officer and executive director Datuk Hisham Othman said that the actual impact of the Covid-19 crisis is expected to be felt in the second quarter, as a majority of tenants had not been able to operate for at least a couple of weeks.

“We expect lower income from turnover rent and car park, as well as slower rental collection due to lower trading activity and shopper traffic declines. We expect that even after the MCO is lifted, the condition will take some time before it returns to normalcy,” he added.

“Looking at the unprecedented headwinds impacting all sectors, we have to take a prudent approach to conserve cash and initiate stringent cost-management strategies to navigate through this challenging period. Our team is diligently examining the options and its impact, including exploring tenancy restructuring, deferring or phasing all but essential maintenance capital expenditures and suspending major redevelopment project starts until further notice.”

The portfolio’s average occupancy at the end of the quarter stood at 91.3%. During the three-month period under review, the renewal activity included 28 new and renewed tenancies on over 103,307 square feet, representing just 5.1% of the portfolio’s net lettable area.