KUALA LUMPUR (Oct 15): KiP Real Estate Investment Trust (REIT) announced a marginal 3.3% year-on-year growth in net property income for its first quarter ended June 30, 2018 to RM9.94 million, from RM9.62 million previously, as rental fee and occupancy rates eked out modest improvements.

In an exchange filing today, the retail REIT said its gross revenue grew 2% to RM15.59 million, from RM15.30 million, attributable to the increase in occupancy rate which grew from 83% a year ago to 86.3% in the quarter under review.

KiP REIT said its community-centric retail centres, KiP Marts — which contributed 76.1% to its revenue — saw improved performances due to the revised rental per sq ft, from RM5.10 last year to RM5.14 currently.

Meanwhile, KiP Mall, which contributed the remaining 23.9% of KIP REIT’s revenue, saw notable improvement in its occupancy rate, which grew from 78.6% in the same quarter last year to 86.2% currently, the filing added.

The total comprehensive income attributable to unitholders stood 4.6% lower at RM7.26 million in the quarter under review, compared with RM7.66 million earlier. The fund explained this was due to higher management fee charged at 0.6% of its total asset value, compared with 0.4% in the same quarter last year.

The management declared an interim distribution per unit of 1.45 sen per unit, amounting to RM7.33 million, payable on Nov 13, representing a 100% distributable income.

“I am pleased with the fund’s steady financial performance, despite the absence of festivities during the quarter in review. This reflects KiP’s stability and its defensive nature,” said Datuk Chew Lak Seong, managing director of KIP REIT Management Sdn Bhd, in a separate statement.

“We will put more creativity in our advertising and event activities, as well as upgrading our food and beverage segments, so as to offer a better dining experience to the community at large. This would inevitably further improve the occupancy rate of KIP REIT’s properties. We will also continue to undertake asset enhancement initiatives to ensure our properties continue to generate strong performance,” Chew added.

Overall, KiP REIT said under current market conditions, retail spaces at all its properties are expected to stay resilient in terms of occupancy and rental rates. As at June 30, the properties recorded an average occupancy rate of 86.3% and could improve further through the upgrading of the food & beverage segments, the filing added.

The management also plans to enlarge KiP REIT’s asset portfolio in the near future, by acquiring other properties from promoters.

“The manager is exploring KiP Mall Kota Warisan, which has been completed and commenced operations on Aug 29, 2017 and is currently under the Right of First Refusal held by the Trustees, if it meets KiP REIT's investment objective.

“Currently, the manager is in the process of exercising the acquisition of Aeon Kinta City Mall in Ipoh from a third party, which will contribute a gross yield of 7.8% per annum to KIP REIT,” it said.

KiP REIT’s unit price closed one sen or 1.23% higher at 82.5 sen today, for a market capitalisation of RM416.87 million.