KUALA LUMPUR (Oct 31): Sunway Real Estate Investment Trust (Sunway REIT) kicked off its financial year 2018 with a strong first-quarter performance, with net property income (NPI) rising 15.5% year-on-year (y-o-y) to RM111.99 million, on the back of higher revenue and lower property operating expenses.

Quarterly revenue increased 9.5% to RM141.17 million in the three months ended Sept 1, 2017 (1QFY18), from RM128.88 million in 1QFY17, mainly contributed by higher revenue across all segments. 

It also proposed an income distribution per unit (DPU) for 1QFY18 of 2.67 sen, payable on Nov 29.

In a statement today, Sunway REIT said its retail segment's revenue improved by 3.9% y-o-y to RM103.6 million in 1QFY18, underpinned by high average occupancy rates for all retail malls in the stable of asset portfolio, mainly due to higher average gross rent for Sunway Pyramid Shopping Mall. The segment's NPI also increased 9.4% y-o-y to RM78.3 million, on the back of higher revenue and lower property operating cost.  
 
The hotel segment, meanwhile, saw revenue and NPI increase 40.9% y-o-y and 43.7% y-o-y in 1QFY18, primarily attributable to full resumption of operations at Sunway Pyramid Hotel, following completion of its refurbishment in June.

In addition, Sunway Putra Hotel enjoyed higher average occupancy and average daily rates during the quarter, benefitted from higher demand from the SEA Games 2017 and the Asean Para Games 2017 held in August and September, respectively.
 
As for the office segment, Sunway REIT said it reported a revenue and NPI growth of 8.1% y-o-y and 8.5% y-o-y respectively, largely attributable to higher average occupancy rates at Menara Sunway and Sunway Putra Tower.

Datuk Jeffrey Ng, chief executive officer of Sunway REIT Management Sdn Bhd, the manager of Sunway REIT, said the asset enhancement initiatives (AEIs) which the trust had undertaken in the last several years are showing encouraging progress in performance, despite continuous challenges affecting the property market/sub-sectors.
 
Upon completion of its acquisition of a mixed-use Sunway Clio Property — comprising a 4-star hotel, a retail podium and car park bays — expected in 3QFY18, Sunway REIT’s combined property value will increase to RM7.12 billion, achieving its target of RM7 billion.

On prospects, Ng said Sunway REIT’s DPU is expected to grow moderately in FY18, supported by moderate growth in the retail segment, resumption in income contribution from Sunway Pyramid Hotel following the full completion of its refurbishment in June 2017, and gradual improvement in the overall occupancy of the office segment.

"In addition, we expect new income contribution from the recent acquisitions, to contribute positively to the DPU in FY2018 and beyond,” Ng added.

Sunway REIT units closed down one sen or 0.58% at RM1.72 today, with 4.08 million shares done, bringing it to a market capitalisation of RM5.07 billion.