KUALA LUMPUR: Pavilion Real Estate Investment Trust (REIT) expects its main income earner Pavilion Kuala Lumpur (Pavilion KL) mall to record rental reversion rates of between 2% and 3% — compared with 7% achieved last year — as most of the lots that are expected to have their tenancy renewed this year are smaller-sized ones.

The pending renewals are part of the mall’s tenancy renewal exercise that began in the third quarter of last year.

“[For 2017,] we expect rental reversion rates for Pavilion [KL] to be slightly flattish [at between 2% and 3%] due mainly to the fact that the majority [of the remaining tenants] are smaller [lots] such as storerooms,” said Pavilion REIT Management Sdn Bhd chief executive officer Philip Ho Yew Hong when speaking to reporters after the group’s annual general meeting here yesterday.

Nevertheless, Ho said he is confident that Pavilion KL will see better growth numbers this year, as over 60% of its retail tenants — based on net lettable area (NLA) — renewed their leases in 2016.

Tenancy renewals pending this year are for some 23% of the mall’s retail tenants, based on NLA. The group is expected to conclude its renewal exercise by the second quarter of 2017.

Ho said Pavilion KL will continue to be the REIT’s main portfolio contributor moving forward. It currently accounts for about 90% of the group’s income contribution, based on the group’s Annual Report 2016.

Meanwhile, he updated that the group is revamping its tenant mix at its Da Men Mall in Subang Jaya, besides working on increasing the occupancy level of Intermark Mall in Kuala Lumpur, which stood at 76.5% as at Dec 31, 2016, according to its annual report.

On whether the REIT still plans to acquire more assets, Ho said if the opportunities and timing are right, the group will be looking at expanding its portfolio. However, it has nothing planned at the moment, he added.

Pavilion REIT shares closed one sen higher at RM1.74 yesterday, with a market capitalisation of RM5.27 billion.