KUALA LUMPUR (May 15): Hektar Real Estate Investment Trust (Hektar REIT) saw its net profit rise 6.1% to RM11.09 million or 2.77 sen a share for the first quarter ended March 31, 2015 (1QFY15) from RM10.46 million or 2.61 sen a share a year ago,  mainly due to improved revenue of its Central Square asset in Sungai Petani, Kedah upon completion of its asset enhancement initiative (AEI).

Revenue also increased 3.4% to RM31.21 million from RM30.18 million in 1QFY14. Net property income grew 5.8% to RM18.6 million in 1QFY15.

In a filing with Bursa Malaysia today, Hektar REIT also announced a first interim income distribution of 2.6 sen per unit, amounting to RM10.42 million, for 1QFY15, payable on June 17, 2015.

“We are beginning to reap the fruits of our AEI at Central Square as it comes to its completion. Occupancy rate has increased from 80.5% last quarter to 86.3% this quarter, with high reversion rates recorded from the new tenancies. We have taken the opportunity to improve the tenancy mix at Central Square," said its chief executive officer Datuk Jaafar Abdul Hamid in a statement today.

"In addition to the food and beverage brands that we have brought in earlier, we have also introduced exciting entertainment and tele-communication brands like Apple Store, YES, Panbowling, HKV and OPPO," he added.

Jaafar expects the occupancy rate at Central Square to reach beyond 90% with the anticipated opening of a cinema in 3QFY15.

Apart from Central Square, Hektar REIT’s portfolio of shopping malls includes Subang Parade in Subang Jaya, Selangor, Mahkota Parade in Melaka, Wetex Parade in Muar, Johor and Landmark Central in Kulim, Kedah.

As at end-2014, the portfolio had an average occupancy of 94.3% and recorded over 30.8 million shopper visits.

Going forward, the trust said the scene for retail malls continues to remain challenging.

"However, with the completion of AEI at Central Square, this is expected to improve Hektar REIT’s performance.

"The board is continuously looking at other asset enhancement opportunities for the properties," it added. 

Hektar REIT (valuation: 3; fundamental: 0.65) also said it intends to distribute at least 90% of the distributable income to unitholders for the year ending Dec 31, 2014. 

The stock closed unchanged at RM1.52 today, bringing a market capitalisation of RM608.96 million.

(Note: The Edge Research's fundamental score reflects a company’s profitability and balance sheet strength, calculated based on historical numbers. The valuation score determines if a stock is attractively valued or not, also based on historical numbers. A score of 3 suggests strong fundamentals and attractive valuations.)