KUALA LUMPUR (April 26): Hektar Real Estate Investment Trust (Hektar REIT) is spending RM62 million to upgrade two of its malls this year, according to chief executive officer of the REIT's manager Hektar Asset Management Sdn Bhd, Datuk Hisham Othman.

The AEIs will see the refurbishment of two of the REIT’s malls, namely the Landmark Central in Kulim, Kedah, and Subang Parade in Subang Jaya, Selangor, which will add up to 60,000 sq ft of net lettable area (NLA) to its portfolio, he told reporters after the REIT’s annual general meeting today.

Hisham said the upgrading works will cost about RM23 million for Landmark Central and RM39 million for Subang Parade.

“Tenant mix remains a critical factor for Hektar REIT in ensuring success of the malls within our portfolio. We understand that retailers prefer to enter either new or refurbished malls, rather than older malls, and there’s a higher emphasis on services and F&B offerings — both these segments continue to perform well amidst the weak economic environment.

“As such, our proactive leasing management focuses on these underlying aspects to optimise rental yields,” Hisham added.

For Landmark Central, some 20,000 sq ft of NLA will be added. That, together with tenant remixing efforts, will give another 20 new shop lots to the mall which Hisham hopes will increase rental revenue on completion of the upgrading works later this year.

As for Subang Parade, Hisham said 40,000 sq ft of NLA will be added, which will add about 24 new shop lots in the mall. Completion is expected by mid-2018. Currently, Subang Parade and Landmark Central have an occupancy rate of 93.0% and 98.9% respectively.

Meanwhile, Hektar REIT is anticipating the acquisition of 1Segamat Mall in Johor for RM104 million, to be completed in the third quarter of this year, said Hisham.

Besides Subang Parade and Landmark Central, Hektar REIT has three other malls, namely Makhota Parade in Melaka, Wetex Parade in Johor, and Central Square in Kedah, with an occupancy rate of 96.4%, 100% and 96.6% respectively.
 
“Our strategies for 2017 remains three-pronged — implementing AEIs to NLAs, completing the acquisition of 1Segamat, and improving efficiency in tenant management to optimise rental returns,” added Hisham.
 
Hektar REIT’s shares closed up 1 sen or 0.63% higher at RM1.60 today, for a market capitalisation of RM641.02 million.