KUALA LUMPUR (Jan 26): IGB Real Estate Investment Trust (REIT) has posted a net property income (NPI) of RM93.66 million for its fourth quarter of financial year 2021 (4QFY21) ended Dec 31, 2021, a marginal improvement of 0.6% from RM93.09 million in the previous year, amid reversal for impairment of trade receivables.

Quarterly revenue for the REIT stood at RM119.37 million, a 19.1% decline compared with last year's RM147.51 million, the filing showed.

IGB REIT's manager has also approved a distribution per unit (DPU) of 2.17 sen, to be paid on Feb 25 with an ex-date on Feb 14.

The DPU for the quarter was derived from 97.5% or RM77 million of IGB REIT's quarterly distributable income of RM79.6 million.

For FY21, IGB REIT posted an NPI of RM275.1 million, a decline of 13.1% from RM316.68 million while its revenue also shrank by 14.1% to RM399.53 million from RM465.24 million.

Correspondingly, the DPU for FY21 stood at 6.03 sen compared with 6.75 sen a year prior as it only had a distributable income of RM220.6 million for FY21, 15.11% lower than FY20's RM259.84 million.

The REIT's manager attributed the lacklustre financial performance to higher rental support provided to its tenants during the Covid-19 pandemic, as a result of Movement Control Order and/or the National Recovery Plan.

However, IGB REIT's manager said that the rising vaccination rate, relaxation of containment measures, economic reopening, and steady employment growth were setting the stage for strong consumer spending in the fourth quarter of 2021 as well as for 2022 and it expects overall private consumption to expand by 6%.

"However, there are downside risks, including the impact of the new Omicron-dominant Covid-19 infections, weakness in labour market recovery, inflationary pressure, and continuing global supply bottlenecks.

"The outlook for consumer spending looks promising, with tenants' retail sales as well as the shopping centre owners/operators [expected] to gain greater positivity, IGB REIT will stay resilient through the Covid-19 pandemic. It remains committed to bringing about long-term value for its stakeholders," its filing wrote on its outlook.

Meanwhile, IGB Commercial Real Estate Investment Trust's (IGBCR) posted an NPI of RM31.76 million for its 4QFY21 ended Dec 31, 2021 on the back of RM46.26 million revenue.

A DPU of 0.99 sen was declared for the quarter.

For its nine-month period ended Dec 31, 2021, IGBCR registered an NPI of RM36.6 million against a revenue of RM53.38 million while its DPU was at RM1.14.

No comparative figures are available for IGBCR as it has only been a public listed property trust since Sept 20 last year.

Writing on its outlook, IGBCR said that it remains committed to its tenant retention strategies, including delving deeper into understanding the changing needs and preferences of tenants, with wellness and safety as its focus despite new take-up of office space remains difficult amid heightened competition and demand lagging behind supply.

"Special attention is being placed on elevating the physical office experience, as space usage and rent remains competitive. However, rental support for eligible tenants would remain minimal and rental reversion is predicted to be flat," the filing revealed.

IGBCR also said that they have put in the efforts to maintain the physical conditions of the portfolio, including assurance of indoor air quality while embarking on intense marketing, supported by attractive, flexible rental packages to boost occupancies.

"As a result, office occupancies of the portfolio have remained relatively stable and as at Dec 31, 2021, the average occupancy rate of IGBCR's 10 buildings was 71.6%. IGBCR remains steadfast in catering to tenants' demand, while continuing to drive improvements in its office premises.

"Following economic recovery, IGBCR will work to seize the opportunities offered in the current window to secure better lease terms or improve occupancy rates in the first half of 2022," its filing wrote.

IGBCR's manager concluded that the prospect for its commercial real estate portfolio is set to cautiously bounce back in the near term despite the challenging yet volatile business landscape.

At market close, IGB REIT was down 0.65% or one sen to close at RM1.53, valuing it at RM5.46 billion, while IGBCR was unchanged at 61 sen, giving it a value of RM1.4 billion.