KUALA LUMPUR (April 18): KIP Real Estate Investment Trust (REIT) declared distribution income per unit of 1.51 sen, totalling RM7.63 million, after it announced a marginal 1.04% drop in net property income for its third quarter ended March 31, 2019 (3QFY19) to RM10.26 million
The slightly lower net property income was mainly attributed to lower rental fees and higher operating expenses.
In a filing with Bursa Malaysia, the retail REIT said its gross revenue came in flat at RM15.64 million in 3QFY19 from RM15.67 million, due to the decrease in rental per square feet of RM5.24 compared with RM5.43 a year ago despite the occupancy rate improving to 88.3% from 86.2% a year ago.
KIP REIT reported that the total comprehensive income attributable to unitholders was 16.7% lower at RM7.37 million in 3QFY19 against RM8.85 million in the preceding year's corresponding quarter.
The REIT explained that the drop was due to higher borrowing costs incurred on the back of higher bank borrowings to finance a solar photovoltaic (PV) system as well as the Kinta acquisition deposit. On top of that, the management fee increased from 0.3% of total asset value (TAV) in the corresponding quarter to 0.6% of TAV in the current quarter.
KIP REIT’s cumulative nine months for the financial year ended March 31, 2018 (9MFY19) net property income was down 0.52% to RM30.64 million versus RM30.8 million in the year earlier.
Revenue was marginally up 0.08% to RM46.86 million against RM46.65 million a year ago.
“I am proud to say that whilst the retail market remains challenging, the REIT was able to maintain its steady financial performance.
"I am confident that the Fund will continue to perform well. We will focus on the improvement of the overall occupancy rate and net income. In addition, we will continue to undertake asset enhancement initiatives to ensure stronger yield performance,” said Datuk Chew Lak Seong, managing director of KIP REIT Management Sdn Bhd, in a separate statement.
“We will continue to search for valuable assets with good yields as we aim to enlarge our asset size to RM2 billion within the next two years,” Chew added.
Nonetheless, Chew noted that after obtaining shareholders’ approval for the acquisition of Aeon Mall Kinta City in Ipoh, this asset will contribute a gross yield of 7.8% per annum to the REIT.
KIP REIT had announced that it wanted to acquire the AEON Mall Kinta City for RM208 million cash on Aug 30, 2018. The 21-year-old building has a total lettable area of 530,181 sq ft and has a valuation of RM220 million based on the valuation performed by C H Williams Talhar & Wong Sdn Bhd on Aug 17, 2018, and a net book value of RM253 million as at Dec 31, 2017.
KiP REIT’s unit price closed 0.5 sen or 0.57% lower at 87 sen today, valued it at RM439.61 million. Year-to-date, it has recovered about 16% from 75 sen.