Sunway REIT posts higher 3Q gross revenue, NPI, to pay DPU of 2.13 sen

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KUALA LUMPUR (Apr 29): Sunway Real Estate Investment Trust (Sunway REIT) posted a higher higher gross revenue of RM110.7 million and net property income (NPI) of RM83.2 million for the third financial quarter ended March 31, 2015 (3QFY15), up 2.4% and 3.2% respectively from the year-ago period, contributed by the retail segment.

In a statement this evening, Sunway REIT (fundamental: 1; valuation: 0.15) said the retail segment continued to drive growth for the trust’s asset portfolio, despite increasingly challenging operating environment.
 
“The performance was however affected by lower contributions from the hotel and office segment,” it said.
 
It also proposed a distribution per unit (DPU) of 2.13 sen for 3QFY15, bringing the cumulative DPU to 6.68 sen, representing an increase of 5.5% as compared with the year-ago period.
 
This translated into annualised distribution yield of 5.7%, based on market closing price of RM1.57 as at March 31.
 
Sunway REIT Management Sdn Bhd's chief executive officer Datuk Jeffrey Ng said the trust has remained resilient, despite an increasingly challenging operating environment.

“Our tenancy mix in the malls comprise more non-discretionary offerings where demand is less elastic, should help to mitigate the impact of weaker consumer sentiment.
 
“It is the survival of the fittest to weather through these sub-sector property cycles. The competitive edge and key differentiating factors lie in the experience and skills of the asset managers and strong rapport with tenants over the years,” he said in the statement.
 
For the nine months ended March 31, 2015 (9MFY15), Sunway REIT posted a 5.9% increase in NPI to RM256.4 million, from RM242.2 million; and a 6.3% increase in gross revenue of RM338.5 million, from RM318.6 million a year ago — on a “solid” performance from the retail segment.
 
“The strong performance of Sunway Pyramid Shopping Mall and Sunway Carnival Shopping Mall, being the two key assets, is mainly attributable to higher average net rental rates, higher average occupancy rates and increase in service and promotion charges with effect from June 2014,” said Sunway REIT.
 
For 9MFY15, the hotel segment recorded a decline in gross revenue and NPI by 5.3% and 3.9% respectively from the year-ago period, on the back of lower performance across all the hotels; while the office segment recorded a decline in gross revenue by 9.3% year-on-year, due to lower average occupancy rates at Sunway Tower and Sunway Putra Tower.
 
On prospects, Ng said a moderate DPU growth was expected for FY15.
 
“The reopening of Sunway Putra Mall in May 2015 and new income stream following the completion of acquisition of Sunway Hotel Georgetown on 28 January 2015 and Wisma Sunway on 23 March 2015, will cushion the lower performance of the office segment,” he said.
 
Sunway REIT shares closed four sen lower at RM1.66 today, with a market capitalisation of RM4.96 billion.

(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.)