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Author: SGX   |   Latest post: Tue, 30 May 2023, 8:48 AM


REIT Watch - S-Reits With Malaysia Assets Record Stronger Operating Results

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S-Reits with exposure to Malaysia properties

Malaysia’s economy recorded stronger GDP growth of 8.9 per cent year on year (yoy) in Q2 2022, following its 5.0 per cent growth in Q1 2022 driven by stronger domestic demand, normalising of economic activity and the reopening of its international borders.

Singapore lists 6 S-Reits with exposure to Malaysia assets – Ascott Residence Trust, Frasers Hospitality Trust, Keppel DC Reit, Mapletree Logistics Trust, ParkwayLife Reit, and Starhill Global Reit. In addition to these 6, CapitaLand Integrated Commercial Trust holds an approximate 10.9 per cent stake in Malaysia-listed Sentral Reit (as at Dec 31, 2021).

Starhill Global Reit owns and manages 2 retail properties in its Malaysia portfolio – The Starhill and Lot 10, contributing 14.5 per cent of its total portfolio in terms of asset value (as at Jun 30, 2022). The Reit’s net property income (NPI) for H2 FY21/22 grew 7.6 per cent yoy to S$75.1 million largely due to the cessation of rental rebates in Malaysia following the completion of asset enhancement works at The Starhill, as well as lower expenses for the group. NPI for its Malaysia properties rose 70.1 per cent yoy in H2 FY21/22, bringing its overall FY21/FY22 growth for the segment to 43.8 per cent.

Asset enhancement works for The Starhill was completed in December 2021 and the mall attracted new tenants like The Chamber’s flagship store which has the widest liquor collection in the country, Eslite Spectrum a renowned Taiwanese bookstore with the first flagship store in South-east Asia opening in end 2022, and other luxury flagship stores including Tom Ford, Roberto Coin, Paul & Shark, and Balmain. The Reit’s Lot 10 continued to attract new tenants including Genki Sushi, 32 Parfait and The Soybean Factory.

According to Retail Group Malaysia (RGM), Malaysia retail sales rose 62.5 per cent yoy to new record levels in Q2 2022, following an 18.3 per cent yoy growth seen in Q1 2022. Growth was largely contributed by the Hari Raya festival and the relaxation of Covid-19 measures, which saw all retail sub-sectors achieve positive growth rates in Q2 2022, surpassing market expectations. Retail associations, Malaysia Retailers Association and Malaysia Retail Chain Association, are expecting an average growth rate of 61.7 per cent in retail sales for Q3 2022.

Frasers Hospitality Trust has The Westin Kuala Lumpur (TWKL) in its Malaysia portfolio, contributing 5.0 per cent in total gross revenue (as at Mar 31, 2022). In its latest business updates for Q3 FY22, TWKL recorded a strong rebound in occupancy to 36.0 per cent from both corporate and leisure demand, and revenue per available room almost doubling yoy in 9MFY22 due to improved average daily rate and occupancy.

Mapletree Logistics Trust (MLT) has 4.9 per cent of its assets under management in 16 logistics properties in Malaysia (as at Jun 30, 2022). MLT reported 13.2 per cent yoy growth in NPI and 17.2 per cent yoy growth in amount distributable to unitholders. Distribution per unit (DPU) to unitholders rose 5.0 per cent to 2.268 Singapore cents, citing steady growth in operating results underpinned by stable occupancy and contributions from an enlarged portfolio.

Active asset enhancement to unlock value is a key management strategy and MLT is exploring the potential amalgamation of Subang 3 and 4 in Malaysia with the 2 land parcels acquired recently. Redevelopment costs are expected to be around S$173 million with a project completion target in 2027. 

REIT Watch is a weekly column on The Business Times, read the original version

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