Pavilion REIT 4Q net property income rises 21% y-o-y on lower operating expenses

KUALA LUMPUR (Jan 28): Pavilion Real Estate Investment Trust (REIT) saw its net property income (NPI) for the fourth quarter ended Dec 31, 2021 (4QFY21) rise 20.78% to RM82.69 million from RM68.46 million a year ago on lower operating expenses.

In contrast, its quarterly revenue slipped 4.98% to RM124.28 million from RM130.79 million on a year-on-year (y-o-y) basis mainly due to lower occupancy rates because of non-renewal of expired tenancies and some tenants deferring their rent commencement dates.

The REIT also declared a final income distribution of 2.58 sen per unit for FY21, to be paid on Feb 28, 2022.

"Total property operating expenses were lower by RM20.7 million or 33% compared to 4QFY20. This was mainly due to utility savings and lower rent rebates given to tenants, offset by higher marketing expenses incurred during the period for festive seasons set-up and gift campaigns.

"Income before taxation for the current quarter under review was higher by RM83.8 million or 277% compared to 4QFY20. Excluding the fair value loss of investment properties, income before taxation for [the] current quarter increased by RM14.2 million or 35% compared to 4QFY20," said the REIT in its filing with Bursa Malaysia.

Pavilion REIT recognised a fair value loss of RM627,000 arising from the valuation of investment properties as at Dec 31, 2021 versus RM70.32 million previously.

Meanwhile, the manager's management fee increased to RM7.25 million from RM6.55 million on higher net property income. Borrowing cost declined to RM22.09 million from RM22.76 million on lower average interest rate for borrowings.

For the full FY21, its NPI was up by 1.33% to RM236.62 million from RM233.52 million. FY21 revenue decreased by 4.24% to RM488.59 million from RM510.22 million.

In a separate statement, Pavilion REIT's chief executive officer Datuk Philip Ho said the group is cautiously optimistic that the recovery and growth of the retail industry are sustainable, following the reopening of the economy, high vaccination coverage and ongoing booster roll-outs.

"Pavilion REIT is determined to remain resilient as the world transits from pandemic to endemic phase and is committed to driving performance and creating long-term value to its stakeholders.

"Pavilion REIT will continue to improve performance and support its tenants by sustaining healthy occupancy levels through proactive lease management, leveraging on digital and media presence to engage and draw visitors to its malls. DA MEN Mall will continue to drive activities to engage college-age and young families to position DA MEN as a holistic community-friendly mall," he added.

Pavilion REIT shares closed unchanged at RM1.25, with a market capitalisation of RM3.81 billion.

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