Hektar REIT's 4Q NPI slips 19% on higher property operating expenses

• Despite an 11.66% rise in quarterly revenue to RM27.89 million from RM24.98 million previously, the REIT's NPI was slashed by property operating expenses surging 41.67% to RM17.85 million versus RM12.6 million.

KUALA LUMPUR (Feb 23): Hektar Real Estate Investment Trust (Hektar REIT)’s net property income (NPI) for the fourth quarter ended Dec 31, 2022 (4QFY2022) declined 18.87% to RM10.04 million from RM12.38 million a year earlier, dragged by higher property operating expenses.

Despite an 11.66% rise in quarterly revenue to RM27.89 million from RM24.98 million previously, the REIT's NPI was slashed by property operating expenses surging 41.67% to RM17.85 million versus RM12.6 million, according to Hektar REIT's bourse filing on Thursday (Feb 23).

It said the higher property operating expenses were due to higher mall upkeep as well as repair and maintenance expenses to cater for the improved domestic demands as economic activities normalised.

Revenue came in higher due to the retail sector’s recovery and 4QFY2021’s low base as higher rental support was provided to tenants during the period.

Hektar REIT had previously announced a final income distribution of 5.3 sen per unit for 4QFY2022, with its payment date to be announced later.

For the full year ended Dec 31, 2022 (FY2022), Hektar REIT’s NPI climbed 24.82% to RM58.69 million from RM47.02 million last year, thanks to the retail sector's continued recovery.

As for FY2021, higher rental support was provided to tenants due to businesses being hit hard by the Covid-19 pandemic and with the implementation of various movement control orders, it said in the filing.

The REIT’s full-year revenue increased 21.58% to RM117.45 million from RM96.6 million a year prior.

Touching on its outlook for FY2023, Hektar REIT said it remains cautious given the volatile economic landscape driven by hawkish monetary policy in response to inflationary pressure, uncertain consumer sentiment as well as lingering supply-chain and logistics issues stemming from geopolitical concerns.

“We will continue adopting prudent financial management, cost optimisation and enhancing our asset efficiencies to help cushion the impact,” the group said.

Hektar REIT units closed down 1.5 sen or 2.14% at 68.5 sen, giving the investment trust a market capitalisation of RM322.81 million.