Higher rental income lifts IGB REIT, IGB Commercial REIT’s 3Q net property income

• The distribution per unit (DPU) rose to 2.68 sen — payable Nov 28 this year — up from 2.60 sen in the same period last year.

KUALA LUMPUR (Oct 29): Higher rental income provided a boost to IGB Real Estate Investment Trust (REIT) (KL:IGBREIT) and IGB Commercial REIT’s (KL:IGBCR) net property income (NPI) for the third quarter ended Sept 30, 2024 (3QFY2024).

IGB REIT’s NPI for 3QFY2024 rose 2.53% to RM114.11 million from RM111.29 million in the same period last year. Revenue increased 3.73% to RM155.27 million, compared to RM149.68 million in 3QFY2023, according to its bourse filing.

Its distributable income for 3QFY2024 amounted to RM99.4 million, derived from a profit of RM92.7 million plus non-cash adjustments mainly from a net fair value change of RM13.1 million, minus a management fee of RM6.4 million, payable in units. This compares to RM95.76 million in 3QFY2023.

The distribution per unit (DPU) rose to 2.68 sen — payable Nov 28 this year — up from 2.60 sen in the same period last year. This brings total DPU for the nine months ended Sept 30, 2024 (9MFY2024) to 8.20 sen, compared to 7.77 sen in 9MFY2023.

In 9MFY2024, IGB REIT’s NPI increased by 4.57% to RM347.83 million from RM332.64 million a year earlier, while revenue grew 4.92% to RM467.8 million from RM445.84 million.

Meanwhile, IGB Commercial REIT reported a 7.05% rise in NPI for 3QFY2024 to RM33.66 million compared to RM31.44 million in 3QFY2023, with revenue up 8.77% to RM57.55 million from RM52.91 million.

For 9MFY2024, IGB Commercial REIT recorded an NPI of RM102.34 million, while revenue totalled RM170.8 million.

IGB Commercial REIT declared a distribution per unit (DPU) of 0.94 sen for the quarter under review —to be paid Nov 28 — bringing total DPU for 9MFY2024 to 2.87 sen, up from 1.74 sen previously.

Looking ahead, IGB REIT acknowledged that although rising service tax rates and fluctuating diesel prices may increase costs, the Employees Provident Fund’s flexible account and Rahmah cash assistance could still create a more favourable environment for sustainable growth in retail spending.

“The manager remains cautious on the retail sales’ growth, which would affect tenants’ performances at shopping malls and also, the financial performance of IGB REIT. Nonetheless, IGB REIT remains committed to bringing about long-term value to its stakeholders,” it said.

IGB Commercial REIT, on the other hand, said it is cautiously optimistic about the office sector’s future prospects, supported by positive fundamentals, especially within Greater Kuala Lumpur. This outlook is driven by tenants rightsizing to accommodate hybrid work models, an emphasis on high-quality buildings amid the "flight to quality," and a prioritisation of Environmental, Social and Governance (ESG) considerations.

“In view of the above, IGB Commercial REIT is adopting proactive strategies to maintain competitiveness. We are prioritising the alignment of our business with the values and expectations of the tenants we serve, including upgrading and enhancing our building facilities to achieve operational efficiencies and performance.

“Our focus on tenant value and portfolio enhancement should position us well to capitalise on emerging opportunities and delivering long-term value for all stakeholders. This focus also enables us to create a sustainable positive impact that not only boosts tenant retention, yet enhances engagement and satisfaction through our corporate social responsibility programs,” IGB Commercial REIT added.

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