Hektar REIT bullish on strategies (5121)

CEO says acquiring neighbourhood malls will pay off
KUALA
LUMPUR: Hektar Real Estate Invesment Trust (REIT) is firmly confident
and bullish that its strategies in acquiring neighbourhood malls that
are not necessarily located in the Klang Valley will pay off for its
unitholders, especially in times of economic trouble.
REIT manager Hektar Asset Management Sdn Bhd's chairman and CEO Datuk Jaafar Abdul Hamid
said that despite being among smaller listed REIT entities in the
industry presently, it counted its strengths as being diversified and
defensive in times of economic uncertainties around the world.
“We
are too small to be compared with the bigger (retail) players. But, we
have our niche. Of course people will say, Hektar REIT is small,
compared with others which are bigger and more stable. But you have to
do your own analysis history shows that we pay quarterly dividends for
the last five years,” Jaafar told journalists after its EGM yesterday.
“Even
though we are small, we are well diversified. The big ones (REITs),
they are concentrated one big mall with big asset values. Imagine if
you have any incidents (happening),” its executive director and chief financial officer Zalila Mohd Toon said.
Hektar
REIT yesterday obtained the approval of its unitholders for the
proposed acquisition of two shopping malls in Kedah Landmark Central
Property (LCP) with a net lettable area of 280,000 sq ft in Kulim, and
Central Square Property (CSP) with a net lettable area of 300,000 sq ft
in Sungai Petani.
LCP opened in 2009 and its main anchor tenant
is Giant Hypermarket. It has a 77% occupancy rate which is expected to
rise to 99% once The Store commences its tenancy on Oct 15.
CSP was launched in December 1997 with The Store being its main anchor tenant with an occupancy rate of 99.5%.
These
purchases will be partly funded by a renounceable rights issuance of up
to 93 million net units in Hektar REIT, which have also been approved
by its unitholders.
The manager is allocating RM19mil to
refurbish the two malls which will be financed via internal funds and
bank borrowings and is expected to be spent in 2013.
LCP will be
bought for RM98mil and has an audited historical yields of 5.8% while
CSP will be purchased at RM83mil with an audited historical yield of
6.4%.
“These are based on audited numbers that have been
produced by the vendor. When we did our assessment when deciding
whether or not we should acquire it is on the basis that it will be 7%
at the point of entry. The minute Hektar REIT injects these two malls
into its portfolio, the starting point will be 7% onwards,” its senior
finance manager Raziff Suhairi Shaaban said.
“Post-acquisition
there may be a slight earnings per unit dilution in the short term but,
in terms of dividends per unit, we assure you that the dividends that
we will be paying post-acquisition will be maintained at least as per
2011. Unitholders dividends will be maintained or improved from this
year onwards,” Raziff said.
The acquisition signified its
expansion into the northern region of Malaysia and was in accordance
with its investment strategy of targeting prime neighbourhood malls as
they were more resilient during times of economic downturn,
capitalising on the economic growth and the vibrancy of the retail
market, a statement issued by the manager stated.