Sunway REIT posts net property income of RM68.1 million in the 1Q

Sunway REIT has recorded a revenue of RM107.4 million and net property income (NPI) of RM68.1 million for the quarter (1Q2021). This was in comparison with revenue and NPI of RM155.4 million and RM119.1 million respectively in the corresponding quarter in the preceding year (1Q2020). 

The set of financial results was largely attributable to lower contribution from the Retail and Hotel segments, however, was partially mitigated by higher revenue from office, services, and industrial & other segments. 

Compared to the immediate preceding quarter ended 30 June 2020, Sunway REIT reported an improvement in revenue of 2.4 percent as retail tenants and hotel operators have progressively resumed business operations under the Recovery Movement Control Order (RMCO) commencing from June 10.

Despite higher revenue, NPI eased by 12.3 percent on the back of higher property operating expenses mainly due to the provision of doubtful debts for the retail segment, despite lower property management expenses from cost containment measures. 

In 1Q2021, retail malls in Sunway REIT’s asset portfolio had shown encouraging recovery in footfall and tenants’ sales to between 70 to 80 percent of pre-Covid-19 level during the RMCO period. 

The Retail segment registered a lower revenue of RM77.7 million in 1Q2021 compared to RM105.5 million in 1Q2020, largely due to an ongoing rental support programme which was provided on a case-to-case basis in supporting affected tenants during the RMCO. NPI eased correspondingly from RM75.3 million in 1Q2020 to RM44.2 million in 1Q2021. 

Meanwhile, the hotel segment recorded a lower revenue of RM2.8 million in 1Q2021 compared to RM23.7 million in 1Q2020, predominantly due to the closure of Sunway Resort Hotel to undertake phased refurbishment and loss of business arising from inbound travel restrictions, group and corporate events. 

Revenue for the hotel segment was supported by ongoing promotional campaigns to capture the domestic travelers market segment. NPI for 1Q2021 stood at RM1.2 million. The transformational refurbishment of Sunway Resort Hotel is set to create a new benchmark for business and leisure experiences in the urban destination of Sunway City as Asia’s leading integrated resort and a regional tourism hub. 

Revenue and NPI for the Office segment increased by 3.4 percent year-on-year (y-o-y) and 10.1 percent y-o-y respectively, supported by a steady average occupancy rate across all office properties in Sunway REIT’s asset portfolio. 

The Services segment recorded an increase of 2.8 percent y-o-y in revenue and NPI to RM14.9 million. Meanwhile, the industrial & others segment has contributed RM1.5 million to revenue and NPI. 

On October 12, Sunway REIT announced an interim income distribution of 0.90 sen per unit, for the period from July 1 to September 30 to the existing unitholders of Sunway REIT prior to the issuance of new units pursuant to the private placement exercise (Advance Distribution). The Advance Distribution was paid on November 10.  

The private placement exercise was completed on 28 October 2020 following the listing of 479.7 million new units of Sunway REIT (New Units) at an issue price of RM1.48 per unit, raising gross proceeds of RM710.0 million. 

Pursuant to the issuance of New Units, the total number of issued units in Sunway REIT has increased to 3,424.8 million units and Sunway REIT’s market capitalisation has expanded correspondingly from RM4.6 billion as of 30 September 2020 to RM5.2 billion based on the market closing price of RM1.52 per unit as at 20 November 2020. 

In addition, Sunway REIT completed the acquisition of The Pinnacle Sunway on 20 November 2020 with part of the proceeds from the private placement exercise.

Jeffrey Ng, Chief Executive Officer of Sunway REIT, commented, “We are encouraged by the recovery in the retail footfall during the RMCO period. That said, tenants’ sales have not fully recovered to pre-pandemic level and it is imperative to continue to support our tenants to survive through this difficult period.”

“The re-imposition of Conditional Movement Control Order (CMCO) in the Klang Valley and selective states in Malaysia amidst the recent resurgence of Covid-19 transmission is hindering the recovery process for the quarter ending Dec 31, particularly for the Retail and Hotel segments. These cyclical segments are more vulnerable to any tightening measures imposed in managing the containment of the pandemic,” he added.

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