Pavilion REIT 4Q Income After Taxation Increased 304% To RM216.4 Million

Pavilion REIT’s income after taxation for the 4th quarter ended 31 December 2022 increased 304.0% from RM53.6 million to RM216.4 million.

In a filing to Bursa Malaysia today, Pavilion REIT announced total gross revenue of RM145.8 million for the fourth quarter ended 31 December 2022, an increase of RM21.5 million or 17.3% as compared to the same quarter in the preceding year of RM124.3 million. This increase is mainly attributed to higher rental billings, increase in revenue rent and income
from advertising.

Total property operating expenses was higher by RM7.3 million or 17.6% as compared to the same quarter of the preceding year mainly due to higher utility cost as the 10% rebate given by the government ended in December 2021 as well as imposition of tariff surcharge of 3.7 sen per kilowatt hour to the non-domestic sector. As a result of the change in minimum wage requirements, there was an increase in maintenance costs due to remobilizing of ad-hoc upkeep and adjustment of the contract sum for labor-intensive services.

These factors resulted in net property income increasing by RM14.2 million or 17.2% for the fourth quarter of 2022 as compared to the same quarter in 2021. A fair value gain of RM151.4 million arising from revaluation of its investment properties was recognised in the current quarter mainly due to an increase in Pavilion Kuala Lumpur mall’s market value from RM4.85 billion to RM5.00 billion. Borrowing costs increased from RM22.1 million to RM25.2 million due to increases in the overnight policy rate as 64.7% of its borrowings are based on a floating rate. The result of these factors was a net gain of RM162.8 million or 304%.

Total revenue for the financial year ended 31 December 2022 was RM569.7 million, higher by RM81.1 million or 16.6% as compared to the preceding year’s end. Income after taxation also increased by 217.6% or RM272.6 million to RM397.8 million resulting in annual distributable income of RM255.8 million or 8.37 sen per unit. A distribution of 4.29 sen per unit would be payable on 28 February 2023.

The Manager of Pavilion REIT expects retail sales to normalize as consumers in Malaysia continue to be cautious in their spending due to uncertainties in the domestic and global economy stemming from inflationary pressures, the rising cost of living and the projected slowdown in the international economy. Despite these challenges, it is expected that domestic demand will anchor the economy amid a steady recovery in the labour market as well as further strengthening of tourism-related sectors leading to an increase in corporate earnings.

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