Sentral REIT (SENTRAL) registered a quarter one 2023 core net profit of RM17.7 million, which was 24% of Maybank Investment Bank Bhd (MIBB) and consensus’ financial year 2023 estimate. Revenue was down 4% year-on-year mainly due to vacancies at Wisma Technip and QB2.
Earnings were also dragged by higher financing costs and utility expenses. Quarter-on-quarter, net property income (NPI) rose 5.1% from step-up rental in Menara Shell and Lotus Building Penang, and a new tenant in Platinum Sentral, said MIBB in a recent report.
Portfolio occupancy rate remained stable quarter-on-quarter at 77%. This was offset by higher financing cost and utility expenses, and the absence of income tax credit.
“Our financial year 2023-2025 estimated net profit forecasts are lowered by -2.2%/-2.2%/-2.1% respectively as we adjust for higher financing costs to 4.5% from 4.3%,” said MIBB.
SENTRAL has successfully renewed 42% of its leases due for renewal in quarter one 2023, with a 99% renewal rate. Management is fairly confident on the renewal of the remaining tenancies for financial year 2023, mainly at Platinum Sentral and Menara Shell. Meanwhile, the next refinancing is only due in financial year 2025.
SENTRAL’s strategies remain focused on improving occupancy and securing new tenants for its vacant properties. Management targets to secure some tenants at Wisma Technip and QB2 by this year’s end.
“For its overall portfolio, we understand that SENTRAL is not dismissing opportunistic divestment of its vacant properties and it continues to explore yield accretive acquisition opportunities,” said MIBB.
