Malaysia-based pure retail real estate investment trust Hektar REIT is looking to double its asset value from the current RM1.2 billion to RM2.4 billion by 2026 through the inorganic route, said Hektar Asset Management Sdn Bhd CEO, Datuk Hisham Othman.
He, however, declined to divulge further information on the retail asset but reiterated that the REIT’s strategy is to own geographically diverse malls that are yield accretive.
“This strategy has been proven well and the future malls that we acquire will most likely be situated outside the Klang Valley, as the Klang Valley is saturated with overbuilt malls or retail assets,” he said after the REIT’s AGM.
“We like malls that are market leaders in their locality, being the number one or only mall in town."
“We are tapping on the stable purchasing power in smaller underserved cities by bringing in new local and international brands or retailers to the area,” he added.
Hektar REIT considers retail properties with yields of 6% to 7% to be acceptable.
Apart from that, Hektar REIT takes into consideration the ownership percentage, land title status and tenure of the retail assets it looks to acquire.
In 2018, rental reversions throughout the Reit’s portfolio amounted to 5.4%, through 160 new and renewed tenancies on 40.9% of the total net lettable area.
As of December 2018, Hektar REIT’s portfolio maintained a high average occupancy rate of 92.1%, surpassing the average occupancy level of 85% for shopping centres in the Klang Valley.
Overall annual visitor traffic grew 9.2% to 32.1 million visits in 2018, driven by Central Square in Sungai Petani and Kulim Central, which have undergone refurbishment and asset enhancement initiatives (AEI) in 2015 and 2017, respectively.
Hektar REIT has allocated some RM30.5mil for Subang Parade’s AEIs, of which RM8mil is for the air conditioning and mechanical ventilation system, which resulted in a 34% average reduction in electricity consumption.
Going forward, Hektar REIT targets to reduce average energy consumption by 10% to 20% in its portfolio of malls by 2022.
At present, the REIT owns six shopping centres with two million sq ft of retail space, valued at a total RM1.2bil and catering to a market catchment of three million shoppers.
Net property income for the financial year ended Dec 31, 2018, rose 6.8% year-on-year to RM78.7mil, providing a dividend per unit yield of 8.1%.