Hektar REIT headstrong on expansion

By IZZAT RATNA / Pic By ISMAIL CHE RUS

HEKTAR Real Estate Investment Trust (REIT) remains focused on the retail business despite the current soft sentiment in the commercial sector, supported by about RM2.4 billion asset value growth aimed by 2026.

Hektar Asset Management Sdn Bhd — the manager of Hektar REIT — ED and CEO Datuk Hisham Othman (picture) said the company is constantly on the lookout to acquire new assets and grow its portfolio size for malls that meet the REIT’s criteria.

“There are quite a few malls that have actually offered themselves, however, not all of them are suitable for investors like us and unitholders,” he told reporters at a press conference after Hektar REIT’s AGM in Kuala Lumpur yesterday.

“We do need to be careful and to be very thorough in our evaluation of these acquisition targets,” he said.

According to Hisham, before any such acquisitions can take place, all future asset injections must be yield accretive for the REIT’s portfolio, as well as to the unitholders in the forms of net property income and dividend.

The REIT is expected to acquire at least four assets over the eight-year period, doubling its assets value from the present RM1.2 billion as at Dec 31, 2017, following last year’s acquisition of Segamat Central, bringing its total net lettable area (NLA) to two million sq ft.

Hisham said it is a known fact that the retail segment is challenging with the oversupply of malls, primarily in the central region.

“One thing we need to remember is that retail gives you tremendous flexibility in altering the tenancy mix to suit the times and changing needs of customers.

“For instance, if a mall only used to have about 15% of food and beverages (F&B) out of the total NLA with more fashion outlets, the F&B component can now be increased to cater to consumers’ current spending habits for more F&B than fashion items,” he added.

Hektar REIT ED and chief corporate off icer Zarina Halim said with the RM2.4 billion projection to double the total asset value by 2026, the REIT is looking at about an average of RM300 million to RM400 million worth of malls year-on-year.

“It’s actually quite reasonable, given the timeframe taken to do the whole acquisition, but of course, it is subject to whether or not we are able to find the right mall,” she said.

As such, Hektar REIT has no immediate diversification plans as the REIT remains optimistic on the retail sector’s prospects moving forward.