MQREIT to extend rental support

During this period, proactive lease management, tenant retention and maintenance of a strong balance sheet remain our top priorities, says MQM CEO


MRCB-QUILL Real Estate Investment Trust (MQREIT) will extend assistance via rental support to its retail tenants who have been badly affected by Malaysia’s Movement Control Order, which came into force on March 18, 2020.

Despite the significant market uncertainties posed by the Covid-19 pandemic, MRCB Quill Management Sdn Bhd (MQM) — the manager of MQREIT — will proactively manage the REIT’s portfolio to maintain a sustainable income, its chairman Saw Choo Boon said in a statement yesterday.

“Amid the market uncertainties, MQREIT will remain vigilant on managing cashflow and exercise financial discipline to continue delivering value to its unitholders,” MQM CEO Yong Su Lin added.

“During this period, proactive lease management, tenant retention and maintenance of a strong balance sheet remain our top priorities.”

MQREIT’s net profit rose 2% to RM19.79 million in the first quarter ended March 31, 2020 (1Q20), from RM19.41 million last year, attributable to higher revenue generated from selected properties and lower finance cost, administration expenses, and trustee’s and manager’s fees.

Net property income climbed 1.3% to RM32.8 million from RM32.38 million a year earlier.

Quarterly revenue was 1.2% higher at RM42.22 million versus RM41.72 million last year, mainly due to higher revenue generated from Menara Shell, Wisma TechnipFMC and Tesco building in Jelutong, Penang.

MQREIT also manages Platinum Sentral, Quill Buildings 1 to 5 and part of Plaza Mont Kiara.

Yong said the trust had an average occupancy rate of 90.5% and a weighted average lease expiry of 4.65 years as at end-March 2020.

In terms of lease renewal, it has approximately 370,000 sq ft (19% of its total leased net lettable area) due for renewal in 2020, with the bulk of these leases due in 4Q20.

Ninety-three percent of the leases due in 1Q20 were renewed and early negotiations have commenced for the bulk of the leases due in 4Q20.

“The Klang Valley office market is expected to remain challenging. We will continue to focus on asset management and leasing strategies that are centred on tenant retention to overcome the challenging operating environment,” MQREIT said in its exchange filing.

The REIT’s gearing ratio stood at 38.3% as at end-March this year.

Its RM335 million borrowings due on March 30, 2020, were successfully refinanced for another five years, increasing its debt average term to maturity to 3.32 years as at March 31.

Following the refinancing, about 54% of the REIT’s total borrowings are on floating interest rate.

“While we expect the low-interest-rate environment to persist, MQREIT will consider to swap some of its floating interest rate exposure to fixed-rate at an appropriate time, to cushion it from any potential rise in interest rates in a volatile market environment,” Yong stated.