The group’s cost containment measures include the reduction, cancellation and deferment of non-essential operational and capital spending

by SHAHEERA AZNAM SHAH/ pic by RAZAK GHAZALI

SUNWAY Real Estate Investment Trust (REIT) will be focusing on cash conservation, cost containment and capital management to weather the pandemic crisis which has been reflecting on the group’s financial performance.

Sunway REIT Management Sdn Bhd CEO Datuk Jeffrey Ng said the unprecedented crisis has led to a cascading effect on business confidence and investment levels among retailers, which could affect rental collection and tenancy renewals.

“The current state of affairs is unforeseen and unpredictable, while consumers are more likely to become price sensitive and budget-conscious with increased unemployment and uncertainty of the future.

“With international trade and travel still restricted in many parts of the world to contain the virus and prevent a second-wave resurgence, the hospitality sector is expected to see a slow recovery,” he said in a statement yesterday.

Ng said the group has implemented prudent cash conservation measures to ensure sufficient flexibility in handling its cashflow to comfortably meet ongoing obligations and commitment.

“We have incorporated proactive and preemptive measures including the variation of income distribution frequency from quarterly to semi-annual basis with the corresponding adjustment of income distribution payout to at least 90% of distributable income.

“We have also proposed a Distribution Reinvestment Scheme to provide additional flexibility to unitholders to receive future income distribution in cash, units or a combination of cash and units,” he said.

He added that the group is also managing its profit and loss through cost containment, including the reduction, cancellation and deferment of non-essential operational and capital spending.

“Where possible, procurement contracts have been renegotiated to achieve better terms and outcomes, further lowering our existing outflows for the best interests of the REIT and our unitholders.

“We will also continue to work closely with our lessees, operators and property managers to achieve operational cost savings and leaner cost structure, as well as enhanced business efficiency and synergies,” he said.

The group is also focusing on straightening its balance sheet through capital management to leave adequate headroom to fund for its future acquisitions.

“We have recently proposed a private placement exercise to finance the proposed acquisition of The Pinnacle Sunway and the ongoing expansion of Sunway Carnival Mall, both of which are expected to contribute positively to earnings and distribution in the coming years,” he said.

For its third quarter ended March 2020, Sunway REIT’s net prodigy income dropped 9% to RM103.51 million from RM113.77 million last year attributable to a decline in revenue.

Its revenue declined 7.1% to RM140.8 million from RM151.5 million following the Covid-19 impact on the group’s retail and hotel segments.