Sunway REIT’s 3Q earnings hit by MCO 2.0

by HARIZAH KAMEL / pic by TMR FILE

SUNWAY Real Estate Investment Trust’s (REIT) net profit for the third quarter ended March 31, 2021 (3Q21), declined 43.93% year-on-year (YoY) to RM36.82 million as the movement restriction measures to contain the Covid-19 pandemic hit business operations.

Quarterly revenue also fell 25.95% YoY to RM104.27 million, largely due to lower contribution from the REIT’s retail and hotel segments on the back of imposition of the Movement Control Order (MCO) 2.0.

The performance was partially cushioned by higher contribution from the office and services segments.

“Sunway REIT maintains a cautious outlook for the remainder of the year due to implementation of MCO 3.0 nationwide and uncertainties surrounding the business operating landscape in the coming months.

“The acceleration of mass vaccination rollout is crucial to containing the infection rate in order for the economy to recover,” Sunway REIT Management Sdn Bhd CEO Datuk Jeffrey Ng noted in a statement yesterday.

The group’s retail segment recorded gross revenue and net property income of RM53.7 million and RM23.9 million respectively, hindered by the scaled-back business operations caused by restrictions and standard operating procedures imposed during MCO 2.0.

The hotel segment’s revenue was RM14.4 million, predominantly boosted by guaranteed income received for Sunway Clio Property and Sunway Hotel Georgetown.

Sunway Resort Hotel is currently undergoing a transformative refurbishment to position Sunway REIT’s flagship hotel into a prestigious tourist and business destination in Sunway City Kuala Lumpur.

The financial performance was further exacerbated by restrictions on interstate, inter-district and inbound travel imposed during MCO 2.0.

The REIT’s office segment registered gross revenue of RM19.3 million for 3Q21, up 79.9% YoY or RM8.6 million due to new income contribution from The Pinnacle Sunway of RM9.1 million and largely stable average occupancy rate.

The services segment edged up to RM15.3 million boosted by annual rental reversion of Sunway Medical Centre and Sunway University and College campus.

Ng said the economic fallout from the pandemic has led to more properties being offered in the real estate market.

“In our opinion, this is an opportune time to actively pursue asset acquisition. Sunway REIT is in a favourable position, supported by healthy gearing level and comfortable debt headroom to capitalise yield-accretive acquisition and asset expansion opportunities to drive its future growth,” he added.