Sentral REIT profit slips 1.6% in 1Q22

by ASILA JALIL / Pic Source:

SENTRAL REIT Management Sdn Bhd expects prospects for its Klang Valley office and retail markets to remain challenging with the ongoing uncertainties as a result of the pandemic. 

In a filing to Bursa Malaysia today, the group’s net profit slipped 1.6% year-on-year (YoY) in the first quarter ended March 31, 2022 (1Q22), to RM20.36 million from RM20.7 million in the same period last year due to lower realised revenue net of lower property expenses and finance cost.

Revenue for the quarter also dropped 5.5% YoY to RM38.76 million from RM41.02 million in 1Q21, dragged by lower revenue generated from Wisma Technip, Menara Shell and Quill Building 3-BMW (picture).

Property operating expenses for 1Q22 were RM8.3 million, down by 14.2% YoY due to lower operating expenses incurred for some of the properties under the portfolio.

The group’s 28% of the total committed net lettable area, or approximately 511,000 sq ft, are due for renewal. 

Approximately 5% of 26,000 sq ft of these leases are due in 1Q22, of which 56% have been renewed. 

The group noted negotiations are in progress for the renewals due in 2Q22 and 3Q22. 

Sentral REIT Management added that it will continue to focus on asset management and leasing strategies that are centred on cost optimisation and tenant retention to overcome the challenging operating environment for its Klang Valley office and retail markets.

Sentral REIT Management chairman Tan Sri Saw Choo Boon said the gradual move to the endemic phase is expected to augur well for the Klang Valley office market.

“While we may still experience some fluctuation in earnings, we remain optimistic that our operation will be able to weather these market uncertainties over time. We will continue to focus on tenant retention to maintain a stable occupancy and healthy weighted average lease expiry for our asset portfolio,” he said. 

Sentral REIT Management CEO Derek Teh said the company had successfully refinanced its debt worth RM130 million which was due in March. 

As part of Sentral REIT Management’s proactive capital management initiative to take advantage of the current interest rate environment, it had also initiated early refinancing of Sentral REIT Management’s RM77 million term loan which is due in September 2023.

“The completion of the above refinancing exercises has extended our debt average term to maturity from 3.16 years to 4.05 years. This addresses all of the company’s refinancing needs until 2025,” he added.