KIP REIT’s NPI down 5.8% in 4Q, declares 2.1 sen DPU

by S BIRRUNTHA / pic source:

KIP REIT Management Sdn Bhd’s net property income (NPI) in the fourth quarter ended June 30, 2022 (4Q22), declined 5.8% to RM14.2 million from RM15.1 million reported a year ago, dragged by higher utilities and other property expenses with full force operating during the quarter.

In a Bursa Malaysia filing yesterday, the real estate investment trust said its revenue was down 0.9% to RM19.22 million compared to RM19.4 million, mainly due to KIP Mall Bangi’s (picture) lower revenue recorded upon anchor tenant lot vacated since end of February 2022 in preparation for the new anchor tenant onboarding in July 2022.

However, the group said it was cushioned by lower rental rebate amortisation and higher promotional area income with further relaxation of the standard operating procedures.

KIP REIT Management has proposed a final income distribution of RM10.6 million or 2.1 sen per unit, which includes a non-taxable portion of approximately 0.11 sen per unit derived from capital allowances and tax-exempt income which are not subject to tax.

For the full financial year ended June 30, 2022 (FY22), the group’s NPI declined marginally by 0.2% to RM56.75 million from RM56.66 million, while revenue dropped 0.7% to RM73.7 million from RM74.25 million a year earlier.

KIP REIT Management ED Datuk Eric Ong said the group has yet again reported a satisfactory set of financial results and it will continue to remain focused as it continues to pursue high quality accretive acquisitions to support its sustainable distribution per unit (DPU) pay-out to its unitholders.

He added that KIP REIT Management has recently inked conditional sale and purchase agreements to acquire three industrial properties as its maiden acquisitions in the subsector.  

“We believe that these acquisitions will provide value to the unitholders of KIP REIT Management as we diversify our portfolio to include industrial assets.  

“We are also anticipating a stable and sustainable income stream through the lease agreements of these three industrial properties for a period of 15 years.

“We will nonetheless continue to focus our core strengths on the management of our existing retail assets in KIP REIT Management’s portfolio,” he said in a separate statement yesterday.

Ong noted that despite the uncertainties in the global economy, the group remains cautiously optimistic and it will strive to work towards a sustainable recovery by taking proactive measures to sustain its business performances as the group moves ahead to a better FY23.

Earlier this month, KIP REIT Management had announced that conditional sale and purchase agreements were entered into between the Trustee of KIP REIT Management and Hextar Chemicals Sdn Bhd, Hextar Industrial Chemicals Sdn Bhd and Teju Logistics Sdn Bhd (collectively referred to as Hextar Group of Companies) for the sale and acquisition of three industrial properties located in Pulau Indah, Selangor, for an aggregate purchase price of RM78.7 million.

Upon completion of the acquisitions, these properties will be leased to Hextar Group for a period of 15 years.

During the financial period under review, the KIP REIT Management’s portfolio consists of seven retail malls as investment properties, of which three are in the southern region, three are in the central region and one in the northern region.

Shares of KIP REIT Management ended unchanged at 90 sen on Thursday, giving it a market capitalisation of RM457.3 million.