KIP Real Estate Investment Trust (“KIP REIT” or “Fund”), the first hybrid community-centric retail REIT listed on Bursa Malaysia today announced its third quarter results for the three-months period ended 31 March 2019 (“Q3FY2019”).
KIP REIT enjoyed higher occupancy rate in Q3FY2019 where it rose by over 2 percentage points to 88.3% in contrast to Q3FY2018. The completion of its solar photovoltaic system in December 2018 meant KIP REIT incurred lower utility expenses of RM2.2 million in the quarter under review (Q3FY2018: RM2.6 million).
For this quarter under review, KIP REIT also exceeded the Fund’s distribution policy of 90% by stating the Fund will be distributing 98% of its quarterly distributable income, amounting to RM7.6 million. This translates to a distribution per unit (“DPU”) of 1.51 sen. On an annualised basis, this gives a yield of 7% based on the latest closing price of 87 sen.
Revenue for the quarter was RM15.6 million whilst revenue for the corresponding quarter in the previous financial year was RM15.7 million. Profit after tax (“PAT”) declined by 16.7% to RM7.4 million, compared to the preceding financial year’s corresponding quarter. KIP REIT incurred increased in bank borrowings to finance the said solar system and also to finance the 3% deposit with regards to the acquisition of Aeon Mall Kinta City. KIP REIT’s borrowing cost increased to RM1.4 million in Q3FY2019 from Q3FY2018’s RM1 million.
For your information, the Fund achieved a revenue of RM46.9 million and PAT of RM22.5 million with a total declared DPU of 4.51 sen for the first 3 quarters of FY2019.
Commenting on the financial results, Dato’ Chew Lak Seong, Managing Director of KIP REIT Management Sdn Bhd (the Manager of KIP REIT) said, “I am proud to say that whilst the retail market remains challenging, the Fund was able to maintain its steady financial performance. I am confident that the Fund will continue to perform well. We will focus on the improvement of the overall occupancy rate and net income. In additional, we will continue to undertake asset enhancement initiatives to ensure stronger yield performance.
I am also pleased to announce that our unitholders had approved the acquisition of Aeon Mall Kinta City in Ipoh, which will contribute a gross yield of 7.8% per annum to KIP REIT. We are aiming to complete the acquisition by July 2019. While we explore the possible injection of our KIP Mall Kota Warisan into the Fund, we will continue to search for valuable assets with good yields as we aim to enlarge our asset size to RM2 billion within the next two years.”