Hektar REIT posts asset revaluation deficit of 4%

Subang Parade is the first shopping mall in Subang Jaya.

KUALA LUMPUR: Hektar Real Estate Investment Trust (Hektar REIT), which carried out a revaluation exercise on its five shopping malls that include Subang Parade (Selangor) and Mahkota Parade (Malacca), found a 4% drop in the properties’ market value against the unaudited net book value of RM1.121bil as at Sept 30.

Hektar Asset Management Sdn Bhd, which manages the retail-focused REIT, told Bursa Malaysia on Friday that it undertook a revaluation of Subang Parade, Mahkota Parade, Wetex Parade (Johor), Central Square (Kedah) and Landmark Central (Kedah) by independent professional valuers, Henry Butcher.

Based on the latest market valuation, the five properties are worth RM1.076bil, a deficit of RM44.98mil over the Sept 30 unaudited net book value.

“Based on the unaudited results as at Sept 30, 2015, the net asset value per unit of RM1.5568 will drop to RM1.445 upon incorporation of the revaluation deficit of RM45mil or equivalent to 11.23 sen per unit,” it said.

The value of Subang Parade, the most expensive property in Hektar REIT’s portfolio, fell 0.4% to RM419.7mil while Mahkota Parade’s value dropped by 10.6% to RM316mil.

For Subang Parade, Hektar Asset attributed the lower value to the general softening of the retail market arising from the current poor economic condition.

Mahkota Parade also suffered the same fate, but Hektar Asset said there was also increasingly stiff competition from the surrounding area which led to rental rate compression, resulting in lower market value.

Based on Hektar REIT’s 2014 annual report, Mahkota Parade had a higher visitor traffic than Subang Parade, at 10 million visits last year compared to Subang Parade’s 9.5 million.

Hektar REIT’s cornerstone investor is Frasers Centrepoint Trust (31.17% stake, according to the annual report), part of the Singapore-based Fraser & Neave group.

Hektar REIT units closed unchanged on Friday at RM1.53.