PETALING JAYA: Retail property-focused Hektar Real Estate Investment Trust (Hektar-REIT) is expected to see higher revenue and distributional income from the entry of new tenants to several malls under its portfolio for the financial year ending Dec 31, 2025 (FY25).
“We expect the overall weighted average occupancy rate of Hektar malls to increase from 85.6% in the third quarter of financial year 2024 (3Q24) to 88.2% in 4Q24 and 91.1% in 1Q25 driven by the entry of new tenants,” AmInvestment Bank Research said.
It added that the REIT has completed the first phase of its asset enhancement initiatives (AEI) with replacement of lifts and escalators as well as new tenants secured for 4Q24 in Subang Parade.
The research house maintained a “buy” call on the stock but revised the target price slightly lower to 85 sen per unit from 86 sen to reflect the delayed start of a new anchor to one of Hektar-REIT’s six malls.
“We expect an improvement in the unit price from rise in occupancy rates of existing shopping malls with new tenants secured,” it said.
Hektar-REIT’s acquisition of its first ever education asset, Kolej Yayasan Saad, would start to contribute to gross revenue with a steady yearly rental reversion rate of 2.5% throughout the lease period of 30 years.
“With the second phase of the AEI underway for Subang Parade, new tenants secured recently would raise the mall’s occupancy rate to 85.1% in 4Q24 from 77.5% in 3Q24, while two mini anchor tenants expected to start operations in 1Q25 would raise the mall’s occupancy rate to 86.5%.
“We expect the rental from these new tenants to increase Hektar-REIT’s revenue in FY25,” it said.
As for Hektar-REIT’s mall property, Central Square in Sungai Petani in Kedah, the research house expects an uplift in gross revenue from 1Q25 from rental from two anchor tenants, which would occupy a combined net lettable area of up to 45,000 sq ft, raising the occupancy rate to 89.9% by 1Q25 from 75.4% in 3Q24.
“Expect improvements in the rental yield and occupancy rate for Segamat Central due to the ongoing reconfigurations of lower ground floor space, tenant remixing initiatives and a new anchor tenant entry,” it said.
Hektar-REIT’s reconfiguration strategy involves subdividing floor space from a large anchor tenant into smaller lots to boost rental yields with a higher rent per sq ft.
To create a more diverse tenant mix aligning to consumer preference, Hektar-REIT has plans to introduce more food and beverage outlets and lifestyle stores to Segamat Central, with a new anchor tenant to begin operations in 1Q25, bringing the occupancy rate to 81.4% from 72.4% in 3Q24.
