PETALING JAYA: UOA Real Estate Investment Trust’s (UOA-REIT) distributional income for the fourth quarter ending Dec 31, 2024 (4Q24) is expected to increase significantly, driven by an improvement in occupancy rate of its Parcel B - Menara UOA Bangsar (MUB).
According to AmInvestment Research, the REIT’s distributional income is expected to improve to RM12mil, a 14.3% increase from the previous quarter figure of RM10.5mil. This is to be supported by the slight increase in gross rental income and lower property expenses.
Consequently, this is expected to lead to a UOA-REIT’s FY24 distributional income of RM43mil.
The occupancy rate for MUB is anticipated to rise above 60% from the previous 58% in 3Q24.
The research house cited that about seven out of eight floors of MUB, which were unoccupied in earlier quarters of FY24 due to the departure of an anchor tenant, have been filled. The replacements of the anchor tenant will take up 85% of the floor space.
Another three floors of MUB was occupied by a key tenant that had departed in 3Q24, have yet to be filled.
“Nonetheless, UOA-REIT has prospects to lease out the vacant floor spaces,” AmInvestment Research stated in a recent report on the REIT.
As for property operating expenses, it noted expenses are likely to trend lower in 4Q24 on the back of completion of the refurbishment and upgrading works at MUB and Wisma UOA Damansara II.
Contributions to sinking funds for assets, which saw an increase in property operating expenses during the earlier quarters, are not expected to recur moving forward. This was mainly due to the completion of the chiller plant replacement at MUB.
Looking ahead, the research house expects UOA-REIT to optimise the chiller plants and not carry out full replacements for UOA Damansara I and II. In FY25, refurbishment works are expected to be carried out for UOA Centre and Wisma UOA II.
AmInvestment Research maintained a “hold” call on UOA-REIT with an unchanged target price of RM1.06 per unit.
