KUALA LUMPUR: MRCB-Quill real estate investment trust’s (MQREIT) net income rose 76.1% to RM15.7mil for the third quarter (3Q) ended Sept 30, 2015, from RM8.93mil a year ago.
The net income growth was mainly due to the recognition of the income contribution from Platinum Sentral in Q3, gain on sale of Quill Building 10 – Section 13, and higher net property income.
MRCB Quill Management Sdn Bhd, the manager of MQREIT, said on Thursday, in Q3 MQREIT’s realised earnings per unit (EPU) rose 3.9% to 2.38 sen from 2.29 sen a year ago.
“Reflecting on the recent domestic uncertainties affecting the economic growth, business and consumer sentiment, we are pleased that MQREIT has achieved stable performance for 3Q2015 with an EPU of 2.38 sen,” MRCB Quill CEO Yong Su-Lin said.
The manager noted that the percentage increase in the EPU was lower than the percentage increase in the realise net income due to the increase in MQREIT’s weighted average units in circulation as a result of the issuance of 65 million placement units and 206.25 million considerations units pursuant to the placement exercise and acquisition of Platinum Sentral, respectively on March 30, 2015.
Yong said despite the challenging office market environment with lacklustre absorption rates, MQREIT had achieved a higher portfolio occupancy rate of 97% for the quarter versus the previous quarter of 93%, and vis-à-vis the average market occupancy of the Kuala Lumpur city and Kuala Lumpur fringe of 84.8% and 87.9%.
“This was on the back of the completion of the disposal of a vacant building known as Quill Building 10 – Section 13 on 4 September 2015. Additionally, our existing major tenants namely BMW Malaysia Sdn Bhd and BMW Asia Technology Centre Sdn Bhd taking up additional office space in Quill Building 3 – BWM and new leases secured in Plaza Mont Kiara and Platinum Sentral during the quarter in review had also contributed to the higher portfolio occupancy rate,” she pointed out.
“In terms of renewal of existing leases, our active leasing strategy has enabled us to successfully renew 93% of leases due up to 3Q 2015 and we are now on target to finalise the renewal of the leases that are due in the last quarter of 2015,” she added.
According to Yong, amid the current trying times, the resilient performance of MQREIT would be underpinned by the group’s proactive approach towards asset and portfolio management, and cost management.
“In cognisance that the office market outlook will remain challenging, strong tenant management will be an essential aspect of our leasing strategy to ensure that higher tenant retention rates are achieved coupled with locking in longer lease renewals to achieve income stability for the Fund.”
“Additionally, with the current operating landscape becoming increasingly challenging, our priority will also be on managing MQREIT’s operational cost effectively in addition to value adding through active asset management initiatives,” Yong explained.
Meanwhile, the proceeds from the disposal of Quill Building 10 – Section 13 were used to pare down MQREIT’s borrowings. With this, MQREIT’s total average borrowing was reduced to RM696mil, translating to a lower gearing ratio of 43% as at Sept 30, 2015, which is below the Securities Commission’s gearing threshold of 50%.
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