PETALING JAYA: KIP Real Estate Investment Trust (REIT) has more than doubled its net profit on a year-on-year (y-o-y) basis for the first quarter of the financial year ending June 30,2020 (FY20) at RM18.5mil, as compared to RM7.26mil during the same quarter in FY19.
This was on the back of changes in the fair value of investment property incidental to the Aeon Mall Kinta City acquisition of RM13.2mil.However, this was partially offset by a one-off expense of RM3.5mil related to the acquisition.
KIP REIT’s net property income (NPI) grew 35.8% y-o-y to RM13.5mil on the back of a revenue growth of 18.6% to RM18.5mil.
The manager of KIP REIT has declared an interim distribution per unit (DPU) of 1.37 sen for the first quarter of FY20.
Based on KIP REIT’s closing price of 84.5 sen yesterday, the annualised DPU gives a yield of approximately 7%.
In a statement yesterday, KIP REIT Management Sdn Bhd managing director Datuk Chew Lak Seong said the acquisition of Aeon Mall Kinta City in Perak has enabled the REIT to diversify its portfolio within a high-growth city in the north-west of Malaysia.
“Aeon Mall Kinta City has a gross yield of 8.3% with a lease until 2025 and an option to renew the lease for another five years, which will generate a stable income.
“Furthermore, the lease also has a rent escalation mechanism of 10% at renewal, which will further boost our y-o-y growth accordingly.
“This improvement in our results is reflective of our increasing growth appetite and commitment to create greater value for our unit holders, ” he said.
Chew added that KIP REIT continues to remain proactive and disciplined in its acquisition strategy and will continue to look for yield-accretive assets with potential to contribute to the REIT’s long-term growth.
“In today’s challenging retail market environment, an active acquisition strategy is the way to drive growth.
“Nevertheless, we maintain a cautious outlook on the remaining FY20 in view of the general market uncertainties, ” he said.
In the first quarter of FY20, KIP REIT completed the acquisition of Aeon Mall Kinta City, a four-storey building with a total net lettable area of 530,181 square feet, located in the vicinity of commercial and residential areas in Ipoh.
The acquisition is anticipated to further contribute to KIP REIT’s full-year NPI.
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