KIP Reit slips into net loss in Q4 on investment properties

However, KIP Reit told the stock exchange that its realised profit after tax for the fourth quarter was RM8.2mil, if the change in property fair value was removed.

PETALING JAYA: KIP Real Estate Investment Trust (Reit) recorded its first quarterly net loss in the fourth quarter ended June 30, after it posted a RM13.2mil unrealised fair value loss on investment properties following the annual valuation exercise.

The net loss for the April-June 2020 period was RM5mil as compared to a net profit of RM11.53mil a year earlier.

However, KIP Reit told the stock exchange that its realised profit after tax for the fourth quarter was RM8.2mil, if the change in property fair value was removed.

The trust’s revenue for the three-month period rose by 4.3% year-on-year (y-o-y) to RM16.9mil. In comparison, the revenue in the corresponding quarter a year earlier was RM16.2mil.

“The increase was attributed to RM4mil from the acquisition of AEON Mall Kinta City (AMKC) (pic) at northern region in July 2019 but partially offset by the amortisation of rental rebate of RM1.4mil, in accordance with MFRS 16, given to the non-essential tenants affected by the movement control order (MCO).

“The acquisition of AMKC also contributed to the increase in net property income by 17%, ” stated KIP Reit.

For the full financial year of 2020 (FY20), KIP Reit’s net profit fell by 6.36% y-o-y to RM31.88mil. On the other hand, revenue improved by 18.2% y-o-y to RM74.54mil, up from RM63.07mil in FY19.

This was mainly due to the 11 months contribution from the acquisition of AMKC in the northern region effective July 31,2019. However, it was partially offset by the amortisation of rental rebates for non-essential tenants during the MCO, which amounted to RM1.6mil.

“The net property income has increased by 33.5% y-o-y.

“Current year income available for distribution was 0.5% lower than preceding year mainly due to one-off expenses incidental to the acquisition of AMKC amounting to RM3.5mil. Additionally, total rental rebates of RM3.5mil was offered to eligible non-essential tenants during the MCO.

“Both of the above were cushioned by higher net property income from the AMKC acquisition, ” according to KIP Reit.

The trust said KIP REIT Management Sdn Bhd, which is the manager of the assets, would remain vigilant on managing cash flow and exercising financial discipline, in view of challenges in the operating environment.

“Operationally, the manager will continue to focus on a leasing strategy aimed at the provision of daily necessities to the local communities surrounding KIP Reit’s portfolio.

“The impact of Covid-19 is currently fluid and evolving. However, the manager will continue to monitor the situation and adopt appropriate strategies accordingly to further encourage long-term partnerships with tenants and ultimately ensure long-term sustainability of KIP Reit, ” it said.