Saturday 4 January 2014

Hektar REIT

First Retail focused REIT in Malaysia

Assets worth RM1b. Aim is to double its asset size to RM2b by 2020.

Should the company acquire another mall, it will most likely raise funds from the equity market.

Currently, it has 5 malls:

Latest valuation:
Latest market valuation (30 November 2013)
Subang Parade
Mahkota Parade
Wetex Parade
Central Square
Landmark Central

The income of neighbourhood mall is always steady. When times are good, neighbourhood malls will not be enjoying stellar income growth as compared to the big malls in major cities. However, when times are bad, they won't be adversely affected as well.

assets enhancement initiatives (AEIs) include renovationo and refurbishment works, negotiating new leasing or rental terms, finding ways to increase net lettable area and others.

AEIs for Central Square (16 to 17 years old) are expected to be completed by middle 2014. Once that is done, the company will be looking at AEIs for Landmark Central (2-3 years old).

The ground floor of Landmark Central is made up of parking lots. If it can be converted into net lettable areas, it would certainly be a boost to the income. Having said that, HEKTAR would need to sort out the parking issue.

For the malls in Kedah, it expect to double the rental collection by a combination of increasing net lettable areas, bringing in international retail brands into the malls, higher turnover rents and others.

Mohkota Parade is upgrading its cinema from 4 to 10 screens. Works are expected to complete by end of 2014.

HEKTAR has a commitment to at least maintain or increase its dividend yoy.

Interest rate hike (some floating rate borrowings)
Hike in electricity tariff
Reducing purchasing power of consumers

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