Hektar REIT’s portfolio consists of six well-established neighbourhood-focused shopping centres in the Northern, Central and Southern Regions of Peninsular Malaysia.

The Manager aims to enhance the long-term value of the portfolio via key operating, investment and capital management strategies. The performance achieved by each centre in the latest financial year is set out in this section.

Property Subang Parade Mahkota Parade Wetex Parade Central Square Kulim Central Segamat Central
State Selangor Melaka Johor Kedah Kedah Johor
Title Freehold Leasehold* Freehold Freehold Freehold Leasehold**
Primary trade area1 1,834,000 382,200 201,600 406,870 287,694 190,000
NLA (retail)2 508,876 sq ft 519,542 sq ft 171,305 sq ft 310,152 sq ft 299,613 sq ft 220,768 sq ft
Tenancies2 113 115 72 64 79 49
Occupancy2 88.2% 96.0% 98.5% 96.9% 93.5% 78.6%
Visitor traffic3 7.8 million 8.3 million 4.3 million 4.5 million 4.0 million 3.2 million
Acquisition price RM 280.00 million RM 232.0 million RM 117.5 million RM 83.3 million RM 98.0 million RM 106.1 million
Valuation4 RM 437.0 million RM 328.0 million RM 138.5 million RM 96.0 million RM 115.0 million RM 107.0 million
Gross revenue RM 44.1 million RM 41.4 million RM 12.3 million RM 11.2 million RM 14.5 million RM 11.6 million
NPI RM 28.3 million RM 23.5 million RM 6.1 million RM 6.0 million RM 8.4 million RM 6.4 million
  • 1 Spectrum Research Asia Sdn Bhd, December 2012 (Independent Research), within 20-minutes drive.
  • 2 As at 31 December 2018.
  • 3 Installation of upgraded footfall system for Kulim Central is underway to capture traffic at new entrances into the shopping centre. Footfall system for Segamat Square was installed only in late December 2017.
  • 4 Valuation for Subang Parade, Mahkota Parade, Wetex Parade, Central Square and Kulim Central were as of 30 September 2017. Valuation for Segamat Central was as of 22 June 2017.
  • * Until year 2101.
  • ** Until year 2116.

Geographically widespread portfolio

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Occupancy

Hektar’s portfolio of assets have achieved an aggregate occupancy rate of 92.1% as at 31 December 2018. Occupancy rates are healthy in spite of the challenging retail environment, with all malls (excluding Subang Parade and Segamat Central) being at least 94% occupied. Subang Parade and Segamat Central are undergoing major tenancy remixing simultaneously with Asset Enhancement Initiatives planned for the future.

In general, the overall occupancy trend for the malls moves in cycles with the most recent downtrend in 2014 with a portfolio occupancy low of 94% before resuming a rise to 97% in the following year.

Occupancy as at 31 december.
Property 2018 2017
Subang Parade 88.2% 90.9%
Mahkota Parade 96.0% 96.1%
Wetex Parade 98.5% 100.0%
Central Square 96.9% 95.3%
Kulim Central 93.5% 98.2%
Segamat Central 78.6% 94.7%
Overall* 92.1% 95.1%
  • * The weighted average occupancy rate is calculated based on NLA.

Visitor traffic

Visitor traffic is measured by a computerised traffic monitoring system. Visits to Kulim Central have increased tremendously by 81.8% post-AEI and significant increases of 18.4% were seen in Central Square in 2018. Mahkota Parade and Wetex Parade shopping centres experienced a slight decline, in line with market conditions. Subang Parade’s performance is expected to bounce back once it has completed its overall tenancy remixing and AEI. The traffic counting system at Segamat Central was installed in early 2018. The wide swings in traffic volatility depend on a host of factors including but not limited to, new tenants, refurbishment, asset enhancements or on the negative side, increased competition. In total, visits to Hektar shopping centres reached 32 million in 2018.

Number of visits.
Property 2018 2017
Subang Parade 7.8 million visits
(21.2%) change in traffic
9.9 million visits
7.6% change in traffic
Mahkota Parade 8.3 million visits
(8.8%) change in traffic
9.1 million visits
(3.2%) change in traffic
Wetex Parade 4.3 million visits
(2.3%) change in traffic
4.4 million visits
(4.4%) change in traffic
Central Square 4.5 million visits
18.4% change in traffic
3.8 million visits
(2.6%) change in traffic
Kulim Central 4.0 million visits
81.8% change in traffic
2.2 million visits
(26.7%) change in traffic
Segamat Central** 3.2 million visits

Total 32.0 million visits 29.4 million visits

Tenancy mix

The largest rental contributors to the portfolio are tenants from the fashion & footwear as well as food & beverage segments. Both segments contributed 42% of the portfolio’s total rental income. In terms of NLA occupancy, department stores and supermarkets continue to dominate the portfolio by taking up 37% of all available NLA.

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Top 10 tenants

The top ten tenants in the portfolio contributed approximately 30.4% of total monthly rental income, providing a diversified revenue base. After the top tenant, Parkson, which contributed approximately 9.6% of monthly rental income, no other tenant contributed more than 5.9%.

Tenant Trade sector NLA % of total NLA % of monthly rental income*
1 Parkson Department Store/Supermarket 254,009 12.5% 9.6%
2 The Store Department Store/Supermarket 273,198 13.5% 5.9%
3 Seleria Food Court Food & Beverage 39,521 2.0% 2.9%
4 MBO Cinemas Leisure & Entertainment/Sports & Fitness 88,670 4.4% 2.4%
5 Giant Department Store/Supermarket 96,283 4.8% 1.9%
6 MR. D.I.Y. Houseware & Furnishing 74,247 3.7% 1.8%
7 MM2 Starscreen Leisure & Entertainment/Sports & Fitness 79,404 3.9% 1.7%
8 Guardian Health & Beauty 12,164 0.6% 1.6%
9 Watsons Health & Beauty 10,296 0.5% 1.4%
10 KFC Food & Beverage 15,786 0.8% 1.2%
Top 10 tenants (by monthly rental income) 943,578 sq ft 46.7% 30.4%
Other tenants 1,081,229 sq ft 53.3% 69.6%
Total 2,024,807 sq ft 100.0% 100.0%
Top 10 tenants (by monthly rental income)
943,578 sq ft NLA 46.7% of total NLA 30.4% of monthly rental income*
Other tenants
1,081,229 sq ft NLA 53.3% of total NLA 69.6% of monthly rental income*
Total
2,024,807 sq ft NLA 100.0% of total NLA 100.0% of monthly rental income*
  • * Based on monthly rental income for December 2018.

Rental reversions

For the year ended 31 December 2018, the portfolio recorded 159 new and renewed tenancies, with an overall weighted average rental reversion of 5.4%. Both Subang Parade and Segamat Central did not record positive growth, largely due to the ongoing tenancy remixing and planned AEIs for each centres. The other four centres recorded strong increases with double digit rental reversions.

The 11-year trend for the portfolio rental reversions is currently on the uptrend.

Property No. of new tenancies / renewals NLA % of total NLA % increase / (decrease) over previous rent rates
Subang Parade 24 200,666 sq ft 39.3% 0.1%
Mahkota Parade 33 67,102 sq ft 12.9% 15.0%
Wetex Parade 33 38,700 sq ft 23.1% 11.8%
Central Square 16 177,779 sq ft 57.2% 11.5%
Kulim Central 19 155,278 sq ft 51.8% 16.4%
Segamat Central 34 187,807 sq ft 86.7% (9.8%)
Total / average 159 827,332 sq ft 40.9% 5.4%
Total / average of rental reversions
159 new tenancies / renewals
827,332 sq ft NLA
40.9% of total NLA
5.4% change over previous rent rates
  • Full year (12 months) ended 31 December.
  • Figures as at 31 December 2018.

Tenancy expiry profile

A total of 245 tenancies will expire in 2019 representing approximately 38% of NLA and 45% of monthly rental income as at 31 December 2018. The management’s strategy is to continue tenancy remixing exercises by refreshing the tenant mix as tenant contracts expire. Key tenancies are secured with options-to-renew and are usually confirmed six months prior to their expiry.

For year ending 31 December 2019 2020 2021
No. of tenancies expiring 245 123 124
NLA of tenancies expiring 766,787 sq ft 408,214 sq ft 690,527 sq ft
NLA of tenancies expiring as % of total NLA 38% 20% 34%
% of total monthly rental income* 45% 26% 29%
  • * Based on monthly rental income for December 2018.

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Tenancy provisions

As at 31 December 2018, turnover rent provisions were present in 86% of tenancy contracts within the portfolio. Step-up rent provisions were present in 20% of tenancy contracts within the portfolio.

A turnover rent provision allows for rent calculated as a proportion of monthly turnover of the tenant’s business. Turnover rent is paid to the REIT if it exceeds the base rent specified in tenancy agreements on a monthly basis. A step-up rent provision stipulates pre-determined increases in rent at defined intervals during a tenancy agreement.

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