Portfolio


Portfolio Performance

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Property Profiles

Hektar REIT’s portfolio consists of six well-established shopping centres in various states on the West Coast of Peninsular Malaysia :-

Subang Parade, located in Subang Jaya, Selangor;
Mahkota Parade, located in Bandar Melaka, Melaka;
Wetex Parade & Classic Hotel, located in Muar, Johor;
Landmark Central Shopping Centre, located in Kulim, Kedah;
Central Square Shopping Centre, located in Sungai Petani, Kedah;
Segamat Central, located in Segamat, Johor.

The portfolio provides a good geographical diversification to the REIT.

The REIT has just completed its acquisition of 1Segamat Shopping Centre on 18 September 2017. It has been renamed as Segamat Central upon completion of the acquisition. With the addition of Segamat Central, Hektar REIT’s enlarged portfolio is now made up of over 2.0 million square feet retail space.

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 asset in the financial year 2016, except for Segamat Central, is set out in the following pages. Information on Segamat Central shall be included after the closing of financial year ending 31 December 2017.

Portfolio (including Segamat Central)
Net Lettable Area
2.0 million sq ft
Occupancy
95.0%
Market Catchment1
3.2 million residents
Visitor Traffic2
30.1 million per annum
Number of Tenancies3
520
Hektar REIT portfolio - Peninsular Malaysia

Data current as at 30 June 2017.
1 Spectrum Research Asia Sdn. Bhd., December 2012 (Independent Research), within 20-minutes drive.
2 Excluding Segamat Central
3 NLA Tenants only


  Subang
Parade
Mahkota
Parade
Wetex
Parade
Central
Square
Landmark
Central
Segamat
Central
State Selangor Melaka Johor Kedah Kedah Johor
Title Freehold Leasehold Freehold Freehold Freehold Leasehold (2116)
Primary Trade Area1
1,834,000
382,200 201,600 406,870 181,195 198,000
NLA (Retail)2 507,150 sq ft 519,542 sq ft 159,153 sq ft 311,230 sq ft 281,388 sq ft 223,439 sq ft
Tenancies2 122 115 76 70 67 70
Occupancy2 93.0% 96.4% 100.0% 96.6% 98.9% 95.9%3
Visitor Traffic FY2016 9.2 million 9.4 million 4.6 million 3.9 million 3.0 million  
Purchase Price (RM) 287.0 million 257.5 million 117.5 million 83.3 million 98.0 million 104.0 million
Valuation (RM)2 427.2 million 322.4 million 135.2 million 95.7 million 112.0 million 105.0 million
Gross Revenue FY2016 (RM)2 49.0 million 40.2 million 13.6 million 10.3 million 11.5 million  
Net Property Income (NPI) FY2016 (RM)2 31.5 million 22.2 million 8.1 million 5.8 million 6.7 million  

1 Source: Spectrum Research Asia Sdn. Bhd., December 2012 (Independent Research), within 20-minutes drive
2 As at 31 December 2016.
3 As at 30 June 2017.
* until year 2101

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NOTE

The following portfolio performance data is accurate as at 31 December 2016 and does not include Segamat Central.

Diversified Portfolio

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Portfolio Occupancy

Hektar’s portfolio of assets have achieved an aggregate occupancy rate of 96.2% as at 31 December 2016. Despite tough retail environment, Wetex Parade has achieved full occupancy.


Property (Occupancy as at 31 December) 2016 2015 2014 2013 2012
Subang Parade 93.0% 94.7% 99.3% 100.0% 99.8%
Mahkota Parade 96.4% 95.5% 94.5% 97.8% 96.1%
Wetex Parade 100.0% 98.7% 98.3% 96.8% 97.8%
Central Square 96.6% 98.0% 80.5% 82.5% 89.8%
Landmark Central 98.9% 99.3% 97.8% 93.7% 96.9%
 
Overall* 96.2% 96.6% 94.3% 95.0% 96.3%

*The weighted average occupancy rate is calculated based on NLA

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Visitor Traffic

Visitor traffic is measured by FootFall, a computerised video-based traffic monitoring system. Visits to Mahkota Parade has increased slightly by 3.3% but Subang Parade and Landmark Central have decreased slightly. Both of the latter malls will be undergoing major asset enhancement initiatives in 2017. Shopper traffic at Wetex Parade and Central Square remained stable at 4.6 million and 3.9 million respectively.


Property (Number of Visits) 2016 2015 2014 2013 2012
Subang Parade (million) 9.2 9.8 9.5 8.5 7.7**
% Change in Traffic (6.1%) 3.2% 11.8% 10.4% (2.5%)
Mahkota Parade (million) 9.4 9.1 10.0 10.4 11.0
% Change in Traffic 3.3% (9.0%) (3.8%) (5.5%) 34.1%
Wetex Parade (million) 4.6 4.6 4.8 4.8 5.2**
% Change in Traffic (4.2%) 0.1% (7.7%) (11.9%)
Central Square* (million) 3.9 3.9 3.3 4.1
% Change in Traffic 18.2% (19.5%)
Landmark *Central (million) 3.0 3.2 3.2 3.4
% Change in Traffic (6.3%) (5.9%)
 
Total (million) 30.1 30.6 30.8 31.2 23.9

* Footfall system for Central Square and Landmark Central was installed only in late November 2012. Footfall for these two malls are reported from January 2013 onwards.

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Portfolio Tenancy Mix

The portfolio tenancy mix is dominated by department stores and supermarkets, which are led by Parkson, The Store and Giant constitute 36.5% of total portfolio NLA. In terms of rental income, the largest segment remains fashion and footwear, which contributes 22.0% of monthly rental income. Food and beverage comes closely behind, constituting 21.6% of the portfolio monthly income.

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Portfolio Top Ten Tenants

The top ten tenants in the portfolio contributed 28.6% of total monthly rental income, providing a diversified revenue base. After the top tenant, Parkson, which contributed 9.7% monthly rental income, no other tenant contributed more than 6.0%.


Tenant Trade Sector NLA
(sq ft)
% of Total
NLA
% of Monthly
Rental Income*
1 Parkson Department Store / Supermarket 254,009 14.3% 9.7%
2 The Store Department Store / Supermarket 273,198 15.4% 5.9%
3 Seleria Food & Beverage 35,468 2.0% 2.5%
4 Giant Supermarket Department Store / Supermarket 96,283 5.4% 1.7%
5 MBO Cinemas Leisure & Entertainment/Sports & Fitness 83,705 4.7% 1.7%
6 Bata Fashion & Footwear 7,322 0.4% 1.6%
7 McDonald’s Food & Beverage 14,124 0.8% 1.5%
8 KFC Food & Beverage 17,431 1.0% 1.5%
9 Kenny Roger Roasters Food & Beverage 7,625 0.4% 1.3%
10 Watsons Services 7,379 0.4% 1.2%
  Top 10 Tenants
(By Monthly Rental Income)
796,544 44.8% 28.6%
  Other Tenants   981,823 55.2% 71.4%
  Total   1,778,366 100.0% 100.0%

*Based on monthly rental income for December 2016

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Portfolio Rental Reversions

For the year ended 31 December 2016, the portfolio recorded 140 new and renewed tenancies, with an overall weighted average rental reversion of -9%. The negative reversion is generally caused by the tough retail and macro-economic environment.

Landmark Central maintains healthy reversion due to its monopolistic position in the market.


Full Year (12 months)
(Ended 31 December)
No. of New
Tenancies / Renewals
NLA (sq ft) % of
Total NLA
% Increase / (Decrease)
Over Previous Rent Rates
Subang Parade 40 80,755 16% (4%)
Mahkota Parade 43 132,788 26% (18%)
Wetex Parade 21 18,030 11% (6%)
Central Square 18 60,130 19% (5%)
Landmark Central 18 50,302 18% 7%
Total / Average* 140 342,005 19% (9%)

* The weight average is calculated based on NLA. Figures as at 31 December 2016

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Portfolio Tenancy Expiry Profile

For the year 2017, a total of 207 tenancies will expire, representing approximately 59% of NLA and 56% of monthly rental income as at
31 December 2016. The expiries are slightly more concentrated in 2017 due to the expiry of several anchor tenants. However, the tenancies are secured with options-to-renew and are confirmed six months prior to their expiries.


For Year Ending 31 December No. of Tenancies Expiring NLA of Tenancies Expiring
(sq ft)
NLA of Tenancies Expiring as % of Total NLA % of Total Monthly Rental Income*
FY 2017 207 1,046,347 59% 56%
FY 2018 108 470,026 26% 27%
FY 2019 73 187,174 11% 16%

* Based on monthly rental income for December 2016.

 

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Portfolio Tenancy Provisions

As at 31 December 2016, turnover rent provisions were present in approximately 93% of the tenancies in the portfolio. Step-up rent provisions were present in approximately 41% of tenancies within the portfolio.

A turnover rent provision allows for rent calculated as a proportion of annual turnover of the tenant’s business. Turnover rent is paid to the REIT if it exceeds the base rent specified in tenancy agreements on an annual basis. A step-up rent provision as specified in tenancy agreements is a pre-determined increase in rent at defined intervals during a tenancy agreement, typically each year and forms the base rent of any tenancy agreement.

 

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