Portfolio


Portfolio Performance

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Property Profiles

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

The portfolio provides a good geographical diversification to the REIT. This financial year, Central Square was re-launched following the completion of its major asset enhancement initiative, which includes a modern facelift, improved fittings and amenities, and expansion of the cinema. 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 financial year 2015 is set out in the following pages.

Net Lettable Area
1.8 million sq ft
Occupancy
96.6%
Market Catchment1
3.0 million residents
Visitor Traffic
30.6 million per annum
Number of Tenancies2
460
Hektar REIT portfolio - Peninsular Malaysia

Data current as at 31 December 2015.
1 Spectrum Research Asia Sdn. Bhd., December 2012 (Independent Research)
2 NLA Tenants only


  Subang
Parade
Mahkota
Parade
Wetex
Parade
Central
Square
Landmark
Central
State Selangor Melaka Johor Kedah Kedah
Title Freehold Leasehold Freehold Freehold Freehold
Primary Trade Area1
1,834,000
382,200 201,600 406,870 181,195
NLA (Retail)2 505,293 sq ft 519,654 sq ft 159,153 sq ft 311,741 sq ft 281,388 sq ft
Tenancies2 126 106 75 82 71
Occupancy2 94.7% 95.5% 98.7% 98.0% 99.3%
Visitor Traffic FY2015 9.8 million 9.1 million 4.6 million 3.9 million 3.2 million
Purchase Price (RM) 280.0 million 257.5 million 117.5 million 83.0 million 98.0 million
Valuation (RM)2 426.4 million 320.0 million 135.0 million 94.0 million 111.2 million
Gross Revenue FY2015 (RM)2 51.7 million 39.8 million 13.4 million 9.7 million 11.0 million
Net Property Income (NPI) FY2015 (RM)2 34.1 million 22.7 million 8.0 million 5.1 million 6.7 million

1 Source: Spectrum Research Asia Sdn. Bhd., December 2012 (Independent Research), within 20-minutes drive
2 As at 31 December 2015.
* until year 2101

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Diversified Portfolio

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Portfolio Occupancy

Hektar’s portfolio of assets have achieved an aggregate occupancy rate of 96.6% as at 31 December 2015. The overall occupancy rate has improved following the completion of the AEI at Central Square.


Property As at 31 December
2015
As at 31 December
2014
As at 31 December
2013
As at 31 December
2012
As at 31 December
2011
Subang Parade 94.7% 99.3% 100.0% 99.8% 99.9%
Mahkota Parade 95.5% 94.5% 97.8% 96.1% 94.5%
Wetex Parade 98.7% 98.3% 96.8% 97.8% 98.6%
Central Square 98.0% 80.5% 82.5% 89.8%
Landmark Central 99.3% 97.8% 93.7% 96.9%
 
Overall* 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 Subang has increased slightly by 3.2% but Mahkota Parade and Wetex Parade have decreased slightly due to the weak consumer sentiment. Shopper traffic at Central Square has increased significantly with the completion of AEI. Visitor traffic at Landmark Central remained stable at 3.2 million.


Property (Number of Visits) 2015 2014 2013 2012 2011
Subang Parade (million) 9.8 9.5 8.5 7.7** 7.9
% Change in Traffic 3.2% 11.8% 10.4% (2.5%) 5.3%
Mahkota Parade (million) 9.1 10.0 10.4 11.0 8.2
% Change in Traffic (9.0%) (3.8%) (5.5%) 34.1% 13.9%
Wetex Parade (million) 4.6 4.8 4.8 5.2** 5.9
% Change in Traffic (4.2%) 0.1% (7.7%) (11.9%) 7.3%
Central Square* (million) 3.9 3.3 4.1
% Change in Traffic 18.2% (19.5%)
Landmark *Central (million) 3.2 3.2 3.4
% Change in Traffic nil (5.9%)
 
Total (million) 30.6 30.8 31.2 23.9 22.1

* 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.
** Figure revised due to system recalibration.

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Portfolio Tenancy Mix

The portfolio tenancy mix is dominated by department stores and supermarkets, which led by Parkson, The Store and Giant, constitute approximately 36.3% of total portfolio NLA. In terms of rental income, the largest segment remains fashion and footwear, which contributes approximately 23.2% of monthly rental income. Food and beverage comes closely behind, constituting 21.2% of the portfolio monthly income.

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Portfolio Top Ten Tenants

The top ten tenants in the portfolio contributed approximately 28.5% of total monthly rental income, providing a diversified revenue base. After the top tenant, Parkson, which contributed approximately 9.6% 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% 9.6%
2 The Store Department Store / Supermarket 273,198 15.4% 5.8%
3 Seleria Food & Beverage 35,437 2.0% 2.5%
4 Giant Supermarket Department Store / Supermarket 96,283 5.4% 1.7%
5 Bata Fashion & Footwear 8,355 0.5% 1.7%
6 MBO Leisure & Entertainment/Sports & Fitness 83,705 4.7% 1.6%
7 McDonald’s Food & Beverage 14,124 0.8% 1.6%
8 KFC Food & Beverage 17,431 1.0% 1.5%
9 Watsons Services 8,757 0.5% 1.3%
10 Kenny Roger Roasters Food & Beverage 7,096 0.4% 1.2%
  Top 10 Tenants
(By Monthly Rental Income)
798,395 45.0% 28.5%
  Other Tenants   978,834 55.0% 71.5%
  Total   1,777,229 100.0% 100.0%

*Based on monthly rental income for December 2015

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Portfolio Rental Reversions

For the year ended 31 December 2015, the portfolio recorded 126 new and renewed tenancies, with an overall weighted average rental reversion of 3%. Central Square has recorded commendable reversion this year with the completion of its AEI. Landmark Central has continued to enjoy good reversion rates following to active tenant remixing exercises. Mahkota Parade has experienced negative reversion due to competitive market condtitions.

The remaining two malls, Subang Parade and Wetex Parade recorded stable reversion rates.


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 35 201,618 40% 6%
Mahkota Parade 39 234,918 49% (6%)
Wetex Parade 46 40,289 25% 0.2%
Central Square 4 80,669 27% 21%
Landmark Central 2 139,640 50% 10%
Total / Average* 126 697,134 40% 3%

* The weight average is calculated based on NLA. Figures as at 31 December 2015

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Portfolio Tenancy Expiry Profile

For the year 2016, a total of 176 tenancies will expire, representing approximately 32% of NLA and 37% of monthly rental income as at 31 December 2015. This is in line with typical tenancy terms of 3 years, as per the current market practice in Malaysia.


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 2016 176 567,805 32% 37%
FY 2017 152 666,924 38% 38%
FY 2018 129 451,306 25% 25%
FY 2019 2 26,737 2% 0.5%

* Based on monthly rental income for December 2015. Figures may not round to 100% due to miscellaneous items.

 

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Portfolio Tenancy Provisions

As at 31 December 2015, turnover rent provisions were present in approximately 78% of the tenancies in the portfolio. Step-up rent provisions were present in approximately 44% 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 is specified in tenancy agreements as 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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