Property profiles
Hektar REIT’s portfolio consists of a regional shopping centre and five 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 area (Population) | 1,834,000 | 382,200 | 201,600 | 406,870 | 287,694 | 190,000 |
| NLA (retail) | 527,139 sq ft | 521,142 sq ft | 174,651 sq ft | 310,564 sq ft | 299,781 sq ft | 211,919 sq ft |
| Tenancies (NLA lots only) | 74 | 84 | 54 | 45 | 73 | 35 |
| Occupancy | 70.3% | 86.9% | 88.1% | 82.3% | 96.4% | 73.7% |
| Visitor traffic | 4.7 million | 6.0 million | 2.9 million | 2.7 million | 2.9 million | 1.8 million |
| Acquisition price | RM 280.0 million | RM 232.0 million | RM 117.5 million | RM 83.0 million | RM 98.0 million | RM 104.0 million |
| Valuation | RM 417.0 million | RM 338.5 million | RM 156.6 million | RM 91.0 million | RM 138.0 million | RM 65.0 million |
| Gross revenue | RM 32.5 million | RM 38.0 million | RM 16.8 million | RM 9.5 million | RM 15.9 million | RM 4.8 million |
| NPI | RM 13.1 million | RM 20.8 million | RM 8.7 million | RM 4.6 million | RM 11.1 million | RM 0.4 million |
Portfolio diversification
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Occupancy
The portfolio recorded an overall occupancy rate of 82.0% as at 31 December 2022, as Hektar REIT continues its ongoing strategy of tenant remixing and rejuvenation plan at Subang Parade and Segamat Central. Despite the challenging retail environment, the Management remains steadfast on boosting occupancies by focusing on retaining existing tenants and utilizing marketing to attract specialty anchors and more F&B retailers to the mall.
| Property | 2022 | 2021 |
|---|---|---|
| Subang Parade | 2022: 70.3% | 2021: 82.5% |
| Mahkota Parade | 2022: 86.9% | 2021: 87.1% |
| Wetex Parade | 2022: 88.1% | 2021: 89.9% |
| Central Square | 2022: 82.3% | 2021: 85.9% |
| Kulim Central | 2022: 96.4% | 2021: 94.0% |
| Segamat Central | 2022: 73.7% | 2021: 67.3% |
| Overall* | 2022: 82.0% | 2021: 84.9% |
Visitor traffic
Overall visitor traffic increased to 21.1 million visits in 2022 as we intensified our marketing initiatives including sales-driven promotional campaigns at all our malls within the portfolio on the back of the lifting of the various restrictive containment measures. All malls experienced an uptrend in visitor footfall following Malaysia’s transition to endemicity after the COVID-19 pandemic, showing positive signs of return in shopper confidence at Hektar malls.
| Property | 2022 | 2021 |
|---|---|---|
| Subang Parade | 2022: 4.7 million visits | 2021: 4.0 million visits |
| Mahkota Parade | 2022: 6.0 million visits | 2021: 2.8 million visits |
| Wetex Parade | 2022: 2.9 million visits | 2021: 1.9 million visits |
| Central Square | 2022: 2.7 million visits | 2021: 1.9 million visits |
| Kulim Central | 2022: 2.9 million visits | 2021: 1.9 million visits |
| Segamat Central | 2022: 1.8 million visits | 2021: 0.7 million visits |
| Total | 2022: 21.1 million visits | 2021: 13.2 million visits |
Tenancy mix
The largest rental contributors to the portfolio are tenants from the departmental store and the food & beverage segments. Both segments contributed 46% of the portfolio’s total rental income. In terms of NLA occupancy, department stores and supermarkets continue to dominate the portfolio by taking up 41% of all available NLA.
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- Numbers may exceed 100% due to rounding up.
Top 10 tenants
The top ten tenants in the portfolio contributed approximately 39.9% of total monthly rental income, providing a diversified revenue base. Aside from the top tenant, Parkson, which contributed approximately 13% of monthly rental income, no other tenant contributed more than 10%.
| Tenant | Trade sector | NLA | % of total NLA | % of monthly rental income* |
|---|---|---|---|---|
| Parkson | Department Store/Supermarket | 252,515 | 12.3% | 13.0% |
| The Store | Department Store/Supermarket | 273,198 | 13.4% | 9.2% |
| GSC | Leisure & Entertainment/Sports & Fitness | 88,670 | 4.3% | 2.6% |
| Watson's | Health & Beauty | 11,965 | 0.6% | 2.5% |
| MR. D.I.Y. | Homewares & Furnishing | 74,301 | 3.6% | 2.3% |
| Seleria Food Court | Food & Beverage/Food Court | 47,760 | 2.3% | 2.2% |
| Guardian | Health & Beauty | 12,164 | 0.6% | 2.1% |
| Giant Superstore | Department Store/Supermarket | 72,140 | 3.5% | 2.1% |
| MM Cineplexes | Leisure & Entertainment/Sports & Fitness | 75,928 | 3.7% | 1.9% |
| KFC | Food & Beverage/Food Court | 15,792 | 0.8% | 1.8% |
| Top 10 tenants (by monthly rental income) | ||
|---|---|---|
| 924,432 sq ft NLA | 45.2% of total NLA | 39.9% of monthly rental income* |
| Other tenants | ||
| 1,120,764 sq ft NLA | 54.8% of total NLA | 60.1% of monthly rental income* |
| Total | ||
| 2,045,196 sq ft NLA | 100.0% of total NLA | 100.0% of monthly rental income* |
Rental reversions
For the year ended 31 December 2022, the portfolio recorded 178 new and renewed tenancies, with an overall weighted average negative rental reversion of 11.0% reflecting our strategy in balancing rental reversions and occupancy levels to ensure portfolio stability.
| Property | No. of new tenancies / renewals | NLA | % of total NLA | % increase / decrease over previous rent rates |
|---|---|---|---|---|
| Subang Parade | 33 new tenancies / renewals | 69,390 sq ft NLA | 13.2% of total NLA | -4.9% change over previous rent rates |
| Mahkota Parade | 55 new tenancies / renewals | 174,979 sq ft NLA | 33.6% of total NLA | -13.5% change over previous rent rates |
| Wetex Parade | 26 new tenancies / renewals | 23,185 sq ft NLA | 13.3% of total NLA | -7.9% change over previous rent rates |
| Central Square | 12 new tenancies / renewals | 44,556 sq ft NLA | 14.3% of total NLA | -4.2% change over previous rent rates |
| Kulim Central | 21 new tenancies / renewals | 35,378 sq ft NLA | 11.8% of total NLA | 22.0% change over previous rent rates |
| Segamat Central | 31 new tenancies / renewals | 118,869 sq ft NLA | 56.1% of total NLA | -35.0% change over previous rent rates |
| Total / average of rental reversions |
|---|
| 178 new tenancies / renewals |
| 466,357 sq ft NLA |
| 22.8% of total NLA |
| -11.0% change over previous rent rates |
Tenancy expiry profile
For FY2022, majority of the tenancies expiring in the year have been renewed with only 6.9% left remaining under negotiation which will carry forward to 2023. In all, our tenancy expiry profile represents low risk. The team has been successfully reducing the amount of holdover tenancies that were unresolved during the peak of Covid-19 pandemic.
The portfolio tenancy expiry profile from FY2023 to FY2027 is presented below showing the spread according to Total Net Lettable Area and as well as by Monthly Rental Income. The tenancies generally have a tenure of 3 years, however key or anchor tenancies may have longer tenure. To note that due to the ongoing remixing strategies in some of our malls, the management have decided to offer shorter term tenancies to remain flexible as it may involve relocation and reconfiguration of tenants. As the successful tenancies renewals progresses during the year, the spread will become more even. The percentage of tenancies expiring in FY2023 may appear high due to the expiry of an anchor tenant who represents 13.4% of the NLA. As per the usual with anchor tenants, renewal negotiation will commence at least 12 months before and are usually concluded six months prior to the expiry.
A total of 213 tenancies will expire in 2023 representing approximately 47.1% of NLA and 57.5% of monthly rental income as at 31 December 2022.
| For year ending 31 December | 2023 | 2024 | 2025 |
|---|---|---|---|
| No. of tenancies expiring | 213 | 94 | 58 |
| NLA of tenancies expiring | 962,565 sq ft | 528,121 sq ft | 187,202 sq ft |
| NLA of tenancies expiring as % of total NLA | 47.1% | 25.8% | 9.2% |
| % of total monthly rental income* | 57.5% | 30.5% | 12.0% |
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Tenancy provisions
As at 31 December 2022, turnover rent provisions were present in 89% of tenancy contracts within the portfolio. Step-up rent provisions were present in 33% of tenancy contracts within the portfolio.
A turnover rent provision allows for rent calculated as a proportion of monthly or yearly 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 or yearly basis. A step-up rent provision stipulates pre-determined increases in rent at defined intervals during a tenancy agreement.
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