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.

  • * until 2101; ** until 2116. Data as at 31 December 2022.
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.

  • * The weighted average occupancy rate is calculated based on NLA. Occupancy as at 31 December.
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.

  • Note: Figures rounded up.
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%.

  • * Based on monthly rental income for December 2022.
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 45.2% 39.9%
Other tenants 1,120,764 sq ft 54.8% 60.1%
Total 2,045,196 sq ft 100.0% 100.0%
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.

  • Figures as at 31 December 2022.
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 178 new tenancies / renewals 466,357 sq ft NLA 22.8% of total NLA -11.0% 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.

  • * Based on monthly rental income for 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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