PETALING JAYA: Sentral REIT Management Sdn Bhd (SRM), the manager of Sentral REIT, has declared an 8% lower distribution per unit (DPU) of 6.82 sen for financial year 2022 (FY22) which translates into a distribution yield of 7.62% based on the closing price of RM0.895 per unit as at Dec 30, 2022, compared with the FY21 DPU of 7.41 sen.
The FY22 DPU of 6.82 sen consists of an interim distribution of 3.40 sen which was paid to Sentral REIT unitholders on Sept 6, 2022, and a proposed final distribution of 3.42 sen for the six months ended Dec 31, 2022. The proposed final distribution is expected to be paid on Feb 28, 2023.
Sentral REIT achieved a realised net income and distributable income of RM73.6 million for FY22 ended Dec 31, 2022. This is 12.9% lower than the RM84.49 million recorded for FY21, mainly attributable to smaller revenue contributions from Wisma Technip and Quill Building 2.
The FY22 realised net income was also lower compared with that for FY21 due to a one-off gain on divestment of Quill Building 5 recorded in FY21. Correspondingly, realised earnings per unit (EPU) and distributable income per unit of 6.87 sen for FY22 were achieved.
SRM chairman Tan Sri Saw Choo Boon said amid the challenging office market environment, Sentral REIT’s financial performance in FY22 was anchored by its office portfolio in KL Sentral which remained resilient.
“While the general economic conditions are expected to remain uncertain with inflationary pressures affecting businesses in 2023, asset management and leasing strategies centred on tenant retention as well as cost management will remain our focus to achieve a sustainable occupancy and income contribution in 2023,” he said.
SRM CEO Derek Teh Wan Wei commented that leasing activities and tenant retention efforts in 2022 were challenging with the incoming supply of office space into Kuala Lumpur coupled with the flight to quality by businesses looking for newer premises.
“Correspondingly, Sentral (REIT) recorded a renewal rate of 41% for the leases due in 2022. Notwithstanding, 121,000 sq ft of spaces were leased in 2022 as a result of our leasing strategies to fill the office spaces in KL Sentral and retail spaces in Plaza Mont Kiara,” he said.
Sentral REIT’s portfolio occupancy rate improved to 77% as of Dec 31, 2022 from 73% recorded in the previous quarter. For 2023, about 162,000 sq ft or 10% of Sentral REIT’s total committed NLA will be up for renewal.
“In line with our ongoing tenant retention strategies, we have initiated early renewal negotiations for some of these tenancies. Concurrently, marketing efforts will be intensified to lease out current vacant spaces to improve the portfolio occupancy rate in 2023,” Teh said.
He added that Sentral REIT’s debt maturity profile in the fourth quarter of 2022 remains well-distributed with the next debt refinancing due only in 2025.
Sentral REIT’s average cost of debt remained stable with a competitive weighted average cost of debt of 3.62% per annum despite the rising interest rate environment.
“As Bank Negara Malaysia continues with its monetary tightening path, regular reviews will be carried out on the optimal mix of fixed and floating rate borrowings,” Teh said.
