Sentral REIT's 1Q net property income rises 30% but finance costs weigh

• Sentral REIT, which has 53% of its portfolio by valuation located in KL Sentral here, also has exposure in Cyberjaya (13% of portfolio) and Penang (6%).

KUALA LUMPUR (May 8): Sentral Real Estate Investment Trust (KL:SENTRAL), or Sentral REIT, posted a 30.29% increase in its net property income in the first quarter ended March 31, 2024 (1QFY2024) to RM38.15 million from RM29.28 million a year ago, on higher contribution from four of its key properties.

Sentral Building 4, Platinum Sentral and Sentral Building 3 — BMW saw higher realised revenue, Sentral REIT said. It recorded a full-quarter contribution from Menara CelcomDigi as well.

Additionally, the quarter saw the impact of revenue straight-lining over the lease term pursuant to requirements of Malaysian Financial Reporting Standards 16 Leases, said the REIT.

Gross revenue rose 27.58% to RM48.12 million from RM37.71 million.

However, net income grew at a slower pace of 12.63% to RM19.89 million from RM17.66 million, due to higher finance costs and fees for its trustee and manager.

Finance costs rose to RM13.35 million from RM9.11 million, as average cost of debt rose to 4.45% per annum in the quarter, from 4.40% in the same period last year. Three-quarters of the REIT’s debt is on floating rate.

Earnings per unit after manager’s fees amounted to 1.66 sen, up slightly from 1.65 sen in 1QFY2023.

Sentral REIT, which has 53% of its portfolio by valuation located in KL Sentral here, also has exposure in Cyberjaya (13% of portfolio) and Penang (6%).

The REIT has approximately 282,000 sq ft or 14% of its total committed lettable space scheduled for renewal in 2024, with 46,000 sq ft of these leases expiring in the first quarter of this year (1Q2024). It said it has renewed 83% of these leases due in 1Q2024 and consequently, its average occupancy rate was secured at 88%.

"In alignment with Sentral REIT’s ongoing tenant retention strategies, we have initiated early negotiations for some leases expiring in the remaining quarters of 2024," said Sentral REIT Management Sdn Bhd chief executive officer Derek Teh Wan Wei in a statement.

"Simultaneously, advanced marketing efforts have commenced to lease out vacant spaces coming on stream, with the aim to sustain the portfolio's occupancy rate this year," Teh said.

At Wednesday’s noon break, Sentral REIT was half a sen or 0.62% lower at 80 sen per unit, valuing the REIT at RM950.5 million.

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