Sunway REIT records a set of strong financial performance
Sunway REIT says its gross revenue climbed 47.7% to RM154.0 million in 1Q FY2022 underpinned by higher revenue from all segments.
Net property income for the Retail segment more than doubled to RM70.3 million in 1Q FY2022 on the back of strong recovery in retail footfall and retail sales.
The Manager expects the financial performance of Sunway REIT to improve significantly in FY2022, supported by reopened international borders, stronger domestic economic growth, improved consumer sentiment on the back of stable employment prospects as well as the progressive re-opening of Sunway Resort Hotel and completion of Sunway Carnival Shopping Mall’s (new wing) expansion
Financial Highlights
| Quarter Ended | |||
| 3-month period ended 31.03.2022 | 3-month period ended 31.03.2021 | Y-o-Y Change | |
| RM’000 | RM’000 | % | |
| Gross revenue | 153,970 | 104,266 | 47.7% |
| Net property income (NPI) | 118,920 | 67,017 | 77.4% |
| Realised Income attributable to: | |||
| – Unitholders | 83,128 | 31,886 | >100.0% |
| – Perpetual note holders | 4,904 | 4,904 | 0.0% |
| Realised income | 88,032 | 36,790 | >100.0% |
| Unrealised income | 18,286 | 27 | >100.0% |
| Total profit for the period | 106,318 | 36,817 | >100.0% |
| Proposed / declared distribution to unitholders | –1 | – | N.A |
| Distribution per unit (DPU) (sen) | –1 | – | N.A |
1 No income distribution was proposed for the current quarter ended 31 March 2022. The next income distribution to be proposed for the semi-annual period from 1 January 2022 to 30 June 2022.
The current reporting quarter (1Q FY2022) is for the period from 1 January 2022 to 31 March 2022. The figures for the same period last year (3Q FP2021), from 1 January 2021 to 31 March 2021, are used for comparison purposes.
Bandar Sunway, 18 May 2022 – Sunway REIT recorded a set of strong financial performance for its first quarter of financial year ending December 31, 2022.
Gross revenue climbed 47.7% year-on-year (y-o-y) to RM154.0 million in 1Q FY2022, underpinned by higher revenue from all segments.
Relaxation in movement restrictions has led to a strong pick up in business activities for the Retail and Hotel segments. Correspondingly, net property income (NPI) jumped 77.4% y-o-y to RM118.9 million in 1Q FY2022, from RM67.0 million in 3Q FP2021.
On Sunway REIT’s refreshed strategic roadmap, Dato’ Jeffrey Ng, Chief Executive Officer of the Manager says “Sunway REIT has undertaken a strategic review on its strategic roadmap, TRANSCEND 2025, taking into consideration of developments in the past two years.
“The refreshed strategic roadmap, now known as TRANSCEND 2027, has established latest goals and targets for Sunway REIT. Sunway REIT aims to grow its property value to between RM14 and 15 billion by FY2027.
“At the same time, Sunway REIT targets to expand its asset allocation into Services and Industrial & Others segments to between 20% and 30% of property value, and diversify into foreign real estate market of between 10% to 20% of property value.”
He says Sunway REIT is actively pursuing third-party acquisition opportunities and is confident in growing our asset portfolio via acquisition, asset management and asset enhancement initiatives strategy towards achieving its TRANSCEND 2027 goals.
Sunway Reit Gross Revenue
Gross revenue for the Retail segment soared 83.5% y-o-y to RM98.4 million in 1Q FY2022, from RM53.7 million in 3Q FP2021, primarily contributed by strong performance from all retail malls on the back of pent-up demand, festive spending, relaxation of COVID-19 safety measures and marginal rental support. NPI jumped 193.5% y-o-y for the quarter under review to RM70.3 million, from RM23.9 million in the same period last year.
For the quarter under review, the Hotel segment’s gross revenue increased 28.6% y-o-y to RM18.5 million, compared to RM14.4 million in 3Q FP2021, attributed to better performance for all hotels except Sunway Resort Hotel which remained close for refurbishment since July 2020.
The Hotel segment recorded an overall improvement in occupancy rates in 1Q FY2022, supported by higher domestic leisure and business travels as well as gradual increase in Meetings, Incentives, Conventions and Exhibitions (MICE) activities. NPI for the Hotel segment improved in tandem to RM17.4 million in 1Q FY2022, from RM12.8 million in the corresponding period in the preceding year. Sunway Resort Hotel has commenced its first phase of operations in May 2022.
Office segment
The Office segment remained resilient for the quarter under review. Gross revenue increased marginally by 0.7% y-o-y to RM19.5 million in 1Q FY2022 compared to RM19.3 million in the corresponding period last year. NPI improved 2.2% y-o-y to RM13.7 million in 1Q FY2022, from RM13.4 million in the same period last year, reinforced by commencement of new tenants and stable occupancy rates across the Office segment.
Gross revenue and NPI for the Services segment in 1Q FY2022 edged up 3.2% y-o-y to RM15.8 million, attributed to annual rental reversion for Sunway Medical Centre (Tower A & B) and Sunway university & college campus.
Meanwhile, gross revenue and NPI for the Industrial & Others segment improved to RM1.7 million in 1Q FY2022 from RM1.5 million, representing an increase of 10% y-o-y subsequent to a rental reversion in January 2022 for Sunway REIT Industrial – Shah Alam 1, in accordance with the master lease agreement.
For the quarter under review, Sunway REIT has acquired an investment property located in Port Klang, Selangor, for a purchase consideration of RM34.1 million. The investment property is being planned for a proposed re-development into a seafront tourist destination with food and beverage (F&B), retail and leisure offerings.
The worst is over!
Jeffrey Ng says it is heartening to report that the Retail segment recorded strong retail sales which was near 100% normalcy in as compared to the same period of pre-pandemic in 2019 for the quarter under review.
“We believe that the worst is over and we are optimistic that the positive trend will continue to sustain as the economy transitions to the endemic phase of the COVID-19. Given the anticipation of stronger retail sales, the Manager expects marginal rental support provision in FY2022, which in turn, contributes positively to the earnings of Sunway REIT.
“In addition, we are cautiously optimistic on the prospect of the Hotel segment, supported by the gradual recovery of the tourism industry following the reopening of international borders. The financial performance of the Hotel segment will be further boosted by the resumption of income contribution from our flagship Sunway Resort Hotel in Sunway City Kuala Lumpur.”
Improvement in NPI margin for the current quarter was attributed to the various measures initiated, including cost containment and leaner cost structure implemented during the COVID-19 pandemic.
The Manager expects the financial performance of Sunway REIT to improve significantly in FY2022, supported by reopened international borders, stronger domestic economic growth, improved consumer sentiment on the back of stable employment prospects as well as the progressive re-opening of Sunway Resort Hotel and completion of Sunway Carnival Shopping Mall’s (new wing) expansion.