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Press Release: New Income Contribution From Newly Acquired Property Boosted Sunway REIT’s Earnings For Second Quarter Of Financial Year Ending June 2020 (2Q FY2020)

Key Highlights:

  • Revenue increased by 11.7% y-o-y to RM155.8 million in 2Q FY2020, boosted by new income contribution from newly acquired Sunway university & college campus and improved performance across all segments.
  • Net property income expanded correspondingly by 11.9% y-o-y to RM116.6 million in 2Q FY2020.
  • Proposed distribution per unit rose by 8.9% to 2.45 sen in 2Q FY2020. Annualizing 1H FY2020 distribution per unit of 4.95 sen, this translates into a distribution yield of 5.4%.

Financial Highlights

Sunway City Kuala Lumpur, 13 February 2020 – Sunway REIT Management Sdn. Bhd., the Manager of Sunway Real Estate Investment Trust (Sunway REIT), is pleased to announce its financial results for the quarter ended 31 December 2019.

Second quarter unaudited financial results for the period from 1 October 2019 to 31 December 2019 (2Q FY2020)

Sunway REIT reported a set of healthy financial performance for the second quarter of financial year ending 30 June 2020. Revenue increased by 11.7% year-on-year (y-o-y) to RM155.8 million in 2Q FY2020, boosted by new income contribution from newly acquired Sunway university & college campus and improved performance across all segments. Net property income (NPI) expanded correspondingly by 11.9% y-o-y to RM116.6 million in 2Q FY2020. Realised profit climbed in tandem by 16.2% y-o-y to RM77.2 million.

The retail segment remained resilient for the quarter ended 31 December 2019. Revenue rose by 1.3% y-o-y to RM106.7 million, largely contributed by Sunway Pyramid Shopping Mall and Sunway Putra Mall. Despite the growth in revenue, NPI contracted by 2.6% y-o-y to RM74.0 million, on the back of lower advertising & promotion and maintenance expenses incurred in the corresponding period in the preceding year.

The hotel segment recorded a revenue and NPI growth of 28.0% y-o-y and 32.0% y-o-y to RM22.6 million and RM21.0 million respectively. The improvement was attributable to resumption of operation of the grand ballroom, meeting and function rooms in Sunway Resort Hotel & Spa upon the completion of the refurbishment for the facilities mentioned above. The upgraded and enhanced facilities are expected to attract higher demand for meetings, incentives, conferences and events (MICE) for the hotel. That said, the financial performance for the hotel segment was offset by softer performance from the hotels in Penang due to the overall soft market sentiment for the hospitality sector and intense competition.  

Following a period of consolidation for the office segment on the back of highly challenging and massive oversupply market landscape, Sunway REIT managed to regain its ground by attracting new tenancies at competitive rates for its office portfolio. This is evidenced by the improvement in the overall occupancy rate in the office portfolio. Revenue improved accordingly by 10.7% y-o-y to RM10.4 million with corresponding improvement in NPI by 6.1% y-o-y to RM5.5 million.

For the 2Q FY2020, revenue and NPI for the services segment climbed 153.0% y-o-y to RM14.6 million due to new income contribution from Sunway university & college campus following the completion of the acquisition in April 2019. The income was further boosted by higher income contribution from Sunway Medical Centre on the back of annual rental reversion. Meanwhile, the industrial and others segment reported a revenue and NPI of RM1.5 million in 2Q FY2020, an increase of 10% y-o-y subsequent to a rental reversion in January 2019.

First Half unaudited financial results for the period from 1 July 2019 to 31 December 2019 (1H FY2020)

Sunway REIT registered a moderate growth for the first six months of the financial year ending June 2020. Revenue increased by 9.9% y-o-y to RM311.2 million and NPI rose correspondingly by 9.8% y-o-y to RM235.7 million.

The retail segment remained on a firm footing in 1H FY2020. Revenue edged up marginally by 0.9% y-o-y to RM212.3 million, contributed by Sunway Pyramid Shopping Mall, Sunway Carnival Mall and Sunway Putra Mall. NPI eased by 2.8% y-o-y to RM149.3 million, for the same reasons mentioned above. In line with the evolving retail market dynamics, the Manager is undertaking tenancy mix re-configuration as part of tenancy profile enhancement exercise to ensure that retail malls to remain in the forefront of competition and appeal to consumers.

The hotel segment recorded a revenue improvement of 15.0% y-o-y to RM46.2 million with a corresponding increase in NPI of 18.1% y-o-y to RM43.1 million, for the same reasons mentioned above. Likewise, the office segment reported a revenue and NPI expansion of 11.1% y-o-y and 8.5% y-o-y to RM20.5 million and RM11.1 million respectively, for the same reasons mentioned above.

Revenue and NPI for the services segment soared by 152.5% y-o-y to RM29.1 million. Similarly, the industrial and others sectors reported a 10.0% y-o-y improvement in revenue and NPI to RM3.1 million. The attributing factors for the financial performance are as mentioned above. 

For the 2Q FY2020, the Manager proposed a distribution per unit (DPU) of 2.45 sen, representing an increase of 8.9%. Annualizing 1H FY2020 distribution per unit of 4.95 sen, this translates into a distribution yield of 5.4%, based on unit price of RM1.82 as at 31 December 2019.

Dato’ Jeffrey Ng, CEO of Sunway REIT Management Sdn. Bhd., commented, “We are pleased to announce that Sunway REIT has delivered a healthy growth in DPU to unitholders in 1H FY2020. This was achieved on the back of our growth strategy to continuously expand our income stream through acquisitions and active asset management initiatives.”

Sharing on the prospect for the remaining part of FY2020, he elaborated, “Taking guidance from the financial performance in 1H FY2020, Sunway REIT expects the distribution per unit for FY2020 to be supported by full year income contribution from newly acquired Sunway university & college campus, stable contribution across all sectors and favourable interest rate environment.”

He further elaborated, “That said, the Manager is cautious and we are closely monitoring the development of coronavirus which may have implications to our business if the pandemic persists over a longer period. In the immediate term, the Manager has activated operational precautionary measures to ensure the cleanliness and hygiene of the premises.  In addition, the Manager also proactively reviewing on possible cost tightening as a precautionary measure in anticipation of a potential downside risk to income.” 

— End Of Press Release —

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Charles Tan The Founder The Writer Kopiandproperty
Charles Tan

Charles is Founder of kopiandproperty.com He writes from his investment experience for the the past 20 years in investments including property, stock, unit trust and more as well as readings and conversations with many property gurus in the industry. kopiandproperty.com is an independent property blog which is not affiliated to any media company, property developer or even real estate agencies.

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