News: Pavilion REIT 4Q 2019 NPI Drops 9.64%

Jan 24, 2020

Pavilion Real Estate Investment Trust’s (REIT) fourth-quarter net property income dropped 9.64% to RM91.25 million compared to RM100.98 million one year ago, caused by higher property operating expenses and lower rental income.

Rental income of Pavilion REIT for the quarter ended 31 December 2019 dropped 1.45% to RM123.96 million from RM125.79 million, reported The Edge Markets.

The company’s property operating expenses saw an increase of 18.75% to RM54.71 million from RM46.08 million, while their gross revenue for the same quarter dropped 0.75% to RM145.96 million from RM147.06 million.

Pavilion REIT is declaring a 4.1 sen final income distribution per unit (DPU) payable on 28 February 2020. Out of this amount, 3.93 sen will be taxable with the remaining 0.17 being non-taxable.

The REIT said the lower gross revenue was due to lower rental and occupancy rates at its Da Men Mall in Subang.

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The increase in property expenses was pinned on the preventive maintenance of lift doors and upgrades of common areas within Pavilion Tower, Christmas events and advertising media, marketing expenses for Deepavali and the writing off of non-recoverable debts.

Pavilion REIT had a RM15.01 million-fair value gain from the valuation of investment properties as of 31 December 2019, compared to the RM33.62 million recorded a year ago.

For the whole year, Pavilion REIT’s net property income increased 0.11%, reaching RM375.18 million compared to RM374.79 million in 2018, with gross revenue growing 5.47% to RM585.35 million from RM554.98 million.

Property expenses increased by 16.63% to RM210.17 million from RM180.19 million, while full-year rental income grew 3.38% to RM502.65 million from RM486.24 million recorded in 2018.

The DPU for the year reached 8.5 sen compared to 8.78 sen in 2018.

The REIT pinned the increase in rental and gross income on its Elite Pavilion Mall and on the higher revenue electricity and rent income from Pavilion Kuala Lumpur Mall for supplying Pavilion Hotel and Pavilion Suites.

Pavilion REIT attributed the increased yearly property expenses on its acquisition of Elite Pavilion Mall and higher electricity costs of providing electricity to Pavilion Hotel and Pavilion Suites.

“As consumers are being cautious and selective in their spending, Pavilion REIT malls intend to be prudent in its spending to create experiential and differentiation to attract and retain shoppers’ loyalty,” the REIT said.

“Operating cost will continue to be monitored to optimise efficiency with spending as required to ensure the needs, comfort and safety of its stakeholders are balanced and not compromised.”


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Nadia Razali
Real Estate Negotiator
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Alam Harta Realty
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