TWRREIT released 3Q2021 quarter report:

  • Revenue increased by 15%, from RM5.66mil in 1Q2020 to RM6.5mil in 1Q2021
  • Net property income increased by 30%,from 1Q2020的RM2.6mil to RM3.4mil
  • NAV per unit maintaining at RM1.89
  • Realised income per uint declined by 30%,from 0.73cent(RM)per unit in 1Q2020 to 0.56cent(RM)per unit

The rise in Revenue and Net property income was attributed to August 2020’s completion of the acquisition of Menara Guoco. Before the acquisition of Menara Guoco, TWRREIT was a net cash company, but it increased approximately RM248mil in loans to complete the acquisition. Please take note that Menara HLX’s earnings further declined, but did not give detailed data.

After the increase in debt, TWRREIT got to pay much higher interest expenses, interest expenses in this quarter increased significantly to RM791k, compared to RM60k in the same quarter last year. Therefore, even after the increase in Revenue, Realised income is lower than in the same quarter of 2020.

It must be noted that Menara Guoco was completely acquired in August, this quarter has not yet reflected its real earning, so the Realised income per unit in the next quarter will increase. But please don’t put high expectations for it. as we mentioned many times before, Menara Guoco will only increase the annual dividend of 0.1cent(RM) per unit (this assumes that the income of other properties remains unchanged)

Interestingly, the one-time acquisition fee (1%) amount to RM2.42mil, Twrreit cleverly included this acquisition fee in the Investment property. If not, the Realised income for this quarter will be Is a negative value.

In the 2021 fiscal year, Twrreit’s total 17% of leases will expire in the 2021 fiscal year (calculated in terms of leased area), of which Menara HLX 4% and Plaza Zurich 32%. It must be noted that the current occupancy rate of Menara HLX is 21% (2019:21%, 2018:34%), while Plaza Zurich’s occupancy rate is 67% (2019:64%, 2018:58%)

Therefore, even if Menara Guoco increase its annual dividend of 0.1cent(RM) per unit, it will not be enough to compensate for the impact of the decline in the occupancy rate of other properties. Of course, if TWRREIT records a higher occupancy rate, its revenue will increase significantly, but it is unlikely.

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