The MQREIT 3Q2020 quarterly report was released. The performance was so good. Let’s take a look at the financial data and compare it to the same period in 2019:
- Revenue increased by 5.7%, 3Q2020 was RM41.7mil, 3Q2019 was RM39.5mil
- Net property income increased by 9%, RM32.4mil in 3Q2020 and RM29.7mil in 3Q2019
- Distributable income per unit increased by 21.8%, 2cent(RM) in 3Q2020, 1.65cent(RM) in 3Q2019
There is no dividend for this quarter.
MQREIT concluded that the increase in Revenue comes from the increase in MenaraShell, WismaTechnipFMC, and TescoBuilding Penang Revenue. In addition, after the OPR decline, MQREIT also saved a lot of debt finance cost. The current debt interest is 4.09%, compared with 4.52% in the same period last year.
As mentioned in the last quarter, a total of 19% (calculated based on the leased area) or 371,000sf of leases is about to expire, of which 216,000sf has been confirmed for renewal, and 25,000sf is not renewed. The success rate of renewal is very high. The remaining 130,000sf is under negotiation, equivalent to 6.7% of the total leased area.
At present, MQREIT’s occupancy rate is 90.5%, and WALE is 4.62 years. Both have recorded growth compare to 2Q2020 (2Q2020 occupancy rate 90.4%, WALE 4.4). In fiscal year 2020, MQREIT has no debt maturity.
The performance of MQREIT this quarter was very impressive, with increased occupancy rate, high lease renewal rate and organic rental growth.
In addition, MQREIT also brings good news to shareholders. The vacant QUILL BUILDING 5 will soon be sold for RM45mil. The investment cost was RM42mil, and the current market value is RM40mil, so this disposal is very reasonable, and the sale process is expected to be completed in 2Q2021.
MQREIT did not explain how to use the proceeds from the disposal, they may utilize the proceeds on reducing debt. Assuming that MQREIT uses all RM45mil to pay the loan, it is expected to save RM1.8mil in annual interest, which is equivalent to 0.17cent(RM) per unit. Therefore, the semi annual DPU of MQREIT in 2021 may be as high as 3.855cent(RM) per unit.
MQREIT is about to change its name from MQREIT to SENTRAL REIT, I suspect QUILL group may have divested holdings in MQREIT.
For the forecast for the next quarter, it is estimated that DPU will be as high as 3.77 cent(RM) per unit.
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