Hektar REIT to acquire malls in smaller cities

KUALA LUMPUR: Hektar Asset Management Sdn Bhd, the manager of Hektar Real Estate Investment Trust (Hektar REIT), is actively looking at acquiring neighbourhood malls outside main cities to tap on the increasing purchasing power there.
Hektar REIT currently owns Wetex Parade (Muar, Johor), Mahkota Parade (Malacca), Subang Parade (Selangor), Central Square (Sungai Petani, Kedah) and Landmark Central (Kulim, Kedah).
Its executive director and chief financial officer, Zalila Mohd Toon, said the company has always consciously refrained from putting all of its eggs in one basket. By spreading out its assets strategically across Peninsular Malaysia, it is diversifying its portfolio risk.
"We are also tapping on the strong purchasing power in smaller cities by bringing in new local and international brands or retailers.
"We believe that strategically selecting the location of our assets has in many ways secured our success to date, as our portfolio of malls now has a track record of high occupancy with a current average occupancy rate of 95%," she said in a statement.
Geographical distribution remains Hektar REIT's key strategy due to its ability to promote growth potential in smaller markets where other larger REIT players or investors shy away from.
Hektar REIT has capitalised on this by focusing on growing towns and changing the retail mix to include brands which are predominantly found in larger cities such as Kuala Lumpur or Penang.
Despite the low spending power that the people in smaller towns are perceived to have, the introduction of more global brands in Wetex Parade for example, was deemed a success. The same model will be carried out in Central Square and Landmark Central, referred to as the "Kedah Malls".
Currently, Hektar's asset enhancement initiatives are focused on refurbishment and expansion exercises. Refurbishment activities for Central Square are expected to be completed in the middle of this year, totalling RM23 million.
Hektar will then begin on the refurbishment of Landmark Central which is expected to be completed by 2015. Expansion exercises have also begun at Mahkota Parade where RM15 million is invested to increase cinema screens from four to ten to enhance shopper traffic and in return, financial performance for the mall.
"Today, Hektar REIT has more than 1.7 million square feet of net lettable area and we are constantly on the lookout to transform more neighbourhood malls into retail destinations of international standards," added Zalila.