PETALING JAYA: MRCB-Quill REIT (MQREIT) achieved a net profit of RM19.79 million in the first quarter ended March 31, 2020 (Q1’20), an increase of 2.0% from RM19.41 million a year ago, attributable to higher revenue generated from the selected properties and lower finance cost, administration expenses, trustee’s and manager’s fee.
Its revenue jumped 1.2% to RM42.22 million from RM41.72 million in the previous year’s corresponding quarter.
Correspondingly, MQREIT recorded a realised earnings per unit (EPU) and distributable income per unit of 1.85 sen which is 2.0% higher than the EPU and distributable income per unit of 1.81 sen recorded in Q1’19.
MQREIT manager MRCB Quill Management Sdn Bhd (MQM) chairman Tan Sri Saw Choo Boon said during this Covid-19 pandemic, it is committed to weather through this challenging period and to provide support where necessary to its stakeholders. It has put in place the necessary precautionary measures at its properties to mitigate the risk of exposure to Covid-19. It will extend assistance via rental support to its retail tenants who have been badly affected by the nationwide movement control order initiated since March 18, 2020.
“In terms of outlook, Covid-19 has affected economies and businesses in all property sectors. As the impact of Covid-19 is currently fluid and evolving, there remains significant market uncertainties. Nonetheless, we will proactively manage the MQREIT’s portfolio to mitigate its impact and maintain a sustainable income,” he said in a statement.
MQM CEO Yong Su-Lin said amid market uncertainties, MQREIT will remain vigilant on managing cash flow and exercising financial discipline to continue delivering value to its unitholders. During this period, proactive lease management, tenant retention and maintaining a strong balance sheet remain its top priorities. MQREIT has been able to sustain a stable occupancy and healthy weighted average lease expiry, which stood at 4.65 years as at March 31, 2020. MQREIT’s average occupancy rate as at March 31, 2020 stood at 90.5%.
In terms of lease renewal, MQREIT has 370,000 sq ft (19% of its total leased net lettable area) due for renewal in 2020 with the bulk of these leases due in Q4’20. 93% of the leases due in Q1’20 have been renewed and early negotiations have commenced for the bulk of the leases due in Q4’20.
“In terms of capital management, MQREIT continues to be in a stable financial position to meet its financial and operational obligations, with a gearing ratio of 38.3% as at March 31, 2020, well within Securities Commission’s threshold of 50%. MQREIT’s RM335 million borrowings due on March 30, 2020 was refinanced for another tenure of five years, thereby increasing its debt average term to maturity to 3.32 years as at March 31, 2020. After this refinancing, about 54% of its total borrowings is on floating interest rate.
“While we expect the low interest rate environment to persist, MQREIT will consider to swap some of its floating interest rate exposure to fixed rate at an appropriate time, to cushion it from any potential rise in interest rates in a volatile market environment.”
