KUALA LUMPUR, 8 February: KIP Real Estate Investment Trust (KIP REIT), whose share price went down 0.5% on the first day of trading, is targeting an annual increase of 3% to 5% in rental revenue for this year, based on its track record.
Last year, its gross rental income grew 2.65% to RM53 million from RM51.63 million in 2015.
“Our revenue comes from rental. For the last few quarters before the listing, figures were matching projections and, with that for the following quarters, we expect to match our projections,” KIP REIT Management CEO Lim Han Gie said at a press conference in conjunction with the company’s listing on Bursa Malaysia yesterday.
KIP REIT shares, however, ended down half a sen at 99.5 sen after rising 4% to an intraday high of RM1.04. A total of 18.24 million shares were traded.
KIP REIT’s initial portfolio acquisitions consist of five KiP Marts in Tampoi, Kota Tinggi, Masai, Malacca and Senawang as well as a neighbourhood retail centre known as KiP Mall in Bangi.
The acquisitions will be financed with the RM234.2 million proceeds raised from its initial public offering (IPO), which saw an oversubscription rate of 5.07 times for the public portion.
According to Lim, the average occupancy rate of “matured” Kip Marts exceeds 90%, but is slightly lower at 70% for those at growing stage, being in operation for less than four years.
He said the company holds the first right of refusal to potentially acquire five KiP Marts, which are at different stages of construction, in Selangor, Negri Sembilan, Pahang, Johor and Kedah. Of the five properties, the Kip Mart in Kota Warisan is slated to open this year.
Meanwhile, Lim said the company is also looking into diversifying its broad and diverse tenant base.
“We are very focused on daily goods and necessities, a lot of people relate retail to shopping, we are a different breed of retailer,” he noted.
KIP REIT’s debt-to-asset ratio stood at 14.8% as of Sept 30, 2016, which is lower than the average ratio of 32% for Malaysian REITs. This, Lim said, gives the company room to undertake borrowings for future acquisition and asset enhancement.