KUALA LUMPUR (April 27): Hektar Asset Management Sdn Bhd, the manager of Hektar Real Estate Investment Trust (Hektar REIT), has adopted a cautious outlook on the REIT sector’s growth this year, due to inflationary pressure and an uncertain global outlook that might affect domestic economic activities.

Hektar REIT chief executive officer Johari Shukri Jamil said the company is taking business sustainability measures, which include monitoring and reviewing its rental strategy and adopting prudent financial management, to ensure economic resilience and stable occupancy.

It has also introduced cost optimisation initiatives, and enhanced its asset efficiencies to help cushion the impact of increasing interest rates and inflation.

“We actively explore avenues for growth by ensuring a solid portfolio of retail brands in our malls that can optimise sustainable returns and defensible income through active tenancy remixing and rejuvenation of the centres,” he told Bernama recently.

Johari emphasised that long-term strategies to increase dividend yields include enhancing and improving the malls' visual appeal, conditions, and facilities.

He said that as the retail landscape recovered from the Covid-19 pandemic, Hektar REIT’s portfolio of malls experienced a 58% increase in visitor footfall and a 50% higher vehicle count annually, significantly improving its tenant sales performance.

Meanwhile, Johari said Hektar REIT is committed to fulfilling its obligation to ensure that all business activities are performed according to high environmental, social and governance (ESG) standards.

He said the company had invested RM10 million in various climate-change-related initiatives over the past five years.

He further said the company had heavily invested in research and development, advancing the buildings and facilities, machinery and automation, such as installing chillers and replacing existing lighting with energy-saving light-emitting diode (LED) bulbs.

It has also embarked on renewable energy initiatives, pursued energy consumption, repaired the cooling towers, retrofitted air-conditioning and mechanical ventilation, and installed cold water systems.

In 2022, he noted that one of the malls, Segamat Central, realised total savings of RM12,000 by replacing traditional bulbs with energy-saving LEDs.

“In the next phase of our initiatives, we hope to install solar panels across our malls. It is important to address electricity usage, as it takes a huge portion of our utility bill, constituting about 89% where we paid about RM19 million alone last year on electricity,” he said.

Johari Shukri noted that internally, there are targets and the capital expenditure for ESG initiatives this year and what to achieve, but he could not share any information at the moment.

Hektar REIT currently owns two million square feet of retail space in four states, with assets valued at RM1.2 billion as of Dec 31, 2022.

Its revenue reached RM117.5 million for the financial year ended Dec 31, 2022 (FY2022), and it is targeting to achieve an overall portfolio occupancy rate of 86% in FY2023, against 82% in FY2022.

Hektar REIT’s portfolio of commercial properties includes Subang Parade in Selangor, Mahkota Parade in Melaka, Wetex Parade and Classic Hotel in Muar, Johor, Central Square in Sungai Petani, Kedah, Kulim Central in Kedah, and Segamat Central in Johor.