3 months later, more bad quarterly report. More sell off ... now 48 sen. What will the key Q2/2023 report show in August? Income distribution time then ... will ARREIT cut dividends some more in view of poor results?
I first took a position in ARREIT back in 2011. Between then and 2020, I continued adding more shares until, at one point, ARREIT comprised around 10% of my entire portfolio. However, sometime in mid-2023, I concluded that something was seriously amiss at this REIT. I wish I had realized it sooner. I guess I was too enamoured with the company to accept reality. (See my post above from Nov-21.) Nonetheless, I offloaded the bulk of my shares at around RM0.51, keeping a few thousand shares as keepsakes.
Having read their 2023 Annual Report again, I couldn't see how the management could turn the Trust around. Their big strategy is to exit hospitality completely and focus on education and healthcare.
Long-time unit holders know that the ex-Holiday Villa Alor Star has been vacant since 2018! Instead of selling it first, ARREIT sold the 100% occupied Holiday Villa Langkawi — supposedly because of the 'new strategic focus'! Fine.
Besides the Holiday Villa Alor Star, the former Toshiba TEC building has also been vacant for over two years. There is hardly any discussion about what the management plans to do with this building.
However, these properties aren't the biggest problem in ARREIT's portfolio. The biggest issue is the very place the Trust is occupying—namely, Vista Tower, which makes up 38% of ARREIT's asset value. When the property was purchased in 2018, it had an occupancy rate of 70%. Since then, the rate has only declined every year, reaching its current 35% occupancy rate. I really hope the management does something drastic about this property soon.
Overall, the asset-weighted occupancy rate of ARREIT has declined by 18.9% between 2018 and 2013, from 84.3% to 65.3%. This is an issue that must be addressed.
Anyway, I will no longer be a unit holder moving forward and wish the management success in turning around this once promising REIT.
Note: A very bad Bumiputras managed REITS. Markets price drop terribly from 60sen+ to 30sen+ within one year. They sold/ going to sell the good asset e.g. Holiday Villa Langkawi, Contraves which enjoy 100% occupancy. The latest Q EPS dropped to 0.35sen from 0.58sen, main due to the discontinued income from HV Langkawi.
Don't expect improvement within short period, especially another valuable asset, Contraves, is going to be sold.
1.20sen income distribution represents 3.5% (over market price 34sen) which is also worse than another bumiputras managed reits, AmFirst, which gave 2.0sen, translated to 6.25% return (over the market price 32sen).
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DividendGuy67
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Posted by DividendGuy67 > 2023-06-09 22:05 | Report Abuse
3 months later, more bad quarterly report. More sell off ... now 48 sen.
What will the key Q2/2023 report show in August? Income distribution time then ... will ARREIT cut dividends some more in view of poor results?