What I learn from Hektar REIT’s 2024 Annual Report (Resilient, Diversification and Value)
Hektar Real Estate Investment Trust (5121), Malaysia’s first retail-focused REIT, continues to demonstrate resilience and adaptability amidst evolving economic conditions. Anchored by a portfolio of seven assets across retail and education sectors with a total asset value of RM1.39 billion, the Trust delivered a net property income of RM62.9 million in FY2024, representing a year-on-year growth of 4.7%.
Despite a dip in portfolio occupancy to 84.0%, largely due to ongoing tenancy remixing and AEI works, Hektar REIT remains optimistic with occupancy projected to rebound above 90% by FY2025.
Strategically, 2024 marked a transformative chapter with the acquisition of Kolej Yayasan Saad (KYSM) in Melaka; Hektar REIT’s maiden foray into the education asset class. This milestone was backed by a successful private placement and the issuance of RM215 million in AAA-rated Medium-Term Notes, enhancing financial flexibility for future acquisitions and capital enhancement initiatives.
Operationally, key assets such as Mahkota Parade and Subang Parade led performance, supported by positive rental reversion of 5.7% across the portfolio and robust visitor traffic of 22.7 million. At Subang Parade, the repositioning initiative introduced experiential tenants including Swet Fitness and Game On hub, reflecting a consumer-centric strategy to boost engagement and rental yields.
Hektar REIT distributed 3.15 sen per unit in FY2024. At the current market price of RM0.435 (as of May 2025), this translates into an appealing distribution yield of approximately 7.24%, significantly outperforming the benchmark 10-year MGS yield and average REIT sector returns. The REIT’s commitment to distributing at least 90% of its distributable income remains intact, reinforcing its appeal to yield-seeking investors.
On the ESG front, Hektar REIT secured multiple accolades including the ASEAN Energy Efficient Building Award and The Edge’s ESG Award for Outstanding Dividend Return, while expanding its EV infrastructure and setting solar rollout plans at five malls by end-2025. With gearing at 41.7% and interest cover at 1.66x, the REIT maintains a sound capital structure, aligning with its goal of sustainable income and long-term defensible growth.
Looking ahead, Hektar REIT aims to double its portfolio size to RM3 billion by 2027, eyeing strategic diversification into education and industrial assets under triple net lease models. The combination of strong fundamentals, strategic pivoting, and an attractive 7.24% yield underscores Hektar REIT’s compelling proposition for income-focused investors.
$HEKTAR / 5121 (HEKTAR REAL ESTATE INVESTMENT TRUST)
