Hektar Real Estate Investment Trust

Hektar REIT Charts a Confident New Course: Diversifying, Greening, and Growing for the Future

For many Malaysians, shopping malls aren’t just places to buy things, they’re community spaces, social hubs, and weekend retreats. Behind many of these malls stands Hektar Real Estate Investment Trust (Hektar REIT), a familiar name in Malaysia’s property scene.

But now, Hektar is evolving beyond its retail roots, and doing it with moves that are earning growing attention from investors.

At its Annual General Meeting today, Hektar REIT unveiled a host of developments that signalled one thing clearly: the Group is thinking big, thinking green, and thinking ahead.

One of the most exciting shifts? Hektar is no longer just about malls. It has taken a confident step into education and industrial properties, sectors seen as more stable and resilient in today’s economy.

Its acquisition of Kolej Yayasan Saad in Melaka marked its debut outside retail, followed by a soon-to-be-completed RM30 million deal for its first industrial property in Penang. For investors, that means a more balanced portfolio and stronger income reliability going forward.

Meanwhile, Hektar isn’t just expanding, it’s transforming. With ESG (Environmental, Social and Governance) at the heart of its strategy, the Group has partnered with solar player Samaiden to roll out rooftop solar systems across five of its malls. These aren’t just small panels, they’re expected to save over RM41 million in electricity bills over the next 20 years and cut nearly 100,000 tonnes of carbon emissions. That’s the equivalent of planting nearly 2 million trees. Not bad for a property trust, right?

To support its ambitions, Hektar REIT also raised RM215 million through a well-received bond issuance backed by the Asian Development Bank. This gives the Group the firepower it needs to grow, without putting too much pressure on its cash flow.

And let’s not forget the facelift at Subang Parade. The iconic mall is undergoing a thoughtful upgrade that will enhance the customer experience, boost tenant confidence, and ultimately support long-term value for unitholders.

CEO Zainal Iskandar put it best: this is about creating a “future-ready” REIT, one that’s diversified, ESG-forward, and laser-focused on sustainable returns. Hektar is making it clear that it’s listening to unitholders, adapting to market changes, and delivering real value over the long term.

So for those wondering what’s next for Hektar REIT, the answer is simple: this is no longer just a mall story. It’s a story of smart transformation; and it’s only just beginning.

$HEKTAR / 5121 (HEKTAR REAL ESTATE INVESTMENT TRUST)

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)

$HEKTAR / 5121 (HEKTAR REAL ESTATE INVESTMENT TRUST)
Research Report by HLIB

$HEKTAR / 5121 (HEKTAR REAL ESTATE INVESTMENT TRUST)
Research by HLIB
Sell - TP RM0.40

"Another miss"

Hektar recorded 1H24 core net profit of RM13.5m, which we deem to have missed ours but within consensus estimates. The negative deviation was due to higher-than-expected finance costs. In view of the results shortfall, we cut our FY24/25/26 forecasts by -5.7%/-2.3%/-1.5% respectively. With only 24.6% of NLA expiring in FY24 having been renewed, there are concerns whether all the
tenancies expiring this year can be renewed/replaced in time. Nonetheless, there might be potential positive spill over effects from (i) EPF Account 3 and (ii) higher civil servant spay, as Hektar’s retail assets cater more to the mass market, which could sustain earnings in subsequent quarters. Maintain SELL with a lower TP of RM0.40.

Analyst:
Tan Je Jyne
jjtan@hlib.hongleong.com.my

Top 5 Dividend Yield REITs in Bursa Malaysia 🏢🏘

Real estate investment trusts (REITs) are trust funds that own, operate, or finance income-producing real estate across various sectors such as retail, hotels, industrials, offices, healthcare institutions, warehouses and more.

Investing in REITs allows Stockbitors to earn income from real estate without needing to buy, manage, or finance the properties yourself. REITs are required to pay out at least 90% of their income to unit holders, generally resulting in high dividend yields, along with the potential for long-term capital appreciation as the value of real estate or the rent increases.

Today, we've filtered for 5 REITs in Bursa with the highest trailing dividend yields! Are the dividend yields sustainable? Do any of them interest you?

Let us know in the comment section below!

$HEKTAR / 5121 (HEKTAR REAL ESTATE INVESTMENT TRUST) $SENTRAL / 5123 (SENTRAL REIT) $IGBCR / 5299 (IGB COMMERCIAL REAL ESTATE INVESTMENT TRUST) $KIPREIT / 5280 (KIP REAL ESTATE INVESTMENT TRUST) $UOAREIT / 5110 (UOA REAL ESTATE INVESTMENT TRUST)

Change in Boardroom - PUAN NORLIZA BINTI SULEIMAN

Change in Audit Committee - PUAN NORLIZA BINTI SULEIMAN

Change in Nomination and Remuneration Committee - PUAN NORLIZA BINTI SULEIMAN

TRANSACTIONS (CHAPTER 10 OF LISTING REQUIREMENTS) : RELATED PARTY TRANSACTIONSHEKTAR REAL ESTATE INVESTMENT TRUST ("HEKTAR REIT")

I. ACQUISITION AND LEASE;
II. PLACEMENT; AND
III. AMENDMENT

Changes in Sub. S-hldr's Int (Section 138 of CA 2016) - HEKTAR BLACK SDN BHD

$HEKTAR / 5121 (HEKTAR REAL ESTATE INVESTMENT TRUST)

Change in Boardroom - MR JOHARI SHUKRI BIN JAMIL

OTHERSAPPOINTMENT OF INTERIM NON-EXECUTIVE CHAIRMAN AND CAPITAL MARKET SERVICES LICENSE REPRESENTATIVE (CMSLR) ACTING PRINCIPAL OFFICER

TRANSACTIONS (CHAPTER 10 OF LISTING REQUIREMENTS) : RELATED PARTY TRANSACTIONSHEKTAR REAL ESTATE INVESTMENT TRUST ("HEKTAR REIT")

I. ACQUISITION AND LEASE;
II. PLACEMENT; AND
III. AMENDMENT

TRANSACTIONS (CHAPTER 10 OF LISTING REQUIREMENTS) : RELATED PARTY TRANSACTIONSHEKTAR REAL ESTATE INVESTMENT TRUST ("HEKTAR REIT")

I. ACQUISITION AND LEASE;
II. PLACEMENT; AND
III. AMENDMENT

TRANSACTIONS (CHAPTER 10 OF LISTING REQUIREMENTS) : RELATED PARTY TRANSACTIONSHEKTAR REAL ESTATE INVESTMENT TRUST ("HEKTAR REIT")

I. ACQUISITION AND LEASE;
II. PLACEMENT; AND
III. AMENDMENT

$HEKTAR / 5121 (HEKTAR REAL ESTATE INVESTMENT TRUST)
Research by HLIB
Sell (from Hold) – TP RM0.50

“Impacted by higher costs"

Hektar’s 1Q24 core net profit came in at RM5.1m (+1.4x QoQ, -44.8% YoY). This came in below ours and consensus estimates at 16% of full year forecast. The negative deviation was due to higher-than-expected finance costs. In view of the results shortfall, we cut our FY24/25 forecasts by -5.4%/-5.2%. We also introduce FY26 forecasts. Besides, the increase in units in circulation after its private placement has resulted in our forecasted FY24/25 EPU to decline by -22%/-23% post earnings cut due to dilution. Although there are some positives regarding its outlook – potential positive spill-over effects to its retail assets from the introduction of flexible EPF “Account 3” and higher civil servant pay – its current yield valuations seems narrow relative to its historical range. Downgrade to SELL with a lower TP of RM0.50.

Analyst:
Tan Je Jyne
JJTan@hlib.hongleong.com.my

Quarterly rpt on consolidated results for the financial period ended 31/03/2024

Changes in Sub. S-hldr's Int (Section 138 of CA 2016) - HEKTAR BLACK SDN BHD

Top 5 Dividend Yield REITs in Bursa Malaysia 🏢 🏘

Real Estate Investment Trusts (REITs) can be a valuable addition to an investor’s portfolio as they allow investors to participate in the real estate market without the need for significant capital or the responsibilities of property ownership. REITs are required to pay out at least 90% of distributable income to unitholders, so many investors flock to REITs for their regular dividend pay outs as part of a balanced portfolio.

Here, we have screened for the 5 highest Dividend Yielding REITs in Bursa! However, do bear in mind that DY is a lagging indicator and Stockbitors should always do due diligence to ascertain the health of a REIT before making any investing decisions!

$SENTRAL / 5123 (SENTRAL REIT) $HEKTAR / 5121 (HEKTAR REAL ESTATE INVESTMENT TRUST) $YTLREIT / 5109 (YTL HOSPITALITY REIT) $KIPREIT / 5280 (KIP REAL ESTATE INVESTMENT TRUST) $UOAREIT / 5110 (UOA REAL ESTATE INVESTMENT TRUST)

TRANSACTIONS (CHAPTER 10 OF LISTING REQUIREMENTS) : RELATED PARTY TRANSACTIONSHEKTAR REAL ESTATE INVESTMENT TRUST ("HEKTAR REIT")

I. ACQUISITION AND LEASE;
II. PLACEMENT; AND
III. AMENDMENT

NEW ISSUE OF SECURITIES (CHAPTER 6 OF LISTING REQUIREMENTS) : FUND RAISINGHEKTAR REAL ESTATE INVESTMENT TRUST ("HEKTAR REIT")

I. ACQUISITION AND LEASE;
II. PLACEMENT; AND
III. AMENDMENT

Additional Listing Announcement /Subdivision of Shares

TRANSACTIONS (CHAPTER 10 OF LISTING REQUIREMENTS) : RELATED PARTY TRANSACTIONSHEKTAR REAL ESTATE INVESTMENT TRUST ("HEKTAR REIT")

I. ACQUISITION AND LEASE;
II. PLACEMENT; AND
III. AMENDMENT

TRANSACTIONS (CHAPTER 10 OF LISTING REQUIREMENTS) : RELATED PARTY TRANSACTIONSHEKTAR REAL ESTATE INVESTMENT TRUST ("HEKTAR REIT")

I. ACQUISITION AND LEASE;
II. PLACEMENT; AND
III. AMENDMENT

Additional Listing Announcement /Subdivision of Shares

Annual Report & CG Report - 2023

General Meetings: Notice of Meeting

$HEKTAR / 5121 (HEKTAR REAL ESTATE INVESTMENT TRUST)
Research by HLIB
Hold (Maintain) - TP of RM0.58

"Weaker end to FY23"

Hektar’s 4Q23 results came in at RM2.1m (-69.1% QoQ, -17.9% YoY), bringing FY23 sum to RM25.1m (-29.3% YoY). We deem the results to be below ours and consensus expectations at 83% and 79% respectively. The negative deviation was due to higher trust and finance expenses. In view of the results shortfall, we cut our FY24/25 forecasts by -3.4%/-3.0%, respectively. Despite increased occupancy rate, rental reversions for FY23 were flat. Moreover, with additional retail malls entering the market later this year, competition in this space will inevitably ramp up, which could further negatively impact Hektar’s rental reversions. Maintain HOLD with a lower TP of RM0.58 based on FY24 DPU on targeted yield of 11.0%.

Analyst(s):
Tan Je Jyne
jjtan@hlib.hongleong.com.my

TRANSACTIONS (CHAPTER 10 OF LISTING REQUIREMENTS) : RELATED PARTY TRANSACTIONSHEKTAR REAL ESTATE INVESTMENT TRUST ("HEKTAR REIT")

I. ACQUISITION AND LEASE;
II. PLACEMENT; AND
III. AMENDMENT