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Hektar Reit aims to quadruple mall portfolio

Trust is focusing for now on Malaysia with its growing retail market

MALAYSIA-LISTED Hektar Reit (H-Reit) plans to quadruple its mall portfolio in about four to five years as it rides on Malaysia’s growing retail market, a senior member of the trust’s management team said.

Zalila Mohd Toon, chief financial officer of the trust’s manager, told BT that there is plenty of room for growth in the retail sector in Malaysia.

Right now, the real estate investment trust (Reit) has two malls – Subang Parade in Selangor and Mahkota Parade in Melaka – worth some RM560 million (S$245.7 million) in total.

‘Our target is to grow it (the portfolio) to RM2 billion,’ Ms Zalila said.

While the Reit is not restricted to investing only in Malaysia, for now it will focus its attention on buying malls in the country, she said.

‘We are not restricted, but we think there are still a lot of opportunities in Malaysia,’ Ms Zalila said. ‘For now, we are concentrating on Malaysia.’

Retail sales in Malaysia are estimated to have grown some 8 per cent in 2007, data from a leading industry body shows. In line with this, foot traffic at H-Reit’s malls have also gone up, Ms Zalila said.

At Subang Parade, foot traffic in the first quarter of 2007 was about 2.3 million, up 79 per cent over the previous comparable period. And at Mahkota Parade, visitor numbers in the first quarter of last year was about 2 million, up 10 per cent compared with the same three months in 2006.

Occupancy rates at both malls are also high, with Subang Parade recording an occupancy of 99.1 per cent as of Sept 30, 2007 and Mahkota Parade 93.9 per cent.

To ride on Malaysia’s retail story, Singapore-listed Frasers Centrepoint Trust (FCT) paid $46.6 million to buy 27 per cent in H-Reit in May 2007, kick-starting its overseas expansion.

Under the strategic partnership, FCT’s parent company Frasers Centrepoint Limited (FCL) also acquired 40 per cent of H-Reit’s manager Hektar Asset Management Sdn Bhd. FCL will gain board and exco representation in the management company some time this year.

Going forward, Ms Zalila said that the two companies will look at possible collaboration in real estate projects, which will provide a steady acquisition pipeline for H-Reit.

Source: Business Times 10 Jan 08

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