Sentral REIT property, Menara Shell. (Photo: REITsWeek)Sentral REIT property, Menara Shell. (Photo: REITsWeek)

MRCB-Quill REIT (MQREIT) has reported a distribution per unit (DPU) of 1.81 sen for its 1Q 2019, a fall of 13.7% year-on-year.

Correspondingly, the REIT recorded realised earnings per unit (EPU) of 1.81 sen, which is approximately 7.9% lower than the EPU of 1.97 sen recorded in 1Q 2018.

Its net income of MYR19.4 million for 1Q 2019 is a decrease of approximately 7.6% from the realised net income of RM21.4 million recorded for the first quarter of 2018.

The lower income was attributable to lower revenue generated from selected properties, said the REIT.

“In the current challenging office market environment, we expect to experience some fluctuation in earnings”, said Tan Sri Saw Choo Boon, Chairman of MQREIT’s manager.

“However, we remain optimistic that MQREIT’s operation will be able to weather these market challenges over time”.

“We will continue to focus on tenant retention to maintain a stable occupancy and healthy weighted average lease expiry (WALE), which stands at 4.84 years as at 31 March 2019 for the REIT’s current asset portfolio”, he added.

MQREIT has approximately 369,000 square feet, or about 19% of its total leased net lettable area, due for renewal in 2019 with 16% of these leases due in 1Q 2019.

The leases due in 1Q 2019 are predominantly relating to the tenancies in Platinum Sentral which have not been renewed.

New leases have been entered into for 48,000 square feet of the non-renewed space in April 2019.

Negotiations are progressing as scheduled for the leases due in the second and third quarter of 2019, which represent 14% and 7% respectively, of the total leases due for renewal in 2019, said the REIT.

MQREIT’s average occupancy rate as at 31 March 2019 was at 89%.

The REIT’s gearing ratio stood at 37.5% as at 31 March 2019 compared to 37.7% recorded in the preceding quarter, with average cost of debt maintained at 4.5% per annum.

MQREIT was last done on the Kuala Lumpur Stock Exchange at MYR1.1

By Shariffa Al-Habshee

Shariffa joined REITsWeek in 2017, and monitors Asia-Pacific REITs for the publication.