Hektar upbeat on mall ops

 By Zurinna Raja Adam

HEKTAR Real Estate Investment Trust (REIT) (5121), owner of Subang Parade mall, is unperturbed by the newly-opened rival Empire Shopping Gallery as each mall goes for a different segment of the market.

Instead, it views Empire Gallery as complementary to the business of Subang Parade and the existing retail mix in Subang Jaya.

Hektar REIT chairman and chief executive officer Datuk Jaafar Abdul Hamid said Subang Parade will continuously invest in advertising and promotional activities like Chinese New Year, Valentine's Day and Shop for School campaign to remain competitive.

"Subang Parade has enjoyed occupancy of more than 99.8 per cent since 2007. This means, for three consecutive years, very few new retailers could enter a prime mall in the Subang Jaya market as there was no space available," Jaafar said in an interview in Subang Jaya yesterday.
Subang Parade has lost a tenant, Toys R Us, which has moved to Empire Gallery, a boutique mall with 180 stores offering a choice of international and local brands.

However, this creates a new opportunity for Hektar REIT as it will be bringing in an eight-screen cinema offering a total of 1,400 seating, by May this year.

"In one stroke, we found a solution which will improve traffic and maintain Subang Jaya's uniqueness as it is the only cinema in a mall in Subang Jaya," Jaafar said.

Hektar REIT owns two other malls - Mahkota Parade in Malacca and Wetex Parade in Muar, Johor. All three malls have a combined occupancy of 95 per cent and portfolio value of RM742 million.

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The group is aiming to breach the RM1 billion mark and is continuously on the lookout to buy either a neighbourhood or regional mall.

"We are always looking for new acquisitions to improve our portfolio. Our business is in retail management and we have over 300 retailers in our property. This is our competitive advantage where we can offer new retail property acquisition in future," Jaafar said.

Among its criteria for acquisition are purpose-built shopping centres with anchors starting from 150,000 sq ft of net lettable area and location in established or emerging neighbourhood with target market segments.

"It is important that we can acquire shopping centres with minimal sold lots. Our benchmark is not more than 10 per cent, as we would like to have control over the property we acquire," said Jaafar.

For its financial year ended December 31 2010, Hektar REIT posted a net income of RM39.2 million, or 12.24 sen per unit, up 5.5 per cent from the previous year. Revenue grew by 3.6 per cent to RM90.9 million against RM87.7 million previously.

Subang Parade remains the group's flagship property, contributing 48.7 per cent to its total gross revenue and some 50.9 per cent to its net property income.