PETALING JAYA: Hektar Real Estate Investment Trust’s (Hektar-REIT) acquisition of an industrial property in Bayan Lepas, Penang, is yield-accretive, offering a yield of 7.5%.
This compares favourably with Hektar REIT’s projected net property income yield of 5.5% to 6% for financial year 2025 (FY25) and FY26, according to Hong Leong Investment Bank (HLIB) Research.
“We also find the transaction to be fair and strategically sound. With a gross floor area of 58,348 sq ft, the purchase of this light industrial asset equates to RM514.2 per sq ft.
“In comparison, similar assets in Bayan Lepas Industrial Park are valued at RM529.4 per sq ft.
“This suggests that the acquisition price is reasonable,” it said.
HLIB Research noted that the property, priced at RM30mil, represents 2.2% of Hektar-REIT’s total asset value.
The acquisition will be funded with 70% debt and 30% cash.
“Assuming Hektar-REIT raises RM21mil at a 5% borrowing cost, we estimate a 2.2% and 4.3% uplift in distribution income for FY25 and FY26.
“As for the gearing ratio, it will see a slight increase to 42.8% from 42.2% following the acquisition,” it said.
Upgrading the stock to “hold” with a higher target price of 48 sen, the research house said it is raising its FY25 and FY26 forecasts by 2.2% and 4.3%, respectively.
However, HLIB Research said it remains concerned about the high tenancy expiry profile in the retail segment, with a significant portion of net lettable area set to expire in the coming years.
In a filing with Bursa Malaysia last Wednesday, Hektar-REIT announced that it will be acquiring a property with factory buildings for industrial, warehousing and office use in Bayan Lepas Industrial Park from Microlead Precision Technology Sdn Bhd for RM30mil.
It said the acquisition was in line with the company’s investment objective to deliver long-term and sustainable distribution of income to unit holders by acquiring quality real estate with stable recurring income.
“The proposed acquisition would further improve the asset diversification of the overall property portfolio of Hektar-REIT with the inclusion of its first maiden industrial asset.
“This is a significant opportunity for Hektar-REIT to begin its industrial footprint in Bayan Lepas by acquiring quality yield-accretive assets with modern facilities at a prime location,” it added.
