Tower Real Estate Investment Trust (Tower REIT) says its investment property, Guoco Tower, which it acquired in August this year has contributed positively to its revenue for the quarter ended September 30, 2020.
It said the increased contribution from Guoco Tower have been compensated by the lower occupancy in Menara HLX (formerly known as Menara HLA).
The 19-storey Guoco Tower is part of the Damansara City integrated commercial development in Damansara Heights, Kuala Lumpur.
Damansara City, a project by Guocoland (Malaysia) Bhd includes other properties like a Grade A office building, a five-star hotel, a retail mall, serviced apartments, and car parks.
Tower REIT acquired Guoco Tower from Guocoland, the property investment arm of Hong Leong Group for RM242.1 million cash, in a related party transaction (RPT).
The disposal is deemed to be an RPT as Guocoland is a major unitholder of Tower REIT.
Tower REIT previously said that it was acquiring Guoco Tower as it had good prospects, despite the uncertainties posed by the market, coupled with the subdued economic growth.
The Grade A office building has an occupancy rate of about 97.1 per cent with tenants comprising multinational and established local companies.
GLM REIT Management Sdn Bhd, the Manager of Tower REIT, expects that Guoco Tower will further contribute to the stability of Tower REIT’s income with the diversified tenant base across a broader range of sectors.
“The Covid-19 pandemic continues to have a profound impact across the globe and on the Malaysian economic growth.
“The demand and rental rates for the office sector may continue to be subdued. Nevertheless, the demand remains strong for office spaces in selected strategic locations in Klang Valley,” the Manager said in a filing with Bursa Malaysia.
The Manager said it will continue to take active steps to manage the portfolio in maximising the return to the unitholders.
For the three months to September, the Trust recorded gross revenue of RM6.51 million, an increase of 15.1 per cent as compared to the corresponding quarter in the preceding year.
Despite higher revenue, Tower REIT’s net trust income for the current quarter fell by 23.2 per cent to RM1.57 million as compared to the corresponding quarter in the preceding year.
It said this was mainly due to higher interest expense and the one-off expenses related to the acquisition of Guoco Tower.
As at September 30, 2020, Tower REIT’s composition of the investment portfolio was Menara HLX (RM342.3 million), Plaza Zurich (RM220.3 million), and Guoco Tower (RM245.56 million).