KUALA LUMPUR (Oct 20): KIP Real Estate Investment Trust's (REIT) net property income (NPI) fell 2.34% to RM13.67 million for the first quarter ended Sept 30, 2021 (1QFY22), from RM14 million a year earlier, on the back of a drop in revenue.

Revenue fell 6.02% to RM17.14 million from RM18.23 million, due to lower promotional area income amid the restrictions on mall level activities.

"The net property income came in lower in tandem with the lower revenue as compared with the preceding year's corresponding quarter at a lower negative variance due to careful cost management," KIP REIT said in a filing with Bursa Malaysia.

The REIT declared a first interim distribution per unit of 1.55 sen amounting to RM7.8 million to be payable on Nov 23,  which includes a non-taxable portion of 0.71 sen derived from capital allowances and tax-exempt income.

KIP REIT said the quarter also saw a decrease in the average occupancy rate for its seven KIPMalls.

In a separate statement, KIP REIT said the three malls located in the southern region, another three located in the central region, and one mall in the northern region, registered gross revenues of RM8 million, RM4.7 million and RM4.5 million respectively.

The northern region exhibited a 9.6% year-on-year improvement in revenue, attributable to the renewal of lease agreement for AEON Mall Kinta City Shopping Centre (AMKC) in September 2020.

"Correspondingly, AMKC's NPI increased by 10% to RM4.3 million from RM3.9 million (in the same quarter last year). The southern and central regions' gross revenues were nonetheless impacted by lower promotional area income as a result of the restrictions on activities and events within the mall areas," said KIP REIT.

KIP REIT Management Sdn Bhd executive director Datuk Eric Ong Kook Liong said the quarterly financial performance was within management's expectations amid the disruptions caused by the Covid-19 pandemic.

"We welcome the news of moving the country into the endemic phase with declining trend in average daily cases and 90% of the adult population being fully vaccinated. We have seen a boost in consumer confidence since and business sectors are also entering a recovery phase with operations becoming less disrupted.

"Nonetheless, we remain vigilant and continue to practise fiscal prudence to keep our expenses manageable. As witnessed in our central region, we have achieved an improved NPI as a result of better cost management implemented in the said region," he said.

Going forward, KIP REIT remains hopeful of the coming quarters and will continue to monitor the situation, adapting to the situation appropriately for the future growth of KIP REIT and its unitholders.

"We will also continue to evaluate viable opportunities to diversify our asset portfolios into different asset classes in the commercial and industrial assets," Ong added.

KIP REIT closed half a sen or 0.6% higher at 84 sen, valuing the group at RM421.93 million.