Hektar REIT

Frasers Centrepoint Trust Hektar REIT Diversifies

Hektar REIT

Frasers Centrepoint Trust’s associate Hektar REIT diversifies from retail into the Education industry. If you do not know, Frasers Centrepoint Trust held 30.97% of the units in Hektar REIT (Hektar Real Estate Investment Trust). Hektar REIT is a retail-focused REIT in Malaysia listed on the Main Market of Bursa Malaysia Securities Berhad.

Hektar REIT Portfolio

Hektar REIT’s property portfolio consists of six shopping centres in the Northern, Central and Southern Regions of Peninsular Malaysia. These six shopping centres are Subang Parade (Selangor), Mahkota Parade (Melaka), Wetex Parade (Johor), Central Square (Kedah), Kulim Central (Kedah) and Segamat Central (Johor).

On 12th September 2023, Hektar REIT announced the acquisition of an educational asset, Kolej Yayasan Saad Melaka (KYSM). KYSM is a prestigious private school in Melaka, Malaysia, at a purchase consideration of RM150 million.

According to the announcement, the acquisition was part of Hektar REIT’s diversification strategy. Hektar REIT diversification strategy was to explore new investment avenues beyond its retail-focused real estate portfolio. The objective is to strengthen the portfolio and reduce risk. This is achieved by acquiring assets that are resilient to economic cycles and delivering consistent value to their unitholders.

The acquisition will be funded via cash payment through a combination of the proceeds from Proposed Placements, internally generated funds and borrowings.

How Will This Affect Frasers Centrepoint Trust?

The acquisition will be partially funded by proposed placements. This is a common method of raising business capital by offering equity shares.

This will mean that existing shareholders including Frasers Centrepoint Trust which held a 30.97% stake in Hektar REIT will sustain a short term loss from the dilution of shares.

Hektar REIT Historical Dividend Yield

The acquisition may not be all bad news for existing shareholders. As you can see from the chart above, Hektar REIT has a good dividend track record of paying their dividends. Hektar REIT was able to continue growing its Distribution Per Unit (DPU) Post COVID-19.

Last, acquisition can always go both ways. Time will tell whether the acquisition is a good investment.

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