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4 Key things to know of Atrium REIT FY21 Performance

Atrium REIT was listed on Bursa Malaysia on April 2007. To date, Atrium REIT’s property portfolio consists of 8 industrial properties located across Klang Valley and Penang. Being a REIT in the industrial sector, they are less impacted by the uncertainty of COVID-19 pandemic as compared to REITs in other sectors such as retail and hospitality. As such, they are one of the few REITs which has been grown positively despite COVID-19.

In this post, we will look at Atrium REIT FY21 Performance based on its latest annual report.

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1. Maintained 100% portfolio occupancy rate of its active assets

As at 31 December 2021, Atrium REIT reported 100% occupancy rate across its portfolio excluding Atrium Shah Alam 4 which is currently undergoing asset enhancement. The healthy occupancy rate is driven by the increase in demand spaces from various businesses. During the year itself, the management had managed to renew/find new tenants to replace 3 of its leases that had expired.

As at 31 December 2021, here is the current status of its lease expiry:

PortfolioOccupancyExpiry
Atrium Shah Alam 1100%Expiring on 31 May 2027
Atrium Shah Alam 2100% Expiring on 31 March 2024
Atrium Shah Alam 3 100% Expiring on 24 July 2023
Atrium Shah Alam 4 0% Undergoing major AEI which is expected to complete in Q4 2022.
Atrium Bayan Lepas 1 100% Expiring on 21 October 2035
Atrium Bayan Lepas 2 100% Expiring on 6 October 2034
Atrium Puchong 100% Expiring on 30 September 2023
Atrium USJ 100% Block A (31 August 2023), Block B (15 February 2024), Block C (31 July 2022)

Atrium Shah Alam 4 which is currently undergoing major asset enhancement initiatives and currently untenanted will be occupied by Quantium Solutions International upon the completion of the AEI. In the shorter term, investors should pay close attention to Atrium USJ Block C which is due to expire in 31 July 2022.

2. Continuous growth in overall financial performance

MYR in 000sFY18FY19FY20FY21
Revenue18,77922,96134,40539,056
Net Property Income17,25721,41332,23836,413

Both revenue and net property income has been on an increasing trend over the past 4 years. Revenue increased from MYR 34.4 million in FY20 to MYR 39.1 million in FY21. Net Property Income on the other hand increased from MYR 32.2 million in FY20 to MYR 36.4 million in FY21. This increase is mainly driven by Atrium Bayan Lepas 1 which was acquired in October 2020.

Atrium REIT has no doubt been resilient reporting solid growth despite the uncertainty of the COVID-19 pandemic.

3. Strong distribution per unit with a attractive yield

MYR (Cents)FY18FY19FY20FY21
Distribution Per Unit8.16.69.09.8

Looking at its distribution per unit, there is a dip in from 8.1 cents in FY18 to 6.6 cents in FY19. This dip is due to the enlarged share base from the placement and right issue issued in conjunction to the acquisition of Atrium Bayan Lepas 2.

Apart from the dip in FY19 which is due to timing differences in rental income recognition, distribution per unit has been growing steadily. Based on 31 December 2021 closing price, this would give investors a solid yield of 6.50% which is fairly attractive.

Read More: Why you should never buy a REIT just because they have a high dividend yield

4. Increasing gearing but within permissible limit

FY19FY20FY21
Gearing (%)39.2%42.6%47.2%

As at 31 December 2021, Atrium REIT has a total borrowings of MYR 255 million which translates to a gearing of 47.2% in FY21. While this is still below the permissible limit, the gearing has been increasing year on year due to its expansion. While growth is great, this is definitely an area that is worth keeping a lookout on.

Of its total loan, 100% of it is variable in nature. This can be both beneficial and adverse to a REIT. The downside of variable loans is that they are subject to interest rate risk. The positive aspect, on the other hand, is that a cut in interest rate would be favorable to them which is what they are experiencing at the moment

Summary

Based on our overall analysis, Atrium REIT FY21 performance has been fairly commendable. Despite the uncertainty of COVID-19, they have managed to maintain a 100% occupancy rate with strong growth in financial performance. Distribution per unit has been on an increasing trend giving investors a 6.5% yield despite trading a premium above its current NAV of MYR 1.26. From a price-to-book standpoint, Atrium REIT is trading at price to book ratio of 1.2.

What are your thoughts on Atrium REIT FY21 performance? If you are just getting started, feel free to read more of our REIT Guide and REIT Analysis. You can also read more about what REITs are if you are new to REITs.

Chee Yang

Chee Yang is an investor and founder of REIT Pulse. Started out his career in both assurance and M&A, he is now in corporate and business development of a rising tech company. Being an active REIT investor, Chee Yang launch REIT Pulse to connect with seasoned investors and similarly help others learn more about REITs.

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